Half of Ohio hospitals, including local network, operating at financial loss

“Going into the pandemic, about 19% in a sample of hospitals that ultimately requested FEMA public assistance during COVID, they went into the pandemic already underwater,” said Dr. Mahshid Abir, senior physician policy researcher at RAND, a nonprofit policy think tank.

“Some hospitals, particularly the larger health systems and those with significant outpatient services, are bouncing back more robustly, and others are not,” Abir said.

Kettering Health, the largest health system in the Dayton region, is continuing to operate on positive margins like they did prior to the pandemic.

Premier Health, though, has about a decade of its operating expenses exceeding its revenue. The hospital system is still showing improvements even with its ongoing negative operating margins.

Expenses, revenues in the billions

While the pandemic has receded, hospitals still face financial challenges with persistent cost growth, inadequate reimbursement, workforce shortages and fluctuating tariff policies impacting the supply chain, said Akin Demehin, American Hospital Association’s vice president of quality and patient safety policy.

Some hospitals have been able to cope with those challenges, while others face a more difficult uphill climb.

For 2024, Kettering Health’s revenue and expenses were $2.7 billion and $2.6 billion, respectively, according to financial documents recently filed with the Municipal Securities Rulemaking Board. Its net operating earnings were $100.2 million, giving the hospital organization a positive operating margin of 3.7%.

For 2023, Kettering Health’s revenue and expenses were $2.56 billion and $2.54 billion, respectively, according to financial filings. Its earnings just from operations was $23.8 million, giving Kettering Health a 0.93% operating margin that year.

About 50% of Kettering Health’s patient service revenue was from commercial insurance in 2024. About 39% was from Medicare, 10% was Medicaid and 1% was self-pay.

Kettering Health has 14 area medical centers and more than 120 outpatient locations throughout western Ohio, as well as Kettering Physician Network, which includes more than 700 board-certified providers.

Premier Health continues negative margins

Premier Health has yet to reach a point of stability, but it has a lower percentage of patients using commercial insurance and relies more heavily on government-sponsored health plans. About 31.2% of its patients in 2024 had commercial health insurance, according to financial filings. About 49% of patients used Medicare, 18% used Medicaid and 1.8% were self-pay.

Hospitals serving more vulnerable patient populations are struggling to keep up with payments from government-sponsors health plans, like those through Medicaid, according to Abir.

“Particularly safety net hospitals or critical access hospitals, they rely a lot on Medicaid in order to get reimbursed,” Abir said. “...It is difficult for many of these hospitals to continue functioning on the kinds of margins that they’re operating when payment from Medicaid is so low.”

For 2024, Premier Health’s revenue and expenses were $2.48 billion and $2.53 billion, respectively, according to financial filings. This was a loss of $47.7 million, giving Premier Health a negative 1.9% operating margin.

This an improvement over the losses felt in 2023, Premier Health said, as it was about $31.2 million less than what the hospital system experienced in 2023.

For 2023, Premier Health’s revenue and expenses were $2.33 billion and $2.42 billion, respectively, according to financial filings. This was a loss of $78.9 million and an operating margin of negative 3.4%.

In 2022, Premier Health’s losses were upwards of $165.5 million, according to previous financial filings.

Premier Health has five hospitals, including Miami Valley Hospital in Dayton, the region’s only level 1 trauma center. Premier Health provides care at its seven emergency departments, eight urgent care locations and more than 130 outpatient locations.

Over half of Ohio hospitals in the red

For Premier Health, 2025 will be another important year for the organization to reach positive operating margins, the hospital system said.

More than 50% of Ohio hospitals, and 72% of rural hospitals, reported negative operating margins over the past few years, according to the Ohio Hospital Association.

“They’re still on thin ice,” Dr. Vikas Saini, president of the Lown Institute, said about rural hospitals. The Lown Institute is a health care think tank.

The median hospital operating margin was 0.0% in 2024, negative 0.7% in 2023 and negative 2.8% in 2022, the association said.

One of the big drivers for Premier Health in 2024 was they were able to improve employee recruitment and retention, which lessened the need for contract-agency staff and creates a better environment for patient and employee engagement, Premier Health said.

“While the effects of the pandemic are largely behind us, there continue to be industry-wide challenges with limited supply of high demand and specialized positions, high-cost supplies and pharmaceuticals and an evolving reimbursement landscape,” Premier Health said.

‘There’s a lot of uncertainty’

Hospital systems are making changes to care models to help cope with costs, as well as to help reach patients before they need a visit to the emergency room. Changes to Medicaid that could reduce the number of people covered, though, could hurt hospitals that rely on its reimbursements, even if they are low.

More hospitals are shifting to outpatient care and ambulatory surgery centers where patients are discharged the same day after a surgical procedure, according to Saini. Telehealth also continues to be popular and more normalized.

If there is a decline in Medicaid coverage, such as with a reduction due to work requirements or having the expansion group no longer being eligible for Medicaid, it can hurt hospitals that serve those populations, Saini said.

“There’s a lot of uncertainty,” Saini said.

If hospital systems aren’t able to keep up with costs, they may be at risk of closures, especially those in rural regions, according to Abir, who expects the trend of rural hospitals closing to increase nationally.

“You really need to commit to saving hospitals, particularly in rural areas, and that needs legislation,” Abir said.