Report: More Hospital Closures Likely Without Increased Support

Harrisburg, PA (January 21, 2026) - More than a dozen Pennsylvania hospitals could be at risk of closing over the next five years without policies to align hospital payments with their cost for providing care, a report by a national consulting firm found.

The analysis by Oliver Wyman, commissioned by The Hospital and Healthsystem Association of Pennsylvania (HAP), finds that operating a hospital is more challenging in Pennsylvania than elsewhere, largely because the commonwealth lags behind peer states in adequately funding hospital care. Fewer than half of the state's hospitals are operating with sustainable margins-37 percent are operating with a loss-and 25 have closed statewide in the past decade.

Without intervention, as many as 12-14 more hospitals could close over the next five years, adding 22 minutes to Pennsylvanians' average drive to the nearest hospital and costing $900 million in lost wages due to job losses, the report projects. Rural hospitals are especially at risk as they serve a greater share of Medicare, Medicaid, and uninsured patients.

"Without timely, targeted state support, many Pennsylvania hospitals will struggle to maintain existing services or make the necessary investments in workforce, technology, and infrastructure that Pennsylvania needs," the report notes.

The report identifies actions to improve Medicaid reimbursement, reform medical liability rules, and streamline administrative requirements as the greatest opportunities for state policymakers to help stabilize hospitals.

While federal cuts enacted through last year's reconciliation bill will significantly worsen hospital reimbursement, the report finds that Pennsylvania hospitals are already at risk due to chronic underfunding. Medicaid reimbursement in Pennsylvania is 11 percentage points lower than the national average. The state's Medicaid program-which provides health coverage for nearly 1 in 4 Pennsylvanians-already pays hospitals only 71 cents, on average, for each dollar they spend providing care to enrollees.

"This expert analysis underscores the urgent need to safeguard access to the care communities depend on," HAP President and CEO Nicole Stallings said. "We cannot have healthy, vibrant, and competitive communities in Pennsylvania without strong, financially stable hospitals. HAP stands ready to work with policymakers to ensure hospitals can sustainably serve their communities."

HAP is advocating for investments in the 2026-2027 state budget to better align hospital payments with the cost of providing care.

Additional key findings from Oliver Wyman's report:

• In addition to their structural deficit, Pennsylvania hospitals are strained by the highest per-resident cost of medical liability payouts in the nation ($43), a projected shortage of 22,000 nurses by 2028, and outdated hospital regulations.
• Pennsylvania hospital and health system average bond ratings (A for systems, BBB+ for hospitals) are much lower than the national median (A+ for systems, A- for hospitals), signaling greater distress.
• Collectively, Pennsylvania hospitals are absorbing a $3.3 billion shortfall between operating expenses and net patient revenue. By 2030, without improved funding, Pennsylvania hospitals' collective margin is projected to decrease from 2.9 percent to between -3.3 percent and -10.8 percent.

The report and a fact sheet are available online.

Tags: Workforce| Access to Care| Medical Liability| State Advocacy| Medicaid| Rural Health Care| Hospital Sustainability