Contact: Barry D. Buckingham
717-232-6787 or

PENNSYLVANIA HOSPITAL MARGINS EXPERIENCE AN INCREASE IN FISCAL YEAR 2021, ACCORDING TO A NEW PHC4 HOSPITAL FINANCIAL REPORT

Harrisburg, PA - June 9, 2022 - The statewide total margin realized by the hospitals in Pennsylvania increased by 7.84 percentage points, from 3.93% in fiscal year 2020 (FY20) to 11.77% in FY21, and the statewide operating margin increased 4.18 percentage points from 3.73% in FY20 to 7.91% in FY21.

“Our data shows that these increases in operating and total margins reflect government relief funding and positive investment performance.” said Barry D. Buckingham, Executive Director PHC4. “Many hospitals continue to face serious financial challenges.”

In FY21, 25% of Pennsylvania hospitals posted a negative total margin, 10% posted a total margin between 0% and 4%, and the remaining 65% posted a total margin high than 4%.

For the fiscal year ending June 30, 2021, Pennsylvania general acute care hospitals’ uncompensated care (combination of bad debt and charity care) has increased in FY21 from $832 million in FY20 to $866 million, an increase of 4.1%, in FY21.

Report highlights:

• Uncompensated Care: The foregone dollar value for statewide uncompensated care (bad debt and charity care) increased 4.1%, from $832 million in FY20 to $866 million in FY21. The percent of uncompensated care to net patient revenue decreased from 1.78% in FY20 to 1.73% in FY21.
• Net Patient Revenue: The revenue hospitals received for patient care increased 6.8 % during FY21. Statewide net patient revenue was $49.9 billion during FY21, making up 91% of statewide hospital total operating revenue.
• Operating Margin: Statewide operating income increased from $1.9 billion in FY20 to $4.3 billion in FY21. As a result, the statewide average operating margin increased 4.18 percentage points from 3.73% in FY20 to 7.91% in FY21. Total operating revenue increased to $55.0 billion and operating expenses increased to $50.6 billion in FY21. In FY21, 30% of Pennsylvania hospitals posted a negative operating margin, 15% posted an operating margin between 0% and 4%, and the remaining 55% posted an operating margin higher than 4%.
• Total Margin: The statewide total margin realized by the hospitals increased 7.84 percentage points, from 3.93% in FY20 to 11.77% in FY21. In FY21, 25% of Pennsylvania hospitals posted a negative total margin, 10% posted a total margin between 0% and 4%, and the remaining 65% posted a total margin high than 4%.

Definitions: The operating margin represents revenue received for patient care minus related expenses. The total margin includes the operating margin 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, endowments, charitable contributions, and other revenue not directly related to patient care.

The Volume One Financial Analysis 2021 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 2021, Volume One are free and available from PHC4’s website at www.phc4.org.