Pa. hospital leaders say health systems on 'brink of disaster'

HARRISBURG — Pennsylvania health care leaders stressed to state senators Wednesday that commonwealth hospitals are at risk of insolvency due to fiscal and workforce instability, burdensome regulations and insufficient reimbursement from government medical insurance programs.

A public hearing by the Senate Institutional Sustainability & Innovation Committee came in the wake of the recent closure of Crozer-Chester Medical Center and Taylor Hospital, both in Delaware County, and the near loss of Sharon Regional Medical Center in Mercer County.

Sen. Tim Kearney, D-Delaware, the committee's minority chair, said four out of six hospitals that had operated in Delaware County, the fifth most populous county in the commonwealth, are now closed. He said hospitals in the greater Philadelphia area are picking up the burden of displaced patients while 2,600 hospital staff from Crozer Health alone, including nurses and doctors, are out of work.

"We are in crisis management. It's ugly, it's tragic and it can be prevented from happening in other communities in the commonwealth," Kearney said.

The most frequent lament of the health care leaders was the lack of sufficient reimbursement for patients insured by Medicaid and Medicare. The health policy firm KFF found that nearly 40% of Pennsylvanians with health insurance are enrolled in either program and that in 2022, total Medicaid spending alone in Pennsylvania topped $44 billion with the federal government covering less than 64% of the cost.

Nicole Stallings, president and CEO of The Hospital & Health System Association of Pennsylvania, said the threat to health care access is real, particularly in rural communities, as "many hospitals are close to breaking."

On average, Stallings said Pennsylvania hospitals are reimbursed 82 cents for each dollar they spend caring for Medicaid patients, which would include state-level reimbursements. Rural hospitals, she said, receive even less.

More than half of Pennsylvania's acute care hospitals are operating at a loss with many experiencing multi-year operating losses, she said.

"Hospitals that receive more than half their patient revenue from Medicaid and Medicare are more than twice as likely to have a negative operating margin," Stallings said.

Stallings encouraged lawmakers to ensure Department of Health updates of regulations "support modern care delivery" and that they explore the financial ramifications of regulations in the hospital environment.

She also encouraged the adoption of a sustainable and predictable funding model to support all commonwealth hospitals including those in rural areas, and she urged support for the proposed Rural Healthcare Grant Program, a Republican-sponsored bill, that would award funds to hospitals to help employees pay down student loan debt.

"Through incentivizing health care professionals to work in rural communities, this bill would address a key barrier to recruitment and retention and that is student loan debt. We would really advocate for that," Dr. Ed Sabanegh, president and CEO, The Guthrie Clinic, said in support of the proposed grant program.

Dr. Mark Rubino, president of Allegheny Health Network Forbes Hospital & Allegheny Valley Hospital, spoke of how hospitals are often a region's top employer. It's not just health care that's lost when a hospital closes services or closes altogether, he said, stressing the negative local economic impact.

He, too, called for changes to the "persistently low" reimbursements for Medicare and Medicaid, noting how costs of everything "from pharmaceuticals to medical supplies to utilities" and more are on the rise but that government reimbursement lags.

As to regulations, Rubino said they often disrupt logical solutions to update aging hospital equipment and infrastructure, calling for changes that require greater investment and ultimately force hospitals to seek waivers or hold off on reinvesting in facilities altogether.

Steven Fontaine, CEO of Penn Highlands Healthcare, bemoaned the impact medical malpractice claims have had on hospitals. He pressed lawmakers to address "tort reform and venue shopping" to reign in potential catastrophic court settlements. He also urged Pennsylvania to join other states in protecting the critical federal 340B Drug Pricing Program which he said pharmaceutical companies are striving to restrict and undermine.

"I'm here to tell you today that rural hospitals are on the brink of disaster without increased support from state and federal governments," Fontaine said.