Why Hospitals are ‘Critical Infrastructure’ for Pennsylvania Communities

June 11, 2026

Hospitals are vital community anchors that communities depend on to thrive.

That was the resounding message from a panel of statewide leaders who came together during HAP’s Leadership Summit last week to discuss the implications of hospital financial distress for Pennsylvanians and their communities.

The reaction panel followed a team from national consulting firm Oliver Wyman who presented the findings of their January analysis of Pennsylvania’s hospital landscape. The team found that the commonwealth’s hospitals face greater challenges than their peers elsewhere and many are already at risk due to a mix of worse-than average reimbursement, a lopsided medical liability climate, and outdated regulations. Imminent federal cuts will worsen this trajectory and, without intervention, as many as 12–14 hospitals could close by 2030, the team projected.

Here are three key takeaways from the discussion.

Hospitals are ‘critical infrastructure’

Pennsylvania Secretary of Human Services Valerie A. Arkoosh, MD, MPH emphasized the need to think about hospital stability through the lens that hospitals “critical infrastructure” for communities, akin to bridges or power lines.

“We see time and time again that when the hospital closes, that is often the beginning of the end of a community,” she said. “It is incredibly difficult to attract a new business to your community or get an existing business to grow or expand. It's difficult to get a community college or other educational institution to think about opening up a campus in your community if there is no hospital nearby.”

Luke Bernstein, president and CEO of the Pennsylvania Chamber of Business and Industry, said that for companies to invest and grow in Pennsylvania, a strong hospital system “has to be a given.” And health care, he said, leads the commonwealth in job creation.

“If we do not have strong hospitals, we simply do not have strong communities,” Bernstein said. “When you think about health care, it is not a sector, it is the driver right now of our economy.”

Kyle Kopko, executive director for the County Commissioners Association of Pennsylvania said the loss of a hospital—or critical services like labor and delivery—make it challenging for rural communities to attract families and businesses.

“If we don't have those sustainable systems in place, what's the next generation workforce going to look like,” Kopko asked? “I've heard time and time again from employers: ‘How am I going to recruit that next generation of workforce?’ If a young family wants to move in and there's not the opportunity to start a family safely, they’re going to look for opportunities elsewhere.”

Communities need sustainable hospital funding

Medicaid and private insurance reimbursement in Pennsylvania already lag 11 and 29 percentage points, respectively, behind the national median. Keith Kasper, executive vice president and chief administrative officer for the University of Pennsylvania Health System, stressed the urgency for policymakers to prioritize sustainable payments that reflect the cost of delivering care.

“We have to invest in these core community assets to have vibrant communities,” Kasper said. “Health care’s driving employment numbers that we see across the nation. We say all health care’s local, and it really becomes local when one of your hospitals closes.”

Widespread losses of private insurance through Pennie—due to the expiration of enhanced premium tax credits—are already happening and H.R. 1 implementation will bring significant Medicaid coverage losses and deep cuts to hospital payments.

“The totality of these things is going to hit our hospitals extremely hard,” Arkoosh said.

Kopko noted that when hospitals are forced to end service lines or close entirely, it puts a greater strain on local governments and emergency services that makes community growth even more difficult.

“This really does impact the community sustainability of our locales throughout the commonwealth,” he said. “If a hospital closes, if a health care system closes, the need to serve that community doesn't go away.”

Medical liability, regulatory reform needed

Oliver Wyman’s research found that Pennsylvania leads the nation in per capita cost of medical liability verdicts. Arkoosh noted that challenges affording and accessing liability coverage are pressuring hospitals as well as childcare providers and foster families.

“Is there a conversation that should be had around some liability changes?” she asked. “This is having a really, really negative impact on businesses in many sectors and so I think this is another area where the commonwealth can contribute.”

Kasper said reforming the commonwealth’s medical liability climate needs to be a top priority. Challenges accessing liability coverage and the threat of out-of-control verdicts is already forcing many hospitals to curtail high-risk services, like labor and delivery.

“Many hospitals are just one nuclear verdict away from continued financial instability,” Kasper said. “We can't have that type of system that allows the providers to be in that kind of financial jeopardy.”

Bernstein echoed the urgency to reform the commonwealth’s liability climate and venue rules and added that outdated regulations inhibit innovation. He noted that the chamber is partnering with HAP and other organizations to quantify regulatory burden in Pennsylvania and inform change.

“Hopefully that’s an opportunity that we can work together in partnership to try to change and maximize and right-size care so one dollar is worth maybe two or three,” he said.

See more key takeaways from Day 1 and Day 2 of HAP’s Leadership Summit.