Small, rural hospitals struggling, bigger ones thriving in Pennsylvania

(Harrisburg) — A recent report finds many rural hospitals in Pennsylvania are running deficits.

Rural hospitals face a tough mix of factors – an aging population, more Medicaid patients, and fewer people insured through private carriers.

The latest analysis from the Pennsylvania Health Care Cost Containment Council, or PHC4, says 34 percent of the state’s hospitals lost money on operations last year.

Most of the hospitals in the red had revenues of less than $150 million.

Joe Martin, executive director of PHC4, says mergers are often the solution.

“That story is yet to be told. It seems that in order to improve your situation, as a small- to modest-sized community hospital, looking for a partner that’s stronger financially is pretty key,” says Martin.

“Who’s going to be invited to the dance, if you will, and who may be left out? That could be a serious policy question because especially in rural areas, the hospital may be the only source of health care in quite a large area, and they employ a lot of people,” he adds.

Meanwhile, the report finds some hospitals are running operating profits far higher than their competitors.

Lancaster Regional in the midstate, Children’s Hospital of Philadelphia, and the Hospital of the University of Pennsylvania report growing operating margins higher than nearly every other facility.

Martin says as more hospitals consolidate, they’re able to demand higher reimbursement rates from private insurers, boosting their profits.

While the average operating margin sat around four percent statewide in 2014, at least one facility in each of the state’s nine regions more than doubled the average.