Pennsylvania is becoming an increasingly difficult place to own or operate a hospital.
Of the 22 hospital closures Becker’s reported in 2025, four were in Pennsylvania — more than in any other state.
Los Angeles-based Prospect Medical Holdings shuttered two Crozer Health hospitals in Delaware County, laying off more than 2,600 employees. Franklin, Tenn.-based Community Health Systems exited the state after selling its three remaining hospitals. Sharon Regional Medical Center closed in 2024 and returned only after Tenor Health Foundation, a newly formed nonprofit, acquired and reopened it in May 2025.
Last year, more than half of Pennsylvania’s acute-care hospitals were operating at a loss, with a third posting multiyear losses, according to Pennsylvania Health Care Cost Containment Council data cited by the Hospital and Healthsystem Association of Pennsylvania.
And yet the state has rarely seen more inbound activity.
Risant Health, a subsidiary of Oakland, Calif.-based Kaiser Permanente, acquired Danville-based Geisinger in March 2024. New Hyde Park, N.Y.-based Northwell Health opened its first two Pennsylvania locations in Pike County. Morgantown, W.Va.-based WVU Medicine, which already owns Uniontown (Pa.) Hospital in Fayette County, expects to close Oct. 1 on Greensburg, Pa.-based Independence Health System’s five hospitals — a deal that would expand its Pennsylvania footprint from one hospital to six. A separate deal for 21-bed Fulton County Medical Center in McConnellsburg, Pa., would make it seven.
The nonprofit systems moving in are not doing so because Pennsylvania has become easier to operate in. Two executives leading expansions at Northwell and WVU Medicine told Becker’s the opposite is true.
‘Less attractive’ — but the hospitals are out of options
The expansion of large nonprofit systems into Pennsylvania might suggest the state has become more attractive, but worsening conditions are leaving smaller hospitals with fewer options.
“I’d actually say it’s less attractive to expand [into Pennsylvania] than in the past,” Ben Gerber, CEO of Peak Health and senior vice president and chief strategy officer of WVU Medicine, told Becker’s. “But the hospitals there are running out of options, and they can’t survive on their own. They need partners with broader scale and capability.
“It’s not that it’s become more attractive for us; it’s that it’s become impossible for smaller health systems to continue standing, and someone’s got to step in.”
For WVU Medicine, stepping in is treated as a mission question before a financial one, according to Mr. Gerber.
“We talk so much about financial viability and what’s attractive and whatnot. It’s attractive to us because our goal is to improve the health of all we serve in our broader geographic footprint, and there are health needs that are not being met,” he said. “Despite the challenges in Pennsylvania, we think we are probably better positioned than most to step in and take care of these hospitals in the community.”
Geography helps.
WVU Medicine entered Pennsylvania years before it acquired a hospital, opening an ambulatory clinic and urgent care center in Waynesburg, Pa., about 30 minutes north of its flagship J.W. Ruby Memorial Hospital in Morgantown, W.Va.
“Southwestern Pennsylvania actually looks a lot like West Virginia. It’s got a big rural population, and we think we manage that population really well,” Mr. Gerber said, noting that becoming the national leader in rural population health management is one of the system’s four core strategies.
In 2020, WVU Medicine took over a struggling Uniontown Hospital in Fayette County, Pa., after UPMC exited a joint venture. WVU Medicine brought specialty services from Morgantown into the community, got the hospital to roughly break even and then reopened a labor and delivery unit that had closed before the acquisition, according to Mr. Gerber.
“That’s one of the proudest things we’ve done as a health system,” he said. “Nobody’s doing that in rural America. We were able to reopen labor and delivery with the knowledge that it was going to set us back financially, and we weren’t going to be break even for another few years, because of the expense. But it was incredibly important to the community.”
Deliveries at the hospital have exceeded expectations, and — notably for any hospital leader weighing service-line cannibalization — volumes at the academic flagship 35 minutes away did not fall, according to Mr. Gerber.
“There’s so much demand for these services that it has not been a problem scaling up the volume at all,” he said.
He also framed obstetrics — often cited alongside behavioral health as a critical but money-losing service line — as a longer-term relationship investment.
“These are mothers that give birth to their children in our hospital. They see the great care that we give to them, they see our investment in the community … and we have patients for life after that.”
Northwell’s Pennsylvania entry looks different in mechanics but similar in approach.
Kevin Beiner, executive vice president and COO of Northwell, said the system spent years studying northeastern Pennsylvania before opening there and entered at the invitation of local officials.
