PHC4: More than half of Pa. hospitals operating in the red

A Pennsylvania Health Care Cost Containment Council (PHC4) report shows more than half of the state's general acute care hospitals posted a negative operating margin in fiscal year 2023.

The Financial Analysis, Volume One, the first in a three-part series of financial reports issued by PHC4 yearly, shows while 51% of hospitals posted negative margins, 15% of GAC hospitals posted an operating margin between 0% and 4%, while the remaining 34% posted an operating margin higher than 4%.

As a result, PHC4 said the statewide average operating margin decreased 2.11 percentage points from 4.37% in FY22 to 2.26% in FY23.

In Lehigh Valley, Lehigh Valley Health Network’s Allentown and Schuylkill hospitals showed positive operating margins, while its Hazelton and Pocono hospitals showed slight losses.

St. Luke’s University Health Network hospitals all operated in the black except for Bethlehem, which had a slight dip into the red.

Tower Health’s Reading Hospital was also in the black.

Volume One provides insight into information surrounding uncompensated care, net patient revenue, operating margin, and total margin for the 156 licensed GAC hospitals that operated in some portion of FY23.

According to the report, there were 156 GAC hospitals licensed in the Commonwealth of Pennsylvania that operated during at least some portion of FY23. There were 158 GAC hospitals operating during the prior year.

Four hospitals opened between the reporting periods. Two hospitals closed, three hospitals merged with other hospitals, and one hospital converted to a psychiatric hospital between reporting periods.

“We know our stakeholders rely on having these high-quality, fact-based reports to evaluate the financial health of Pennsylvania’s care delivery systems. As a part of our mission, we look forward to continuing to produce this much needed reporting,” said Barry D. Buckingham, PHC4’s executive director.

Volume One also reports that 46% of Pennsylvania’s GAC hospitals posted a negative total margin. There were 14% that posted a total margin between 0% and 4%, with the remaining 40% posting a total margin higher than 4%.

Due to these factors PHC4 said the statewide total margin realized by hospitals decreased 0.86 percentage points, from 4.30% in FY22 to 3.44% in FY23.

The report is intended to provide stakeholders with fact-based information to prioritize resources and make informed decisions.

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