The Pennsylvania Health Care Cost Containment Council (PHC4) has released its first ever report on the finances of rural hospitals in Pennsylvania.
And, while not surprising, the picture isn’t positive.
Barry D. Buckingham, PHC4’s executive director, suggested that the financial challenges of rural hospitals may have significant implications for healthcare access in rural areas. Buckingham stated, “As rural hospitals close or reduce services due to financial pressures, residents of these areas may face longer travel times to access care, reduced availability of emergency services, and a potential general decline in the quality of health or healthcare services.”
Rural hospitals, by definition, operate in geographically isolated areas, often serving smaller populations with higher percentages of elderly and low-income individuals.
Looking at Bradford Regional Medical Center, over a period of fiscal years from 2020 to 2023, patient revenue declined at a rate of 11.06%, while operating expenses declined by 7.38%.
BRMC spokesman Joseph Fuglewicz acknowledged the issues faced by small hospitals.
“Rural healthcare providers across the country have been facing enormous challenges, including decreased reimbursements, increased operating costs, staffing shortages and dynamic markets,” he said. “These challenges place immense pressure on healthcare systems to pivot operations to reduce the financial burden and maintain essential services for the communities they serve. Without external support, this will continue to be a perfect storm negatively impacting healthcare systems nationwide.”
According to the report, Bradford Regional’s net patient revenue in fiscal year 2023 was $39 million; for 2022, $43 million; for 2021, $48 million; and $59 million for 2020.
Total operating expenses for fiscal year 2023 were $51 million; for 2022, $55; for 2021, $61; and for 2020, $66.
The operating margin in 2023 was -18.29%; the state average was 2.26%. The state average total margin was 3.44%, while for BRMC it was -19.10%.
The percent of uncompensated care in 2023 was -1.43% at BRMC, while the state average was 1.39%. Medicare’s share of the total net patient revenue at BRMC was 38.44%; the state average was 35.37%. The medical assistance share was 25.73% at BRMC, while the state average was 14.9%.
PHC4’s Special Report on the Financial Health of Pennsylvania Rural Hospitals, Fiscal Year 2023, displays data for general acute care hospitals (GAC hospitals) located in rural counties, as defined by the Center for Rural Pennsylvania.
The analysis shows that during Fiscal Year 2023 (FY23), there were 64 (41%) GAC hospitals located in a rural county. Of these GAC hospitals, 31 (48%) operated at a loss based on operating margins during FY23 and 28 (44%) operated at a loss based on total margins during FY23.
According to the report, contributing factors to the issues for rural hospitals may include the following:
PHC4 is an independent council formed under Pennsylvania statute (Act 89 of 1986, as amended by Act 15 of 2020) in order to address rapidly growing healthcare costs.
