PYA completed a comprehensive study, Financially Distressed Hospitals—Impact of Commercial Payers, in June 2025 in collaboration with the Kansas Hospital Association (KHA), evaluating the impact of commercial reimbursement rates on the financial condition of hospitals, particularly rural hospitals, in Kansas and neighboring states. With KHA, PYA also examined the role commercial payers play in the ongoing strain on the states’ healthcare sustainability.
Summary of Findings
Drawing on Medicare Cost Report data from 2019-2022, the PYA study evaluated 124 hospitals across Kansas. Key findings reveal that more than half of these hospitals are operating at a financial loss, with a statewide median operating margin of -12.7% in fiscal year 2022. The situation is especially dire for rural hospitals, with over 20 facilities at immediate risk of closure—the highest number in the nation.
Comparative analysis in the PYA study shows Kansas hospitals faring worse financially than their counterparts in Oklahoma and Nebraska. Contributing to this disparity is a misalignment between commercial reimbursement rates and the actual cost of care delivery.
The study also assessed the financial strength of key commercial insurers and modeled the impact of potential reimbursement increases. Results suggest that aligning payments more closely with costs could materially improve hospital sustainability and preserve access to essential health services statewide.
In sharing the study with the public, KHA explained:
“PYA’s analysis underscores the severe financial challenges facing hospitals and that without additional funding, many hospitals will continue to operate at a loss, threatening their ability to provide essential [healthcare] services, maintain infrastructure and support necessary staffing levels. By aligning hospital funding more closely with the actual costs of care, whether through commercial reimbursement or other sources, Kansas hospitals can move from financial distress to sustainability, ensuring they continue to serve their communities.”
“The results of the PYA study help Kansans better understand the overall financial challenges facing Kansas hospitals and possible solutions.”
As financial pressures continue to mount for hospitals across the country, PYA’s analysis offers a data-driven framework for understanding the severity of the situation and highlights insights for payers, providers, and policymakers seeking to stabilize the nation’s healthcare system.
For access to the PYA study, including executive summary, findings, and key data visuals, visit KHA’s Financial Stability Resources. Also, read KHA’s summary of the study and key takeaways.
PYA has partnered with Kansas hospitals for many years to provide strategic advisory services in operations, transactions, compliance, compensation, reimbursement, regulatory matters, and many other areas. Our experts are dedicated to helping all hospitals operate sustainably and be able to focus on patient care.
Learn more. Read about PYA’s Business Intelligence services.
