Data Highlights Strain on Pennsylvania Hospitals

Looming Medicaid cuts threaten to erase areas of improvement

July 17, 2025

Fewer than half the commonwealth’s acute care hospitals are operating with margins necessary for long-term stability and more than a third continue to operate at a loss, according to data released today by the Pennsylvania Health Care Cost Containment Council (PHC4).

The fiscal year (FY) 2024 data shows uneven financial recovery among Pennsylvania hospitals, with many faring worse than they did in FY 2023 despite improvement overall. Sweeping federal Medicaid cuts that will take effect in the coming years threaten to undo progress for hospitals that saw improvement and put at risk those experiencing continued losses.

“Pennsylvania’s hospital community continues to experience significant financial strain, largely because reimbursement does not reflect the cost of providing care. This will only worsen as federal Medicaid cuts begin to take effect in the coming years,” said HAP President and CEO Nicole Stallings. “We cannot have healthy, economically competitive communities without strong, financially stable hospitals.”

Here are some key takeaways:

• Important caveat:  PHC4’s analysis looks at hospital-level finances, which do not show the complete picture of strain on the commonwealth’s hospital community, especially as more hospitals are part of health systems. Significant losses absorbed by health systems, such as losses to system-owned physician practices, aren’t captured in hospital-level financial statements.
• Recovery hasn’t been even:  The share of hospitals experiencing multi-year losses—now 39 percent—has steadily increased. Among hospitals that operated in the red over the past two fiscal years, 44 percent saw their operating margins worsen.
• Medicaid cuts put progress at risk:  Medicaid state-directed payments—which are necessary to stabilize hospitals because Medicaid reimburses significantly less than the cost of providing care—increased in January 2024, contributing to some of the improvement over FY 2023. The federal reconciliation bill undoes this increase.
• Uncompensated care on the rise:  The ratio of uncompensated care to hospital’s net patient revenue increased by 10 percent in one year—likely due to the end of the pandemic-era pause on eligibility redeterminations—and anticipated coverage losses due to federal cuts are expected to push this amount even higher.
• Quotable:  “While the data reflects an upward trend, the underlying factors driving these changes have not been fully identified or analyzed,” said Barry D. Buckingham, PHC4 executive director. “Further investigation is needed to pinpoint the specific contributors to this growth.”

HAP is focused on advocating for policies that stabilize hospitals and protect access to the care they provide to Pennsylvania communities. Learn more about our advocacy online.