Issues

Hospital Finance

Connecticut hospitals serve as the healthcare safety net for their communities, caring for all regardless of ability to pay.

Connecticut hospitals also continue to face significant economic headwinds that threaten their financial health and sustainability. The consistent gap between the cost of providing patient care and payment to hospitals for those services, particularly from Medicare and Medicaid (HUSKY), creates pressing financial challenges.

How Hospitals Are Paid

Hospitals receive payment for patient services from government insurance programs like Medicare and Medicaid, from commercial insurance companies, and from patients who pay (in part or in full) for services themselves.

Hospitals receive reimbursement from Medicaid (HUSKY) for only about 62% and from Medicare for only 74% of what it costs to provide the care to those patients. In 2023, this underpayment for services amounted to nearly $2.8 billion, and Connecticut hospitals incurred $1.43 billion in Medicaid losses and $1.38 billion in Medicare losses.

Financial Challenges:

Expenses are significantly elevated from pre-pandemic levels, driven by the rising costs of drugs, contract labor, and salaries and wages for medical personnel
Medicaid and Medicare underpayment continue to burden caregivers and deprive people who are medically underserved of access to needed care and social supports
Margins remain depressed relative to pre-pandemic levels, with statewide operating margins falling into the negative. Healthy margins are needed to support care delivery, care improvement and innovation, and investments in the community
Hospitals are facing significant workforce shortages. State and federal support can enhance hospital initiatives that bolster recruitment and retention and help manage these growing labor-related expenses
Hospitals are treating patients who are sicker and require longer lengths of stay