Pennsylvania’s healthcare system is facing a period of escalating instability, marked by a troubling combination of hospital closures, financially driven service reductions and a wave of layoffs across major health systems. The cumulative impact is limiting access to care, particularly in underserved areas, and raising urgent questions about the long-term sustainability of healthcare delivery in the state.
Over the past five years, six rural hospitals in Pennsylvania have closed, and an additional 18 are at risk. Of those, 10 are considered to be in imminent danger of shutting their doors.
“Pennsylvania has the unfortunate distinction of having one of the highest percentages of rural hospital closures,” Nicole Stallings, president and CEO of HAP, said during an episode of the Becker’s Healthcare Podcast. “In the northwest part of the state, there’s now an area the size of Connecticut without a birthing hospital.”
The most recent closure is Kennedy Township-based Heritage Valley Kennedy Hospital, which is set to shutter permanently on June 30 due to declining patient volumes and reduced reimbursements. Some outpatient services, including diagnostics and urgent care, will remain at nearby facilities, while emergency and surgical care will shift to Heritage Valley’s campuses in Sewickley and Beaver.
In a parallel crisis, Crozer Health in Upland, Pa., continues to fight for survival. The system recently secured $6 million in temporary funding to keep its two hospitals operational, while transitioning out services such as obstetrics and gynecology to stabilize operations. Its parent company, Los Angeles-based Prospect Medical Holdings, filed for bankruptcy in January and is working on offloading most of its hospitals as part of a broad restructuring effort
The Pennsylvania Association of Staff Nurses and Allied Professionals, which represents about 1,000 frontline Crozer workers, underscored the importance of protecting both services and staff at the hospitals. “The doors to the health system must not just stay open – the services the health system provides must persist and the staff must be there to serve the citizens of Delaware County when they are at their most vulnerable,” the union said in an April 11 statement shared with Becker’s.
Beyond hospital closures, widespread layoffs are reshaping the workforce in Pennsylvania’s health systems in 2025, driven by financial strain, operational restructuring and changing care demands.
Layoffs have rippled across Pennsylvania’s health systems in early 2025, reflecting a broader industry trend of cost-cutting and structural realignment:
– Allentown-based Lehigh Valley Health Network, which recently merged with Jefferson Health, laid off about 100 workers in January. Philadelphia-based Jefferson also outsourced 171 administrative roles, including billing and preauthorization staff.
– Bryn Mawr-based Main Line Health laid off 200 administrative and management staff, largely in IT, finance, human resources and revenue cycle.
– Independence Health System, formed through a 2023 merger of Butler Health System and Excela Health, has laid off 151 employees so far in 2025 — representing 2% of its workforce. Leaders cited “unrelenting and unprecedented financial and operational pressures.”
– The University of Pennsylvania Health System in Philadelphia eliminated about 300 jobs across the organization to address “continued pressures and changes in the field” and ensure “strong financial footing.”
Despite some stabilization in hospital margins, rising labor costs, declining reimbursement rates, and shifting care delivery patterns have pushed systems toward leaner operations. Layoffs and service line reductions are becoming part of strategic cost-containment planning for many health systems.
