by Daniel Brouse
March 23, 2025
Whether a hospital is for-profit or non-profit is not the key factor in determining patient costs or the long-term viability of healthcare. The fundamental reality is that a hospital cannot sustain ongoing financial losses and remain operational. To ensure long-term sustainability, hospitals must generate enough revenue to cover costs, invest in infrastructure, and maintain quality care.
Nearly 46% of hospitals in Pennsylvania are not profitable, a troubling trend driven by a combination of financial pressures, changing healthcare dynamics, and policy challenges. One major issue is low reimbursement rates from Medicare and Medicaid, which pay hospitals less than the actual cost of care. Since Pennsylvania has a large aging population, hospitals are increasingly reliant on these programs, compounding their financial struggles. At the same time, labor and operating costs have surged, with healthcare worker shortages forcing hospitals to pay higher wages and rely on expensive temporary staffing agencies. Rising costs for medical supplies, equipment, and pharmaceuticals further strain hospital budgets.
Another factor is the decline in inpatient admissions, as many procedures that once required hospital stays are now performed in outpatient settings or ambulatory surgical centers. Fewer admitted patients mean hospitals lose a critical revenue stream. Additionally, hospitals must deal with uncompensated care and bad debt, as many patients are either uninsured or unable to pay their medical bills. Since hospitals are legally required to provide emergency care regardless of a patient’s ability to pay, they suffer millions in lost revenue each year.
The situation is even more severe for rural hospitals, which serve smaller populations and struggle with physician shortages, making it harder to attract and retain patients. Many of these hospitals are at risk of closure due to ongoing financial losses. Meanwhile, competition from larger health systems puts additional pressure on smaller hospitals, as big hospital networks can negotiate better insurance reimbursement rates and invest more in technology and infrastructure.