Pa. leader tackles financial challenges of hospitals | States of healthcare

Note: This is the first in a new series of profiles of healthcare leaders at the state level.

Since taking over as president and CEO of the Hospital and Healthsystem Association of Pennsylvania, Nicole Stallings has been racking up the miles driving around the Keystone State.

In her first six months on the job, Stallings met with more than 60 hospital CEOs.

“I've been making my rounds across the Commonwealth,” Stallings tells Chief Healthcare Executive®.

Stallings took over the post last June, succeeding Andy Carter, who led the organization for more than a decade. Previously, Stallings served as chief external affairs officer for the Maryland Hospital Association.

It’s a big change in scope and size. The Maryland association represents more than 60 hospitals, while Pennsylvania’s association serves as an advocate for more than 230 hospitals.

In an interview with Chief Healthcare Executive, Stallings says she’s heard a consistent theme from hospital leaders across Pennsylvania. Many of the state’s continue to struggle financially.

Nearly 40% of the state’s hospitals have a negative operating margin, and many others have very modest margins, she says.

“We like to say in the hospital association world, no margin, no mission,” Stallings says. “And so for hospitals to be able to really provide for the needs of their communities, it's critically important that they have that financial stability.”

‘It’s not sustainable’

Stallings points to the link of the strength of hospitals to the health of communities, in more ways than one.

“We know that healthcare deserts very quickly become economic deserts, because hospitals are often the top employers in their communities,” Stallings says.

Pennsylvania mirrors much of the nation, as hospitals across America are battling financial difficulties. Many Pennsylvania healthcare leaders cite a common concern about inadequate reimbursements from the federal government.

“Those conversations become louder and are perhaps more important even now, because of the financial strain that our hospitals are facing,” Stallings says.

“We have patients that are coming in sicker, they're staying longer, we still have historic and persistent workforce shortages,” she continues. “We're grappling with these rising expenses. And so it's not sustainable, and a community's health is really reliant on having a financially healthy hospital.”

With reimbursements not keeping pace with the cost of care, hospitals in Pennsylvania, much as in other areas, are reducing services, or consolidating services that had been at multiple locations, Stallings says.

“These are some of those tough decisions and discussions that are happening around hospital board tables,” Stallings says.

Many Pennsylvania hospitals are continuing to struggle in recruiting and retaining workers. Pennsylvania’s health systems have made progress, reducing turnover 28% over the past year, according to a report issued last month. Still, one in five nursing support positions were vacant in late 2023, along with about one in seven positions for direct care registered nurses, the association says.

Staffing is a huge problem for many hospitals in Pennsylvania’s rural areas, which cover large swaths of the central and northern regions of the state.

“The workforce challenges in rural communities are particularly acute,” Stallings says. “It's very difficult to recruit into those areas, which tend to be the communities that are aging the most and therefore need the most care.”

“One of the key challenges that we will have is to think about what's next for our rural hospitals so that we can continue to ensure access to those essential services,” she says.

Behavioral health needs

Pennsylvania hospital leaders also continue to see a high number of patients with behavioral health issues in their emergency departments. Hospitals nationwide, including children’s hospitals, are seeing more patients arriving in mental health emergencies.

Stallings has heard a number of hospital leaders discuss boarding patients with mental health needs in emergency departments. “It has come up in virtually every conversation I've had with hospital leaders,” she says.

Some of those patients haven’t needed acute medical care.

“They arrived in the emergency department because services were not available in the community, or they got to a crisis point and needed to come in to be stabilized into the hospital. And yet we don't have the next setting to send them,” she says.

As a result, hospitals have a throughput issue. “We have a front door problem and a backdoor problem,” she says.

Stallings sees the potential for hospitals to come together to devise some regional solutions, which are sorely needed.

Tackling tough conversations

Pennsylvania’s hospital leaders have shown a willingness to come together to deal with tough issues, Stallings says. She points to the issue of maternal health as an example. “We know that there are disparities in access and outcomes that we need to address in Pennsylvania,” Stallings says. “Some of those happen within the four walls of the hospital. And there's care that we can improve. But there's also an opportunity to better partner, so that before, during and after delivery, we are best supporting mom and baby and ensuring that high quality care is provided and that we are addressing historic inequities there.”

“This is a tough conversation, and it's going to require significant resources, time and effort,” Stallings says. And the hospital association’s board is very focused on the issue.

The association is also focused on health equity more broadly, including workforce and community needs. “I would say we are really bringing that comprehensive view to all of the work that we're doing,” Stallings says.

Looking ahead, Stallings says she is most excited about helping the hospital association build new relationships with the business community and educational institutions.

“I believe our success is all very much tied to one another, so really building those relationships and thinking about the things that we can work on together,” Stalling says.

She also says she wants to continue building on the association’s strong foundation and finding ways to innovate.

As Stalling says, “I believe in holding up the mirror and asking ourselves, what could we be doing differently? How could we do this better?”