(TNS) — Less than half of all acute care hospitals in Pennsylvania last year operated within a sustainable margin.

That means that over half of all hospitals either lost money or barely broke even.

Over a three-year period, about 39% posted negative margins, which means on average they lost money in that time period. The number of hospitals posting those margins has been on the uptick and administrators say the coming Medicaid cuts will make the situation worse.

Those are some of the findings gleaned from this year’s hospital financial report by the Pennsylvania Health Care Cost Containment Council, which produces a series of reports measuring the financial condition and viability of the Commonwealth’s hospitals and health systems.

While the report offered a few bright spots – some signs of recovery, for instance – the overall trends in the financial health of hospitals cast broad concerns.

“Pennsylvania’s hospital community continues to experience significant financial strain, largely because reimbursement does not reflect the cost of providing care,” said Nicole Stallings, president and CEO of the Hospital and Healthsystem Association of Pennsylvania. “This will only worsen as federal Medicaid cuts begin to take effect in the coming years.

“While the hospital-level financial data does not fully capture significant losses to health systems, the fiscal year (FY) 2024 data shows that less than half of the commonwealth’s acute care hospitals are operating with margins necessary for long-term stability and more than a third are operating at a loss.”

Health care experts widely agree that the newly enacted Republican tax and spending bill, which calls for $1 trillion in cuts to Medicaid over the next decade, will exacerbate the financial outlook for hospitals. Medicaid, the state-federal health insurance program that covers an estimated 72 million low-income and disabled people nationwide accounts for 19% of all spending on hospital care, according to KFF.

“Federal cuts will accelerate these challenges by cutting Medicaid payments that have been necessary to stabilize some hospital margins and reducing health care coverage, resulting in more uncompensated care,” Stallings said.

According to this year’s report, which was released Thursday, Pennsylvania hospitals last year faced a 20% increase in uncompensated care costs – that is the percentage of patients with bad credit or who are unable to pay for care.

The total rose to $927 million up from $774 million in 2023.

Statewide operating income for hospitals increased from $1.4 billion in 2023 to $4.5 billion in 2024. As a result, the statewide average operating margin increased 4.54 percentage points from 2.26% in FY23 to 6.80% in FY24. Operating margins refer to the revenue minus cost of doing business.

Total operating revenue increased to $66.6 billion and operating expenses increased to $62.1 billion last year.

Still, overall, 37% of Pennsylvania hospitals posted a negative operating margin; 14% posted an operating margin between 0% and 4%, and the remaining 49% posted an operating margin higher than 4%.

Another key takeaway from the report is the growing gap between hospitals that are stable and those that are not.

Hospitals that had losses in the past two years reported losses again in 2024. Approximately 44% of those that had operated in the red in recent years did worse in 2024 than they did in 2023.

Despite the statewide uptick in operating margins from 2023 to 2024, which signal a measure of recovery, a little less than half of the hospitals that are operating at a loss are worse off than they were the year before.

“Hospitals’ recovery since the pandemic has not been even and, despite some improvement, many remain at risk,” Stallings said. “The share of hospitals experiencing multi-year losses — now 39% — has steadily increased. Among hospitals that operated in the red over the past two fiscal years, 44 percent saw their operating margins worsen. The ratio of uncompensated care to hospital’s net patient revenue increased by 10 percent in one year — likely due to the end of the pandemic-era pause on eligibility redeterminations — and anticipated coverage losses due to federal cuts are expected to push this amount even higher.”

Across Region 5, which covers much of central Pennsylvania, UPMC hospitals posted some of the most robust margins, with UPMC Pinnacle and Lititz hospitals posting just over a 25% operating margin. UPMC Carlisle posted a 24% operating margin; UPMC Memorial in York posted a 22.4% operating margin.

UPMC reports its financial results as a system, posting quarterly on its public website.

“Each UPMC hospital operates as part of the UPMC network and is supported by the strength and resources of UPMC, one of nation’s leading integrated health systems,” a UPMC spokesperson told PennLive via email.

