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How Rising Energy Costs Challenge Pa. Hospitals

January 20, 2023

Rising energy costs add another layer of pressure on hospitals’ already-slim margins, hospital leaders told the Senate Majority Policy Committee today.

This morning, the committee hosted a public hearing in Allegheny County focused on energy access and affordability. During the hearing, the lawmakers heard from Chuck DiBello, vice president of facilities and real estate, Allegheny Health Network, and John Krolicki, vice president of facilities and support services, UPMC.

The hospital leaders discussed the ways rising energy prices affect hospitals and their efforts to improve sustainability across their health systems.

“As hospitals across the United States grapple with inflation, staffing shortages, and continuing fallout from the coronavirus pandemic, health care leaders warn that the energy crisis could also spell trouble for the entire health care system,” DiBello said in submitted remarks.

Among the key takeaways from today’s hearing:

  • High energy burden:  Hospitals and their affiliated facilities are “large square foot environments,” providing high-quality care 24 hours a day, 365 days a year. They require energy for lighting, security systems, operating room equipment, and other necessities, creating a significant financial burden when energy costs rise.
  • Unsustainable balance:  Hospitals pay more to provide care than they receive in payments. Negotiated rates with insurers allow no room for real-time flexibility to address sudden increases in the costs of care.
    • Beyond energy, hospitals have navigated elevated expenses across the board, especially for staffing, supply chain costs, prescription drugs, and other operational expenses.
  • Potential solutions:  The lawmakers called for a review of Pennsylvania’s energy policies and infrastructure to address concerns related to access and affordability.
  • Quotable:  “Any rate increases for utility costs would represent significant hardship for Health Systems to manage, and one that we collectively have little agency to help improve,” Krolicki said in prepared remarks.

HAP continues to communicate with lawmakers and the general public about hospitals’ financial strain and the importance of supporting high-quality care in Pennsylvania. The prepared remarks from today’s hearing are available online.

For questions, contact Heather Tyler, HAP’s vice president, state legislative advocacy.