More hospitals have closed in Pennsylvania than in any other state this year, reflecting a growing crisis in the state’s healthcare infrastructure.
Of the 22 hospital closures Becker’s has reported on in 2025, four were in Pennsylvania. One additional hospital — Sharon (Pa.) Regional Medical Center — closed in 2024 but was acquired and reopened in May by Tenor Health Foundation, a newly formed nonprofit.
Pennsylvania’s hospital challenges are multifaceted, involving a combination of overextended acquisition strategies, reimbursement shortfalls, workforce shortages and a rising tide of high-severity malpractice settlements.
Financial pressure and legacy deals
According to Radha Savitala, co-founder and CEO of Tenor Health Foundation, part of the issue stems from Pennsylvania’s high number of hospitals — many of them rural — and the fact that some health systems likely overpaid for certain acquisitions in the state more than a decade ago.
“[Pennsylvania] has a higher number of hospitals than many other states. That’s a big factor,” Ms. Savitala said during an episode of the Becker’s Healthcare Podcast. “Second, if you look back at the acquisitions that happened about 10 to 15 years ago, we’ve seen that some systems likely overpaid. Once they hit their expected rate of return, we started to see a wave of divestitures and exits.”
Tenor Health, which acquired and reopened Sharon Regional earlier this year, plans to acquire three more Pennsylvania hospitals and potentially other financially distressed hospitals in other markets. But the path to stability, Ms. Savitala said, requires a tighter focus on community sustainability and local market alignment.
“Medicaid reimbursement on the acute care side in Pennsylvania isn’t strong,” she said. “While the state does provide relatively good reimbursement for behavioral health, Medicaid alone can’t sustain these hospitals. That’s why it’s so important to look at patient mix and ensure you’re negotiating contracts that support the goal of staying local.”
A legal shift with major consequences
Hospital leaders say Pennsylvania’s shifting legal landscape is compounding these financial strains. A 2023 rule change allowing “venue shopping” — where malpractice lawsuits can be filed in plaintiff-friendly jurisdictions regardless of where care was delivered — has made the state one of the most challenging environments for hospital operators.
“Many providers in Western Pennsylvania are already financially struggling. A single large case could, quite frankly, put them out of business,” Brian Devine, CFO of Pittsburgh-based Allegheny Health Network, said during an episode of the Becker’s CFO and Revenue Cycle Podcast. “This is a major risk in our market as we continue to see malpractice claims and settlement demands rise at an alarming rate.”
Pennsylvania’s medical liability climate ranks among the most challenging in the nation, and “venue shopping” is making it even harder to recruit providers to rural areas. The looming threat of litigation in plaintiff-friendly jurisdictions — such as Allegheny and Philadelphia counties — coupled with rising insurance costs, is increasingly affecting access to care, Nicole Stallings, president and CEO of the Hospital and Healthsystem Association of Pennsylvania, said during a recent episode of the Becker’s Healthcare Podcast.
“Now, if you’re providing care in a rural community and there’s an adverse outcome — for example, involving a travel nurse — the lawsuit can be moved to jurisdictions like Philadelphia County, which is notoriously plaintiff-friendly,” Ms. Stallings said. “We see a high number of nuclear verdicts there. Just in the past two years, there has been a surge in cases being brought into these challenging jurisdictions. That’s certainly a key reason why access to maternal healthcare continues to decline in Pennsylvania.”
The impact of ‘nuclear verdicts’
Rising malpractice settlements are also a growing concern for hospital finance leaders. In Western Pennsylvania, providers are seeing larger demands from plaintiffs and more frequent involvement from out-of-state law firms.
“Historically, this phenomenon has been more common in large metro areas where massive plaintiff demands and settlements are more typical,” Mr. Devine said. “However, we’re now seeing out-of-state lawyers filing substantial claims in our region, which has raised serious concerns about malpractice litigation trends and the financial impact of these settlements on providers in our market.”
While the overall number of malpractice claims hasn’t increased significantly, the severity — and cost — of those claims has. This is particularly true in metro areas like Philadelphia County and Allegheny County, where “nuclear verdicts” are more common.
A call for legal reform
In response, hospital leaders are advocating for tort reform. Some states have implemented caps on malpractice settlement amounts. Pennsylvania has not. In the meantime, systems such as Allegheny Health Network are investing in internal risk mitigation strategies.
“When it comes to managing these cases, we can’t always control the rising demands from plaintiffs or the way cases are litigated. However, what we can do is ensure we have the right level of documentation, education and communication across our clinical teams,” Mr. Devine said. “We’ve found that ensuring proper escalation protocols and thorough documentation can significantly aid in defending these cases, ultimately leading to more reasonable settlements as the facts emerge.”
As the challenges mount, Pennsylvania remains a key market to watch — both for its risk of continued hospital closures and for the turnaround efforts underway from emerging hospital operators such as Tenor Health Foundation.
