Collaboration Remains Critical for Solutions To Support the Future of Care Delivery
Read the CHA Report: Connecticut Hospitals Face Continued Financial Challenges, December 2024
Download the Kaufman Hall Independent Analysis
WALLINGFORD, CT – Connecticut hospitals and health systems continue to face extraordinary financial pressures, exceeding national and regional challenges as healthcare providers across the country work to recover from the lasting effects of the global pandemic and years of historic inflation, according to a new report released today by the Connecticut Hospital Association (CHA) supported by an independent analysis from Kaufman Hall, a national healthcare economics firm.
Connecticut hospitals face expense growth that continues to be a concern, as rising expenses related to operational costs, such as prescription drugs and supplies, and workforce costs exceed national growth and increases in the Northeast/Mid-Atlantic region, the report finds. Connecticut hospitals are collectively operating at a loss with a negative total operating margin, a critical indicator of hospitals’ financial health. And Medicaid and Medicare rates are not keeping pace with the cost of care, increasing burdens and harming access for patients.
“We are raising awareness about these challenges ahead of the 2025 Legislative Session to inform our continued collaboration with state leaders and partners to ensure a sustainable and viable healthcare delivery system for our state’s future,” said Jennifer Jackson, CEO, CHA. “Connecticut leads the nation in healthcare. But many of our challenges also exceed national challenges. More must be done to preserve the world-class, compassionate, accessible care for which Connecticut is known. Policymakers understand the importance of a sustainable and strong healthcare system, and we need to confront these realities head on to develop the right solutions for all patients and communities.”
Key findings from the report include the following.
- Hospital expenses are rising at rates that exceed national and regional trends. In one year, from FY 2022 to FY 2023, in Connecticut:
- Operating expenses grew by 6.5% (an increase of $1 billion), exceeding the national growth rate of 4.5% and Northeast/Mid-Atlantic growth rate of 5.2%
- Workforce expenses grew by 4.4% ($169 million), exceeding the national growth rate of 1.8% and Northeast/Mid-Atlantic growth rate of 2.9%
- Drug costs grew by 10% ($249 million), exceeding the national growth rate of 6% and Northeast/Mid-Atlantic growth rate of 9%
- Medical supplies costs grew by 6.8% ($92 million), matching the national growth rate and exceeding the Northeast/Mid-Atlantic growth rate of 6.4%
- Connecticut hospitals are collectively operating at a loss. Connecticut hospitals produced a total operating margin of -0.5% in FY 2023, lagging the Northeast/Mid-Atlantic margin of 2.2% and national margin of 2.6%. This is at a time when national margins are already historically low and hover at unsustainable levels. Hospital margins provide insight into how costs compare to revenues and are a critical indicator of a hospital’s financial health. Total Connecticut hospital loss from operations was $76 million in FY 2023
- Government payer underpayment continues to strain hospitals and health systems. Connecticut’s hospital operating revenue growth lagged the Northeast/Mid-Atlantic and the nation in part due to rising governmental payer mix. Governmental payments have not kept pace with the cost of care
- In FY 2023 hospitals and health systems in Connecticut experienced $1.38 billion in Medicare losses and $1.43 billion in Medicaid losses
- Medicaid payments average 62 cents on the dollar, and Medicare payments average 74 cents on the dollar, according to OHS’s September 2023 report
“Financial challenges are a real and persistent challenge to the sustainability of Connecticut hospitals, the nearly 260,000 jobs they support, and the high level of care they provide that all patients deserve,” said Jackson. “Strong hospitals are critical to support the needs of today’s patients, the health of communities across the state, and future generations. Ongoing collaboration with state leaders is needed to support solutions that keep our hospitals viable over the long term to improve health access, affordability, and equity.”
CHA is advocating for continued collaborative efforts to enhance hospital initiatives that bolster healthcare worker recruitment, training, and retention; ensure that Medicaid pays rates that cover the costs of care; develop ways to reimagine Medicaid to invest in local communities; address unfair national health insurance administrative practices that raise costs and reduce access to care; and avoid policies that will place additional burdens on caregivers.
Read the CHA Report: Connecticut Hospitals Face Continued Financial Challenges, December 2024
Download the Kaufman Hall Independent Analysis
