Philadelphia-area hospitals and health systems are still facing cost pressures as they try to recover financially

Financial pressures from higher costs for labor, pharmaceuticals, and other supplies did not let up in the first three months of this year for not-for-profit health systems in Southeastern Pennsylvania, as most continued reporting operating losses through March 31.

The Inquirer has been tracking financial results for the region’s nine health systems, as they work to recover financially in a world where experts expect permanently higher costs to prevent a return to pre-pandemic profitability levels.

“Hospital and health system leaders must figure out how to navigate the new financial reality,” said Erik Swanson, senior vice president of data and analytics at Kaufman Hall, a Chicago health-care consulting firm.

Here is what we know about the earnings of the Philadelphia region’s health systems in the nine months through March 31:

The University of Pennsylvania Health System remained profitable, though at a lower level than it saw before the coronavirus pandemic. Penn’s $57 million operating profit for the quarter that ended March 31 was far better than a year ago, when the system had a rare quarterly loss of $15 million.

Read more about the University of Pennsylvania Health System.

Thomas Jefferson University reported a $117 million operating loss — nearly three times bigger than the loss for the comparable period a year ago. Jefferson’s operating results included $121 million in investment income that other health systems typically only include in net income. Excluding that investment income, Jefferson’s operating loss would have been $238 million.

Read more about Thomas Jefferson University, including Jefferson Health.

The Children’s Hospital of Philadelphia recorded its smallest operating profit margin in at least 10 years, according to an Inquirer analysis of the not-for-profit health system’s financial results. That’s true even excluding federal COVID-19 aid during the pandemic.

Read more about the Children’s Hospital of Philadelphia.

Temple University Health System reported a $54 million loss in the first nine months of fiscal 2023, but showed significant improvement in the most recent quarter. Temple had a $49 million profit in the quarter, up significantly from $27 million the previous year.

Read more about the Temple University Health System.

Patient admissions, emergency department visits, and outpatient surgeries are up solidly at Main Line Health, which has four acute-care hospitals in Philadelphia’s western suburbs. Still, the system lost $114 million on operations, significantly more than the $43 million loss last year.

Read more about Main Line Health.

Tower’s cash reserves had dwindled to $202 million on March 31, down 45%, from the end of last June. That left the Berks County organization, anchored by Reading Hospital, with just 39 days of cash on hand, Tower reported Friday. Days of cash on hand is a common measure of financial strength and stability.

Read more about Tower Health.

The quarterly financial results that New Jersey’s not-for-profit health systems report to bondholders are not comparable with those shared by their Pennsylvania counterparts, so The Inquirer looked at annual results for 2022 available in audited financials statements.

They showed that rising costs for labor and other expenses squeezed Virtua Health, Cooper University Health Care, and Inspira Health Network, South Jersey’s largest not-for-profit health systems, but only Inspira Health Network reported losing money on operations.

“We achieved a 4% revenue increase in 2022, but it was not enough to offset increased costs. We have a plan in place and anticipate getting back to break even by 2025,” Inspira said in a statement.

Despite the financial downturn, both Fitch Ratings and Moody’s Investors Service this spring affirmed Inspira’s strong credit rating.

Read more about N.J. health systems, including Inspira.

In Philadelphia’s northern suburbs, three small systems reported losses.

Doylestown Health improved slightly, to a loss of $18 million, down from $20 million last year. During the three months that ended March 31, Doylestown swung to a 1.9 million profit from a $12.7 million loss last year.

Grand View reported a loss of $38 million, up from $27 million a year ago. As a percentage revenue, Grand View’s loss was the biggest in the region.

Redeemer Health’s operating loss was $37 million, up from $24 million last year.