Hospital Closures & Financial Headwinds: A Healthcare Reality Check with Alan Condon

In this episode, Alan Condon, Editor-in-Chief at Becker’s Healthcare, joins Scott Becker to discuss a wave of recent hospital closures, the impact of private equity ownership, and the mounting financial pressures facing health systems.

Episode Transcript

(00:00):
Exciting things are happening at Becker's Healthcare. Stay
ahead of industry trends with the new Becker's
CFO plus Revenue Cycle podcast,
your go to source for insights from top
healthcare finance leaders. Tune in wherever you get
your podcasts.
And don't miss the tenth annual health IT
plus digital health plus RCM conference, happening September

(00:22):
30 to 10/03/2025
in Chicago.
Join thousands of executives, engage with industry leaders,
and explore the future of health care innovation.
Learn more about our upcoming events at beckershospitalreview.com.
See you there.
This is Scott Becker with the Becker's HealthCare
podcast.

(00:42):
I'm thrilled today to visit with Alan Condon,
editor in chief of Becker's Healthcare.
He joined us regularly to tell us what's
going on, particularly often in the financial world
of hospitals and health systems.
Alan, let me tee it up and ask
you to take it away.
What what what are you watching currently? What
are the big stories you're watching currently?
Yeah. Absolutely. Thanks so much, Scott.

(01:03):
So, unfortunately, kind of some some troubling, some
challenging news that we've covered recently. I think,
as it relates to hospital finances, it's really
such a a wide array of upcoming hospital
closures, unfortunately,
in Pennsylvania,
in Texas,
in Florida,
due to a variety of reasons. But I
think, first and foremost, this is one that

(01:25):
we've been following, staying really close over the
last few months, and that's Crozer Health,
previously a four hospital system in Pennsylvania,
recently closed two hospitals, during the pandemic.
It's some back and forth over a month
of court hearings, negotiations
with various stakeholders in Pennsylvania,
including the the the attorney general's office. Unfortunately,

(01:47):
we just got news yesterday, so Monday, that
it it it will shut down operations and
lay off more than 2,600
employees. So that includes its two remaining hospitals
in Pennsylvania
as well as several other, outpatient facilities and
medical offices.
So I think this decision really follows multiple

(02:07):
failed efforts to find a buyer for these
Kroger facilities.
It comes three days after its CEO
Tony Esposito just stepped stepped down.
Important to note here, Prospect Medical Holdings, that's
a for profit private equity backed health system,
has hospitals in various other states including California,

(02:29):
really working
with multiple stakeholders, like I said, to try
and get a deal over the line to
try and offload those hospitals
to, another health system in the area. UPenn,
the University of Pennsylvania health system, was one
of those names that was potentially working to
get a deal done.
But, unfortunately, for the community,
for patients, for for the health systems and

(02:50):
all involved here, it looks like the the
decision has finally come down with no deal
to be able to be done to keep
those hospitals open,
and imminent closure that is expected to take
place over the next week or two.
Thank you very, very much. And what a
shame for those communities as well as the
employees and in the leaders and everybody else
that's involved in that. You know, maybe with

(03:11):
the possible exception of the private equity fund
that put into so much debt that this
happened, but a a lot of empathy for
a lot of players there. What a what
a shame, and, hopefully, it's not a sign
of the times of of more challenges coming
to American health care.
Absolutely. I I think it's, again, something that
I think a lot of stakeholders are really
pushing for a long, long period of time.
And court hearings, proposals, really trying to get

(03:33):
a deal done. Unfortunately, that doesn't seem like
that might be the case. But
not to harp on too much about some
of the closures, financial challenge that we're seeing,
but I think just in in this week
alone, I also moved down to Orlando Health
in Florida.
They've acquired Rockledge Hospital recently in November. Now
that was a
$440,000,000
deal, and they acquired multiple hospitals from

(03:55):
Steward Healthcare.
This is a a 300 bed facility,
and
Orlando Health got in there and just recently
shared that post acquisition
didn't realize
just how bad the the infrastructure was inside
the hospital.
Really made it made a swift decision to,
unfortunately, close that hospital, but

(04:17):
really maintained that they're also spending a lot
of money to a fourth of a billion
dollars to build another hospital in the region,
various emergencies freestanding emergency department, outpatient facilities to
support the community in that area. But,
unfortunate, again,
a recently acquired hospital from another,
failed, poor profit backed entity,

(04:38):
Orlando Health, have made the decision to close
that hospital. That's
unfortunately infecting close to 950
jobs as well in Florida.
And and just to jump straight down, I
think
just reported this week as well under their
critical access hospital, unfortunately, again, is closing this
week in Texas. That's Midcoast Medical Center. It's

(04:59):
by Trinity. So,
again, it's slightly different than the other two.
It wasn't a recently acquired hospital, but something
that a rural hospital in Texas that has
been struggling, financially for some time,
really pointed to increased accounts payable for supply
supplies and services,
lower than expected revenue from collections owed on
patient co pay, really reimbursement rates that have

(05:21):
not kept up with the the rate of
inflation in recent years. Just the,
unfortunate
mold of these recent challenges that really unfortunately
led to the ultimate decision to close that
hospital.
The the one silver lining that this hospital
does have, the hospital leaders are really pushing
local
elected officials to pursue the rural emergency hospital

(05:43):
designation. They really see this as a potential
avenue
to get back open in in the near
future should they be able to apply for
that designation and get it over the line
by CMS. And just a quick little breakdown
for for folks who might be as aware
of that. It was
a recent designation CMS
implemented a couple years ago essentially aims to
curb rural hospital closures by offering them a

(06:06):
a chance to close some of their infrequently
used inpatient beds and focus solely on outpatient
and emergency department services. So they see that
as a potential avenue for for reopening the
hospital in the near future. But just a
tough, tough couple of stories that really highlighting
some of the the financial challenges that many
are still dealing with this year.
No. It it really is. Just tremendous challenges

(06:28):
out there. Alan, as always,
a great quick synopsis of what's happening. Lots
of concerns.
Thank you for joining us today,
on the Becker
Healthcare podcast. Thank you very, very much.
It was a pleasure. Thank you so much,
Scott.