Pennsylvania hospitals face financial challenges but hold strong on economic contributions

Pennsylvania hospitals, while facing financial challenges in the post-pandemic world, still support one in 10 jobs and contribute a fifth of the state’s gross domestic product. 

A report conducted by the Hospital and Healthsystem Association of Pennsylvania (HAP) shows hospitals are facing financial stress due to increased costs of supplies and labor while facing stagnant payments from insurers, Medicare and Medicaid and stock market losses. 

 “Hospitals are critical to the health and future of Pennsylvania communities, both because of the essential care they provide and their role as job creators and economic engines,” said Andy Carter, president and CEO of HAP. “Hospitals support family-sustaining jobs throughout all parts of the commonwealth and are often among—if not the—top employers and economic flagships in their communities.” 

HAP’s analysis of fiscal year (FY) 2021 data reveals that Pennsylvania hospitals—both directly and through the ripple effects of their economic activity—benefitted their communities and the commonwealth by: 

• Contributing $168 billion to the state and local economies 
• Supporting 590,000 jobs throughout the entire commonwealth 
• Generating $38 billion in wages, salaries, and benefits 

The analysis also highlights the strain hospitals are experiencing due to rising expenses, the continued COVID-19 pandemic, a historic workforce shortage, and a national behavioral health crisis and calls attention to the need for investments and policies to support hospitals long-term sustainability. 

“In the face of financial stress there is a risk to access to health care,” Carter said. Since 2020, five hospitals have closed and others are facing cutbacks in services to keep the overall operation solvent, he said.  

“No one has lived through a pandemic, economic turmoil from the pandemic, and international turmoil that we are seeing today,” Carter said. “Communities are proud of their hospitals and broadly speaking, most are not at risk of closure.” 

That said, Carter emphasized that hospitals want to continue to reflect the quality of services offered before COVID-19 and not become a shadow of their former selves. 

However, he said, the increased cost of labor, mainly due to a shortage of nurses and nursing support staff; supply cost increases from gauze to high tech equipment; and pharmaceutical increases, hospitals are feeling the squeeze. 

Still they are vital to the communities they are in, he said.  

Some of the key findings of the analysis include: 

• Pennsylvania hospital jobs pay, on average, nearly 6% higher than the statewide average wage for all sectors. 
• Hospitals rank fifth among all Pennsylvania industries for employment and fourth for total annual wages. 
• 59 of Pennsylvania’s 67 counties have at least one hospital among their top 10 employers and in 18 of them, a hospital is the largest employer. 

• Hospitals are among the top 10 industries directly contributing to Pennsylvania’s economy, ranked ninth between construction and management of companies and enterprises. 
• Hospitals and universities with hospital-affiliated medical schools secured nearly $1.8 billion in highly competitive federal research funding to advance health care innovation. 
• Pennsylvania general acute care hospitals reported $866 million in foregone revenue due to uncompensated care. 

According to the Pennsylvania Health Care Cost Containment Council, Carter said, 30% of the state’s hospitals reported losing money in 2021 and 15% reported modest earnings. No one, he said, invested in modernization and new offerings. 

“There is no single answer to this,” Carter said, but “we have a range of ideas.” 

Changes to Medicare and Medicaid payments are vital. Carter said the government needs to increase those payments, or at least stop the cuts. There was a 2% decrease in July. “Hospitals did get a one-time support from the federal government through American Rescue Plan money,” he said. 

HAP has requested money from the state’s pandemic funds as well to offset the losses due to COVID, Carter said. 

“We also need to improve the workforce,” he said. “We need to increase the numbers going into the pipeline. While this won’t have an immediate impact, it will help three to five years down the line.” 

Carter explained that with the nursing shortage, hospitals are turning to temp agencies to hire nurses from across the country or internationally. That comes with a cost, he said.  

A survey of HAP members last winter showed that since 2019: 

• Hourly rates paid to staffing agencies for registered nurses providing direct patient care in medical/surgical and other units have increased by 108% from $59 per hour to $123 per hour while the average number of shifts per day worked by temporary staff increased from five to eleven 
•  Hourly rates paid to staffing agencies for registered nurses providing direct patient care in specialty units have increased by 82% from $66 per hour to $120 per hour while the average number of shifts per day worked by temporary staff increased from four to nine 
•  Hourly rates paid to staffing agencies for nursing support staff (such as certified nurse assistants, patient care assistants, and nurse assistants) have increased by 444% from $9 per hour to $49 per hour while the average number of shifts per day worked by temporary nursing support staff increased from three to five 

“Some of this need is abating as some health care workers are returning to the field,” he said. 

Another area of concern is telehealth, Carter said. “We need to cut the red tape and make sure providers are paid for telehealth services.” 

Carter explained that due to the pandemic, restrictions were lifted for telehealth. Now they are at risk of expiring. But more than that, he said, providers need to be paid for telehealth services, which is not always the case. 

The importance of telehealth, he said, is that it makes care easily assessable and helps with staffing issues.  

Finally, Carter said payments from insurers and Medicare and Medicaid payments must increase to match what hospitals pay to treat patients. 

“We are calling on lawmakers and insurers to step up and join hands so as not to put hospitals at risk,” Carter said.