Financial Analysis 2022 – Volume One – News Release

PENNSYLVANIA HOSPITAL MARGINS EXPERIENCE A DECREASE IN FISCAL YEAR 2022, ACCORDING TO A NEW PHC4 HOSPITAL FINANCIAL REPORT

Harrisburg, PA – June 22, 2023 – The statewide total margin realized by the hospitals decreased 7.59 percentage points, from 11.88% in fiscal year 2021 (FY21) to 4.29% in FY22. The statewide average operating margin decreased 3.66 percentage points from 8.02% in FY21 to 4.36% in FY22. “As our Pennsylvania hospitals are continuing efforts to recover financially from the Covid-19 pandemic, our data shows that in FY22, 43% of Pennsylvania hospitals posted a negative total margin.” said Barry D. Buckingham, Executive Director PHC4. “In addition, 39% of Pennsylvania hospitals posted a negative operating margin which indicates many hospitals continue to face serious financial challenges.” In FY22, 43% of Pennsylvania hospitals posted a negative total margin, 10% posted a total margin between 0% and 4%, and the remaining 47% posted a total margin higher than 4%. For the fiscal year ending June 30, 2022, Pennsylvania general acute care hospitals uncompensated care (combination of bad debt and charity care) has decreased 5.3%, from $794 million in FY21 to $752 million in FY22. The percent of uncompensated care to net patient revenue decreased from 1.59% in FY21 to 1.41% in FY22. Report highlights:

• Uncompensated Care: The foregone dollar value for statewide uncompensated care (bad debt and charity care) decreased 5.3%, from $794 million in FY21 to $752 million in FY22. The percent of uncompensated care to net patient revenue decreased from 1.59% in FY21 to 1.41% in FY22.
• Net Patient Revenue: The revenue hospitals received for patient care increased 7.0% during FY22. Statewide net patient revenue was $53.4 billion during FY22, making up 92% of the statewide hospital total operating revenue.
• Operating Margin: Statewide operating income decreased from $4.4 billion in FY21 to $2.5 billion in FY22. As a result, the statewide average operating margin decreased 3.66 percentage points from 8.02% in FY21 to 4.36% in FY22. Total operating revenue increased to $58.1 billion and operating expenses increased to $55.5 billion in FY22. In FY22, 39% of Pennsylvania hospitals posted a negative operating margin, 13% posted an operating margin between 0% and 4%, and the remaining 48% posted an operating margin higher than 4%.
• Total Margin: The statewide total margin realized by the hospitals decreased 7.59 percentage points, from 11.88% in FY21 to 4.29% in FY22. In FY22, 43% of Pennsylvania hospitals posted a negative total margin, 10% posted a total margin between 0% and 4%, and the remaining 47% posted a total margin higher than 4%.

Definitions:The operating margin represents revenue received for operating patient care minus expenses. The total margin includes the operating income plus revenue and expenses for all other facets of the acute care hospital activity. Revenue included in total margin would also factor in investment income, unrestricted contributions, and other revenue not directly related to patient care. The Volume One Financial Analysis 2022 of General Acute Care hospitals is the first of a three part series of reports PHC4 publishes annually. Volume Two focuses on Ambulatory Surgery Centers and Volume Three on non-GAC hospitals, which will be released later this year. PHC4 is an independent state agency charged with collecting, analyzing and reporting information about the cost and quality of health care in Pennsylvania. Copies of Financial Analysis 2022, Volume One are free and available from PHC4’s website at www.phc4.org. Media Contact: Barry D. Buckingham, Executive Director, PHC4 [email protected]