HAP News Releases and Statements

New PHC4 Report Outlines Growing Financial Stress for PA Hospitals

Half of state’s hospitals posted negative or slim margins

June 03, 2021

A new report released today provides an updated look into the financial toll of the COVID-19 pandemic on Pennsylvania’s hospitals and health systems.

In its financial analysis of general acute care hospitals for fiscal year (FY) 2020, the Pennsylvania Health Care Cost Containment Council (PHC4) uncovered a significant drop in the statewide average of total margins (from 6.63% during FY 2019 to 3.93% during FY 2020), as well as the statewide average of operating margins (from 5.61% during FY 2019 to 3.73% during FY 2020).

“After a full year of life with COVID-19, this report gives us our best picture yet of the devastating and lasting financial toll that the pandemic has had on health care in Pennsylvania. Our hospital community and its workforce have sacrificed so much in the wake of extreme challenges, and we see in this analysis just how long of a journey we have to rebuild,” said Andy Carter, president and CEO of The Hospital and Healthsystem Association of Pennsylvania (HAP).

During FY 2020, 38 percent of hospitals posted negative operating margins—up from the year before—and nearly one in five hospitals (18%) in Pennsylvania experienced margins between 0 and 4 percent, a rate below what is needed to maintain hospital infrastructure and long-term sustainability.

Additionally, Carter expressed especially great concern about the combination of the slim operating margin averages combined with continuously high uncompensated care (the combination of charity care and bad debt), the statewide foregone dollar value of uncompensated care was $809 million during FY 2020, which although slightly lower than the prior year, still far higher than the low of $750 million just two years ago.

“Now more than ever, we must ensure that hospitals and health systems—which were leaders in the COVID-19 response—remain the steadfast community anchors that Pennsylvania has relied upon for so long.”

Additional information about the impact of the pandemic on Pennsylvania’s hospital community can be found in HAP’s Center for Health Policy Research new report analyzing a year with COVID-19 in the commonwealth.

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