Strong hospitals Are Necessary For PA's Tech Boom to Happen

The Keystone State has been buzzing with excitement since the recent announcement detailing a wave of private investment that promises to make the commonwealth a national hub for artificial intelligence (AI) infrastructure and the energy required to fuel it.

The $90 billion of investments in data centers, energy, and workforce initiatives – estimated to create tens of thousands of jobs – were announced during an inaugural Pennsylvania Energy and Innovation Summit hosted by U.S. Sen. Dave McCormick at Carnegie Mellon University and attended by President Donald Trump, Gov. Josh Shapiro, and other political and business leaders.

Much of the discussion around Pennsylvania’s future as an AI leader has focused on energy infrastructure as a key enabler – and understandably so. But there’s another factor that will also make or break this effort that should not be taken for granted: access to high-quality health care.

We can’t talk about economic development without considering the vital role of local hospitals. Hospitals are often the top employers in their communities, anchoring local economies and encouraging business growth through the direct and ripple effects of their activity. But the ways that hospitals help their communities thrive reach much deeper.

For these AI and energy investments to be successful, the communities where they’re planned – many of them in rural areas – need the full range of health care services on which families depend. That’s critical both to supporting the healthy workforce on which employers depend and for attracting and keeping talent. It’s a tough sell, for example, to ask a young family to relocate to an area where the closest emergency room is a more than 30-minute drive or the nearest birthing hospital is more than an hour away.

It shouldn’t come as a surprise that many of the rural investments that have already been detailed – a 1,000-job data center in Indiana County and a 30-job natural gas power facility upgrade in Snyder County, for example – are in areas near community hospitals that have been able to maintain a broad range of services, including labor and delivery. For other communities aiming to attract similar investments (or get a piece of the ones announced recently that have not yet reached the site-selection phase), a strong, local hospital is a necessity.

At a time when many rural hospitals are struggling and care deserts are increasing – a scenario that’s poised to escalate as federal Medicaid cuts take effect in the coming years – it’s paramount that state and federal policymakers take action now to preserve health care access that’s vital to the commonwealth’s economic future.

That starts with addressing the broken payment model. Hospital reimbursement in general has not kept pace with the cost of providing care, which continues to increase as labor, supply, and drug expenses rise. Nationally, hospitals’ year-over-year expense increases have more than doubled the rate of inflation.

Right now, your rural hospitals are reimbursed for care provided to Medicaid beneficiaries at 74 cents on the dollar, and that number is set to deteriorate in the coming years. No business can build long-term stability on that kind of a structural deficit. We see the results of this imbalance as more than half the commonwealth’s acute care hospitals continue to operate at a loss or with margins too low for long-term stability.

Just as strong communities depend on strong hospitals, the reverse is also true. Changing the trajectory for rural hospitals hinges on the very same economic development that they enable. Vibrant, growing communities mean higher patient volumes and fewer barriers to recruiting a robust workforce of health care professionals, both of which are crucial factors in maintaining services. More community members with employer-sponsored health plans means less reliance on Medicaid and Medicare, both of which pay below the cost of delivering care. There is a strong link, both ways, between the futures of rural hospitals and the communities they serve.

To be sure, there is a bright future for our rural communities and the possibilities are exciting. But whole, vibrant communities are greater than the sum of their parts. These investments will be a lifeline for our communities and we need to ensure hospitals will be there to care for them and help them thrive. Investments to stabilize hospitals today will enable communities to attract the growth necessary to boost their vitality and safeguard access to care into the future.

We all have an interest in making sure our communities have the necessary infrastructure to be healthy, vibrant, and economically competitive. Let’s continue to invest in our commonwealth, and invest in the health care that enables a strong Pennsylvania economy.