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Data Highlights Financial Strain on Hospitals

June 22, 2023

More than 2 in 5 Pennsylvania general acute care hospitals ended fiscal year (FY) 2022 with a loss, according to new data highlighting financial instability that threatens the care hospitals provide their patients and communities.

The Pennsylvania Health Care Cost Containment Council (PHC4) released its annual financial analysis for general acute care hospitals today, covering July 2021 through June 2022. The new data begins to reflect the financial pressure hospitals are grappling with as they emerge from the COVID-19 pandemic with skyrocketing costs that have outpaced payments.

“As our Pennsylvania hospitals are continuing efforts to recover financially from the COVID-19 pandemic, our data shows that in FY 2022, 43 percent of Pennsylvania hospitals posted a negative total margin,” said Barry D. Buckingham, PHC4 executive director. “In addition, 39 percent of Pennsylvania hospitals posted a negative operating margin which indicates many hospitals continue to face serious financial challenges.”

Here are three things to know:

Tight margins and losses:  In addition to the 39 percent of hospitals with negative operating margins, which means they lost money providing care, another 13 percent had margins less than 4 percent, which are not sustainable in the long term.

Care at risk:  Continued losses and narrow margins make it difficult for hospitals to maintain facilities and equipment, invest in new services, or launch new initiatives to meet the health needs of their communities. Long-term financial challenges put hospitals at risk of having to reduce the services they offer to patients or, in the most severe cases, close.

National context:  The latest data reflects the financial toll hospitals faced as they responded to the Delta and Omicron surges of the COVID-19 pandemic and the challenges that continue to threaten hospitals’ sustainability. Calendar year 2022—half of which is reflected in the FY 2022 data—was the most devastating to hospitals’ financial sustainability in recent memory, with about half of hospitals nationwide operating at a loss. Expenses have increased sharply due to record inflation and a national health care workforce crisis.

The report is available online.