Insufficient insurance reimbursements could drive more than a dozen Pennsylvania hospitals to close within five years, according to a report released Wednesday by the Hospital and Healthsystem Association of Pennsylvania.
The industry group hired consultancy Oliver Wyman to create the report.
In its analysis, the New York City-based firm focused on Pennsylvania’s Medicaid payouts, which amounted to 87 cents on the dollar in 2022, compared with $1.26 nationally.
Commercial insurers worsen the situation by reimbursing Pennsylvania health care providers less than those in most other states, the report said.
A “highly unfavorable medical liability litigation environment” is also cited as a factor harming the state’s hospitals along with a burdensome regulatory regime.
“Without timely, targeted state support, many Pennsylvania hospitals will struggle to maintain existing services or make the necessary investments in workforce, technology and infrastructure that Pennsylvania needs,” the report said.
Oliver Wyman claims 12 to 14 hospitals could close through 2030, adding to the 25 that have shuttered since 2016. Many more may cut services in a bid to stay afloat.
As things stand, 37% of the state’s hospitals have a negative operating margin, and another 14% are just barely scraping by, according to the report.
Rural hospitals are especially at risk because they depend disproportionately on Medicaid patients.
Reimbursements are expected to get even smaller in the coming years as the federal government slashes its contributions to the program — part of the July bill championed by President Donald Trump.
These hospitals also see more uninsured patients, whose ranks are expected to grow because of the expiration of enhanced Affordable Care Act subsidies last month and the introduction of Medicaid work requirements in 2027.
