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October 6, 2023

CT hospitals recorded $206M operating loss in FY 2022

HBJ FILE PHOTO Hartford Hospital, Hartford HealthCare’s flagship hospital.

Hospitals in Connecticut experienced an overall operating loss of $206 million in fiscal year 2022, largely due to an increase in expenses, according to a new report.

The state Office of Health Strategy in September released its “Annual Report on the Financial Status of Connecticut’s Short Term Acute Care Hospitals.”

The report includes data on hospitals for the fiscal year ending Sept. 30, 2022.

Key findings from the report include: 

Statewide losses from patient care and related sources (i.e., operating revenue) for hospitals in the state was $206.6 million, compared with a gain of $333 million in the previous year. 

Hospitals had losses of $309 million from sources unrelated to patient care, (or nonoperating revenue) such as revenue from investments, unrealized gains on investment holdings, and gains from affiliates or joint ventures The losses were due mostly to declines in the financial markets.

Net patient revenue increased by over $2 billion between fiscal years 2019 and 2022. However, expenses increased by $3.3 billion, from $12.5 billion to $15.8 billion, in that same time period.

There was an overall operating loss of $206 million in fiscal year 2022, the report shows.

The Connecticut Hospital Association (CHA) this week said the report confirms that hospitals in the state are facing “significant economic headwinds that threaten their financial health and sustainability.”

The CHA called for action to address hospitals’ financial situation, noting how the COVID-19 pandemic is still having lingering effects on the industry.

Rising costs of drugs, contract labor, salaries and wages for medical personnel are among the factors contributing to the growth in expenses. Hospitals are also spending more on uncompensated care, with insufficient Medicaid and Medicare reimbursements, according to the OHS report.

Statewide hospital uncompensated care charges totaled $907 million in fiscal year 2022, a $73 million, or 8.8% increase, from the prior fiscal year, the report shows.

CHA CEO Jennifer Jackson said the report is further evidence of the “need to advance policies that support care delivery and abandon the pursuit of policies that will increase cost and reduce access to care.”  

Jackson said industry officials, OHS and state leaders need to work together to develop policies that enhance healthcare access and affordability. 

“We need to work together on solutions to address underpayment, address root cause drivers of poor health, and reduce administrative burden and bureaucracy that drive up costs,” Jackson said. “Medicaid underfunding not only leads to cost shifts that increase costs for families with private insurance, but it also deprives people who are medically underserved of access to needed care and social supports.”

The Office of Health Strategy indicated in an emailed statement that while 2022 was a less profitable year for some Connecticut hospitals, when it looks at a five-year period, “the majority of hospitals across the state appear stable and financially sound.”

Statewide, hospitals reported $8.2 billion in unrestricted assets for fiscal year 2022, it noted.

“Insurers, hospital systems, pharmacy benefit managers, pharmaceutical manufacturers and all healthcare providers must continue to work to drive down the underlying costs of care so that we can successfully address the affordability crisis facing our Connecticut employers and residents,” the statement said.

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