Hospitals and Communities are at Risk
Hospitals save lives and provide high-quality care to all who need it, regardless of ability to pay. They lead efforts to improve public health and innovation to advance care. They are often the top job creators and economic engines in their communities.
Hospitals can’t support that mission without financial stability—and that stability is at risk. Continued losses put hospitals at risk of having to reduce services, forgo plans to serve their communities in new ways and, in extreme cases, close facilities.
Financial Challenges
More than half of the commonwealth's acute care hospitals are operating at a loss. Why? Simply put, payments do not cover the cost of care and have not kept up with rising expenses.
Hospitals are increasing their investments in developing, recruitng, and retaining health professionals, and the cost of drugs, supplies, and administrative burdens continue to increase. At the same time, Pennsylvania hospitals are navigating decades-old state regulations that do no reflect modern care delivery and a medical liability climate that's approaching a crisis.
Payments from public and commercial payors have not kept up with rising costs. On average, Medicare and Medicaid reimburse hospitals at 82 and 81 cents respectively for each dollar it costs them to provide care.
A ‘Perfect Storm’
A January 2023 report by Health Management Associates found that staffing shortages and rising costs have created a “perfect storm” for Pennsylvania hospitals.
According to the report: “As the post-COVID-19 challenges and disruptions continue, we anticipate hospital financial concerns about liquidity will grow. Pennsylvania hospitals are taking the lead in addressing many of these challenges, but without additional support, it is unclear whether many hospitals will be able to weather the financial disruption this crisis has created, which could, in turn, affect access to care across the commonwealth.”