Sharon Hospital’s Financial Situation Dire Prior to Steward Bankruptcy

SHARON, Pa. – Long before Steward Health Care System filed for bankruptcy, the financial situation at Sharon Regional Medical Center, Pennsylvania’s only Steward-owned hospital, was bleak.

Statewide fiscal year 2023 numbers released by the Pennsylvania Health Care Cost Containment Council show for-profit general acute care hospitals overall had an operating margin at nearly -12%.

The situation at Sharon Regional was much worse at just over -20% operating and total margins. The total revenue for the hospital was $108 million, while the operating expenses rose to $142 million.

Fiscal year 2023 started July 1, 2022, and ended June 30, 2023, for most of the hospitals in the report, although in the case of Sharon Regional, the report notes its fiscal year ended prior to June 30, 2023. Either way, that was long before Steward filed for bankruptcy in May 2024.

The numbers are much stronger for nonprofit hospital Meadville Medical Center, which has shown interest in operating Sharon Regional.

Meadville’s operating margin for fiscal year 2023 was a slim 0.18%, with a total margin of 5.05%, down from its three-year average total margin of 6.99%. Meadville’s net patient revenue was $237 million, while total operating expenses were $245 million.

The Pennsylvania Health Care Cost Containment Council report analyzes the financial picture of all 156 of Pennsylvania’s general acute care hospitals, including the 19 for-profit hospitals. In the case of both Sharon and Meadville, the figures include specialty units affiliated with the facilities, such as psychiatric, rehab, long-term care and skilled nursing.

Overall, the report shows nonprofit hospitals have better operating margins than for-profit hospitals. However, 51% of Pennsylvania hospitals posted a negative operating margin for fiscal year 2023. Of those, 34% had a negative operating margin of higher than -4%. Altogether, 46% of Pennsylvania hospitals posted a negative total margin.

Among the 156 hospitals, the operating income decreased from $2.5 billion in fiscal year 2022 to $1.4 billion in fiscal year 2023. Uncompensated care rose from $752 million a year earlier to $774 million, while revenue from patient care increased by 4.6%. Net patient revenue was $55.9 billion, which was 92% of the total operating revenue for hospitals.

In Region 2, which is the northwest region of the commonwealth that includes both Sharon and Meadville, the area’s hospitals overall had a -3.46% operating margin and a total margin of -2.91%, which is down from the three-year average of 2.85%. Additionally, while the statewide average of net patient revenue covered by Medicare is 35.37%, in Region 2 that level is 45.65%, making it the second highest region in the commonwealth. Another 13.14% of patients in Region 2 receive medical assistance.

Sharon Regional’s operating margin was the worst in Region 2, followed by Bradford Regional, south of Buffalo, at -18.29% operating margin; Millcreek Community in Erie, Pa., at -15.68%; and UPMC Northwest and UPMC Jameson at -11.51% and -11.48%, respectively.

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