(The Center Square) – The Pennsylvania Health Care Cost Containment Council, or PHC4, has released the third and final volume of its annual report on the financial health of the state’s hospitals.
The report honed in on the state’s 67 non-General Acute Care, or non-GAC, hospitals, which include rehabilitation hospitals, psychiatric hospitals, long-term acute care hospitals, and specialty hospitals. The findings demonstrated about a 15% increase in uncompensated care costs from 2022 to 2023.
The 15% increase amounts to $2.2 million, raising the total uncompensated care for non-GAC hospitals from $15.2 million to $17.4 million.
Uncompensated care reflects services provided by the hospital that are not reimbursed by patients or insurance companies. This includes situations in which hospitals offer financial aid to those who can’t afford treatment and unexpected costs.
For hospitals to remain viable, many are forced to cover the financial gap left by uncompensated care by cutting costs and increasing revenue from paying patients, insurance companies, and government programs. This ultimately results in higher costs being passed down to taxpayers, patients, and insurance providers.
Eligible hospitals are able to report uncompensated care for reimbursement through the state’s Hospital Uncompensated Care Program. Participating hospitals must open their doors to anyone and offer charity care to remain compliant with the program.
PHC4 maintains that the report is intended to provide information so that stakeholders can make informed decisions. Through comparison, the aim is to help providers “contain costs and improve the quality of care they provide.”
“Providing insight into information surrounding uncompensated care, operating margins, and net patient revenue is what makes these reports so valuable across the Commonwealth,” said Barry D. Buckingham, the Executive Director of PHC4.
Specialty hospitals, which saw a steep drop in operating margins between 2018 and 2022 are rebounding, but they remain squarely in the negative at -5.25%. Collectively, their operating expenses exceed net patient revenue by about $7 million.
The margin for rehabilitation hospitals was 6.06%, for psychiatric hospitals was 5.01%, and for long-term acute care hospitals was 3.53%.
GAC hospitals make up the vast majority of patient care across the state, with 156 facilities operating at a 2.26% margin.
The financial pressure hospitals face may be best illustrated across rural Pennsylvania where facitlities have been merging, closing, or cutting services.
One in 4 rural hospitals stopped providing obstetrics services from 2011-2021. And in 2010, 170 rural hospitals have closed and half of existing ones operate in the red, data shows.