“This hasn’t been rushed. We typically find that if we walk in thinking we know what a community needs, we’re going to make a mistake. We need to listen and get to know the community,” Mr. Beiner told Becker’s. “We were asked by some of the local politicians who have relationships in New York to consider providing healthcare services in the community.”
Pike County has a clear access gap: It is the only Pennsylvania county without a hospital.
“We’re not there as a carpetbagger to bring people out of Pennsylvania into New York,” Mr. Beiner said. “We bring care into communities slowly but surely as we believe we can safely do it, and that’s our preference rather than moving people out of a community to get care elsewhere.”
Northwell began with traditional primary and immediate care. The system is evaluating additional diagnostic capacity, particularly mammography and gastroenterology diagnostics. Behavioral healthcare, addiction medicine and pediatrics could follow.
Mr. Beiner said Northwell would prefer to expand those services through partnerships where possible.
“We don’t want to come in and replace what works in a community,” he said.
Northwell is also open to hospital acquisitions if the right opportunities arise.
“There are some really impressive, high-quality hospitals and hospital networks in Pennsylvania. We will seek future partnerships,” Mr. Beiner said. “Do we make clinical affiliations? Do we make larger affiliations? All of that remains to be seen. But we come with good intentions. We’re not looking to replace the legacy. We’re looking to augment, and partnerships are really the game.”
The elephant in the room
Pennsylvania’s hospital distress has no single driver. Low Medicaid reimbursement, medical malpractice exposure and the structure of some of its largest healthcare markets are among the pressures executives pointed to.
Medicaid currently reimburses Pennsylvania hospitals about 71 cents for every dollar spent on care, and the state’s reimbursement rate is 11 percentage points below the national average, according to a recent report commissioned by the Hospital and Healthsystem Association of Pennsylvania.
“Hospitals in Pennsylvania are already underpaid for the care they provide, and payment cuts through the federal reconciliation process haven’t even been implemented yet. Our hospitals are still only reimbursed 71 cents on the dollar, and less than half have the operating margins necessary for long-term stability,” HAP President and CEO Nicole Stallings told Becker’s in January. “Hospitals have plans for every scenario, ranging from service reductions to reductions in force, to potential consolidation and even closure.”
High Medicaid payer mixes are one factor behind the state’s recent hospital closures.
“You’re seeing a lot of the closures where the Medicaid mix is higher,” Mr. Gerber said. “And you’ve also seen that in the eastern part of the state — the closure in Chester, Pa., which is obviously a very heavily Medicaid population.”
Medical malpractice costs add another layer.
That aligns with what health system CFOs have told Becker’s: a 2023 rule change permitting venue shopping lets malpractice claims be filed in plaintiff-friendly jurisdictions such as Philadelphia and Allegheny counties regardless of where care was delivered, and Pennsylvania has no cap on malpractice awards.
“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.”
Ms. Stallings has also tied malpractice pressures to declining maternal care access across the state.
Southwestern Pennsylvania presents another challenge: market structure.
“Southwestern Pennsylvania is a unique place, and I don’t think you can ignore the elephant in the room that you have two very large integrated payer providers in that market that are interested in supporting their own insurance companies and facilities,” Mr. Gerber said. “I think some smaller health systems feel the squeeze due to that.”
The dynamic is not new, but other financial pressures have intensified it.
“That’s been the case for many years,” he said. “But as other things like Medicaid have become more challenging, I think that squeeze has become more acute.”
Pittsburgh-based Highmark Health leaders have described a similar competitive structure in a recent Becker’s feature.
“Pennsylvania has a prevalence of prominent integrated delivery and finance systems — such as Highmark-AHN, Jefferson, UPMC and Geisinger — that are competing directly with each other,” said Bruce Meyer, MD, executive vice president and market president for Highmark health’s western Pennsylvania and West Virginia operations. “On top of that, the remaining commercial insurers having dominant market share, such as Independence Blue Cross in the Philadelphia area. This has led to the natural conclusion that, as a provider, you need to have significant scale in any negotiation with insurers. Consolidations are one way to achieve that scale.”
But Mr. Beiner cautioned against viewing those pressures as unique to Pennsylvania, pointing instead to broader cost and reimbursement challenges across the Northeast.
“I think the phenomenon we’re seeing in the entire Northeast — costs are going up,” he said. “The cost of hiring people is going up. The cost of supplies, the cost of equipment. We’re looking at major advances in electronic medical records, in AI, and these all become very, very expensive.”
When reimbursement fails to keep pace, sustaining hospital networks becomes increasingly difficult, according to Mr. Beiner.
“We’re also seeing it in New York,” he said. “Hospitals are struggling, particularly outside of the metro area.”
