A new report commissioned by the Hospital and Healthsystem Association of Pennsylvania is warning of a pending hospital crisis in the Commonwealth.
The report notes that a Rural Health Transportation Program should offer some help but is less than the aid hospitals had been getting prior to recently enacted federal legislation. The report states that hospitals serving a high proportion of Medicare, Medicaid, and uninsured patients, which includes many rural hospitals, are far more exposed to payment shortfalls and coverage losses.
Pennsylvania had more hospital closures than any other state in 2025, mainly because it has more hospitals than most other states and a large share of rural hospitals. Without policy changes, the HAP report predicts that as many as 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.
“This expert analysis underscores the urgent need to safeguard access to the care communities depend on,” Hospital and Healthsystem Association of Pennsylvania President and CEO Nicole Stallings said. Medicaid reimbursement in Pennsylvania – which provides health coverage to nearly 1 in 4 Pennsylvanians – is 11 percentage points lower than the national average and pays hospitals only 71 cents on average for each dollar they spend providing care to enrollees.
The report calls for lawmakers to boost the state’s Medicaid reimbursement rates and for tort reform to rein in medical liability awards. In 2022, the Pennsylvania Supreme Court ruled that liability lawsuits can be filed in any county where a defendant conducts business, rather than requiring trials to take place in the county where the defendant is based. This has led to a practice known as “venue shopping” that has resulted in astronomical payouts to plaintiffs that drive up insurance costs and put Pennsylvanians’ access to health care at risk. According to the PA Medical Society, the number of medical malpractice lawsuits filed in Philadelphia doubled after the rule change.
The PA Chamber has fought to end venue shopping, arguing that it allows pro-plaintiff attorneys to have their trials in areas where juries are more likely to award significant awards against defendants.
The report also suggests that the state could use “targeted investments” to help hospitals and health systems cut costs. “The implications of the scenario modeling are clear: Without a change, Pennsylvania could continue losing two to three hospitals per year or more, hurting local communities and rippling out to surrounding areas,” the report said. “The alternative is for the state to partner with hospitals through increased reimbursement, regulatory reforms, and targeted investment to preserve reliable, high-quality local care and secure the economic contribution hospitals deliver to communities.”