The most comprehensive up-to-date report on UPMC’s financial performance for the first quarter of 2025 “reflects coordinated efforts across our provider-payer system to expand access to high-quality care while better managing rising costs,” the health system’s spokesperson said.

“We remain focused on ensuring UPMC stays strong in advancing our mission for patients, members, communities, and employees during an ever-evolving health care environment.”

The Penn State Health system posted a broader ranging operating margins across its hospitals. Milton S. Hershey, for instance, posted an 8.19% operating margin. Holy Spirit posted 3.08%; and Lancaster Medical Center posted -25.71%. That figure is likely skewed since the hospital opened in 2022, so a full three-year snapshot is not available.

In a statement emailed to PennLive, Penn State Health noted that the report “highlights the strong financial performance of Penn State Health Milton S. Hershey Medical Center,” the system’s largest hospital and flagship of its academic health system.

“Milton S. Hershey Medical Center’s three-year average total margin significantly exceeds the state average,” the statement noted..

Penn State Health Holy Spirit Medical Center, a key community hospital and local trauma center, saw a 7.5% increase in net patient revenue in fiscal year 2024 compared to the prior year.

“This growth reflects continued recovery in patient volumes and revenue in the post-COVID era, despite ongoing challenges from the rising operational costs facing many hospitals,” Penn State Health officials said in the statement.

Officials said Penn State Health Lancaster Medical Center, which opened in October 2022, has shown “remarkable progress for a new hospital”, with a year-over-year revenue growth of 137% between 2023 and 2024.

“It typically takes years for new hospitals to reach full operational maturity, and Lancaster Medical Center has shown continued growth in both patient volumes and revenue since opening,” officials said.

They added that revenue margins for all of the system’s hospitals “reflect the impact of the system’s academic support payment” to Penn State College of Medicine.

In the WellSpan Health system, the York hospital posted a 9.47 operating margin; while the Gettysburg hospital posted a 15.28% margin. WellSpan Chambersburg posted at 5.77%; and Waynesboro posted an 18.72% margin.

“Fiscal year 2024 was one of the most challenging years for health care as the industry experienced significant headwinds. By operating as a system of care, WellSpan has been able to weather the headwinds, ensuring that our ongoing reinvestment strategy supports all the communities we serve across central Pennsylvania,” WellSpan officials said in an email to PennLive.

Each hospital’s margins are dictated by complexities within its geography, the statement said. WellSpan officials said the health system overall is “well-positioned” to face the challenges of declining reimbursements, rising costs, workforce shortages, pharmaceutical and supply chain inflation, and other headwinds in healthcare.

“We continue to expand the services we provide in all the communities we serve, this includes urology services in Lewisburg, the opening of the City Gate surgical center in Lancaster, and three new hospitals in Carlisle, Newbury, and Shrewsbury, among other developments,” the statement from the system’s officials said.

The report provides hospital-specific financial data for 153 hospitals that reported data for 2024. Hospitals are arranged by nine regions. Operating and total margins for each hospital are reported. Each hospital’s corresponding operating income, total income, and total operating revenue is noted in the report.

The report also outlines the percentage hospitals received from Medicare and Medical Assistance for their share of net patient revenue, which reflects revenue for patient care only and does not include revenue from other operations such as cafeteria, parking, rent, research and educational activities.

Across the region Milton S. Hershey and WellSpan Good Samaritan had the highest share of Medical Assistance with both posting close to 12% share. UPMC Pinnacle Hospitals posted a 6.76% share.

The percent of uncompensated care to net patient revenue increased from 1.38% in 2023 to 1.52% in 2024.

The revenue hospitals received for patient care increased 9.2% during 2024. Statewide net patient revenue was $61 billion last year, making up 92% of statewide hospital total operating revenue.

Still, the report generally offers a hospital by hospital snapshot, and as such, the losses could be far greater given that so many hospitals have conslidated and report their financial status system wide.

Regardless, most health experts expect the newly enacted reconciliation bill to undo what little recovery hospitals have seen in recent years.

“We cannot have healthy, economically competitive communities without strong, financially stable hospitals,” Stallings said. “HAP urges our state leaders to prioritize policies that protect access to care in our communities.”