Pennsylvania hospitals are ‘more challenged’: Q&A

Pennsylvania hospital leaders have long suspected that they are facing headwinds that go beyond those in other states, and now a new report suggests those beliefs have merit.

Over the next five years, 12 to 14 hospitals could close in Pennsylvania without more support from the state government, according to a new report released Wednesday by Oliver Wyman, a consulting firm. The Hospital and Healthsystem Association of Pennsylvania commissioned the report.

Nicole Stallings, president and CEO of the Hospital and Healthsystem Association of Pennsylvania, talked with Chief Healthcare Executive® about the report, the financial pressures, and why hospitals in the Keystone State are facing a tougher road.

Here’s a portion of our interview in this video. Edited excerpts of our conversation appear below.

Q: The report suggests that more than a dozen Pennsylvania hospitals could be at risk of closing over the next five years, and Pennsylvania has already seen some hospital closures in the last few years. If there are some more hospital closures, what would that do to access for Pennsylvanians?

A: “Access in Pennsylvania has already been strained, and so if we continue on this current trajectory, unfortunately, we will see service closures and hospitals closed. And that also means not just access to health care being impacted, but jobs and economic activity in our local communities would also be impacted. So this report, we believe, is really a call to action that we can do something about this trajectory and better support our hospitals and their sustainability.”

Q: Well, the report seems to suggest that Pennsylvania hospitals are facing significant challenges, but perhaps challenges that are maybe even more daunting than hospitals are facing in some other states. Is that your perspective?

A: “Yes. We commissioned this report to better understand how the strain that our hospitals were facing compared to those and other states, and the report clearly demonstrates that Pennsylvania's hospitals are more challenged. It's more difficult to operate in Pennsylvania than many other states, and the result is really serious financial strain that could impact access to care into the future.”

Q: Was that surprising? Because, it's one thing to suspect that maybe Pennsylvania hospitals are facing different challenges, but was it a little bit surprising or even just sobering to see that play out in the report?

A: “Our members have been raising these concerns for quite some time, but it was important for us to bring in an outside expert to really validate what we believe to be true. But yes, it was sobering to see how far below our Medicaid reimbursement is to that of our peer states, to see how low our commercial reimbursement is compared to others, our regulatory environment, our medical malpractice environment, all of these things together are really painting the picture of the reality for Pennsylvania's hospitals.

“But this report also wanted to take that important look forward and to say, without change, if policymakers don't put things in place to more closely align reimbursement to the cost of providing care, what does that mean for hospitals, for access, for jobs and for local economic activity?”

Q: I've been talking to a number of hospital leaders that say they've already been taking steps to deal with some of those Medicaid changes that are coming in the next few years. Some are ratcheting back on programs, some are doing layoffs. What are you hearing from Pennsylvania members in terms of how they're preparing to deal with the changes in Medicaid?

A: “All of our hospitals are evaluating a variety of scenarios and making plans which can include, unfortunately, service reductions, labor reductions, and even perhaps closure.

“I think what this report, though, points out is that Pennsylvania's hospitals have been doing their part with respect to identifying cost containment and efficiencies. The report demonstrates how efficient Pennsylvania’s hospitals are. The report demonstrates the high quality of care across our hospitals, but it also aligns with that sobering fact that reimbursement is so far below. So Pennsylvania is really falling behind.”

Q: We talked already about the possibility of more than a dozen hospitals closing over the next five years, if some of these trends aren't addressed. Beyond the threat of closure … you also have the potential that hospitals may be scaling back some of those services, due to financial stress. Is that a real concern that even if some of the hospitals were able to keep the doors open, they might have to really significantly curtail some of the programs they offer?

A: “Yes, we tend to see the need to scale back services over time before a hospital ultimately has to close. But let me be clear, our hospitals are doing everything that they can to continue to provide those services to the communities that they serve. It's our hope that policymakers will also do what they can.”

Q: Is there something else affecting the financial landscape of hospitals in Pennsylvania that we didn't want to leave off the table?

A: “I think I would just kind of restate that this report demonstrates that it's significantly more challenging in Pennsylvania to operate a hospital. No one wants Pennsylvania to continue to fall behind, so we look forward to partnering with the administration and with lawmakers to put appropriate policies in place.”