Why scale in one state beats scale in 20
For Mr. Gerber, the divide between systems exiting Pennsylvania and those expanding there comes down to whether their scale is concentrated enough to matter.
“Some larger multistate operators are finding out that they’re not able to reap the synergies and the benefits of scale, where they don’t have sufficient scale in any individual geography,” he said. “So they’re not really able to make the investments necessary in Pennsylvania when their portfolio is so scattered across the country.”
WVU Medicine’s Independence deal is a bet on the opposite math.
Independence Health — itself formed through the combination of Excela Health and Butler Health System — had moved closer to financial stability through consolidation, but ultimately needed a larger partner.
Adjacency made WVU Medicine a natural fit. Its leadership already knows the southwestern Pennsylvania market, and Westmoreland County’s roughly 350,000 residents represent more than twice the population of West Virginia’s largest county, according to Mr. Gerber. West Virginia has about 1.75 million residents.
That added population is particularly important for a rural academic health system trying to sustain highly specialized services.
WVU Medicine wants to provide complex tertiary and quaternary care so that West Virginia patients aren’t forced to leave the state for it. Pediatric heart surgery was the example Mr. Gerber used: A service that is necessary for the region but requires a population base large enough to support it.
“We never want a child to need pediatric heart surgery,” he said. “But if we’re going to provide those services to everybody in West Virginia so that they don’t have to go out of state, it’s probably not enough that we’re just drawing from West Virginia. We need access to population elsewhere.”
Mr. Gerber also sees Ruby Memorial Hospital in Morgantown, W.Va., as a practical destination for patients in southwestern Pennsylvania who might prefer not to travel into Pittsburgh for tertiary and quaternary care.
“Folks that are not accustomed to navigating parking garages and 10 buildings spread across an urban landscape find it very convenient to get off the highway and go into surface parking at Ruby and walk in our front door,” he said.
WVU Medicine has also committed $800 million over five years across the Independence Health hospitals, including improvements to Butler Memorial Hospital’s emergency department and a major renovation of Westmoreland Hospital.
“That plays into our strategy about being able to provide great experience, great care close to home without having to go into the city,” Mr. Gerber said. “That is a major part of our strategy, and one we have executed on before, and one we think we can execute on again now.”
Peak Health, WVU Medicine’s health plan, will expand alongside the system’s Pennsylvania hospital footprint. Mr. Gerber said the goal is not to match UPMC Health Plan or Highmark in scale, but to give southwestern Pennsylvania a third option.
“We are hearing that a lot of people are very excited about that third option,” he said.
Both Northwell and WVU Medicine leaders expect the broader consolidation wave to continue.
“I expect the consolidation phenomenon to accelerate. It seems to go in waves over the decades,” Mr. Beiner said. “We’ve seen this before, but maybe not so pronounced as we’re seeing it now.”
Northwell added seven hospitals in the lower Hudson Valley and Connecticut when its Nuvance Health merger closed in May 2025, and the system intends to keep growing.
“We’ll be super judicious and careful about it, because we want to make sure we’re developing a sustainable network that is truly integrated,” he said. “It’s not just about adding stars on the flag. It’s about making sure we can connect communities to the right care.”
Looking further ahead, he expects more large systems to combine in response to mounting financial and operating pressures.
“The networks that can continue to grow and provide community-based care in an integrated way, provide the value of that sustained access — those are going to be the winners,” he said.
For Pennsylvania, that is the trade taking shape. The state is not becoming an easier place to run a hospital. Instead, financial pressure is making it more difficult for smaller organizations to stand alone — and making regional scale, capital and integration increasingly valuable to the nonprofit systems willing to step in.
Jefferson Health President and CEO Joseph Cacchione, MD, previously framed that role in mission terms.
“Sadly, we’ve witnessed closures that leave communities with limited or no access to lifesaving care. In these instances, nonprofit systems are left to step in and ensure access to care for all,” Dr. Cacchione told Becker’s in a recent feature. “Nonprofit health systems exist to fill these gaps.
“We have no shareholders and no dividends — our communities are our shareholders, and our dividends are improved patient outcomes. While we continue to advocate for better reimbursement rates from Medicaid and Medicare, there’s still more work to do. Safety-net health systems, already stretched to their financial limits after the pandemic, are struggling to reinvest in their people, technology, patient safety and aging infrastructure. Fair reimbursement from private payers — who report record profits year after year — is critical to sustaining this mission.”
The question for Pennsylvania is whether that next wave of consolidation preserves access or simply leaves the state with fewer, larger owners.
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