Published: 19 July 2000
Analyst(s): Jonathan Edwards
Management Summary Healthcare providers and payers in the Harrisburg region are suffering the combined effects of increased medical and drug costs, and reductions in Medicare and Medicaid reimbursements. As a result, local healthcare organizations are consolidating operations and shedding unprofitable lines of business. Harrisburg, Pennsylvania's state capital, is on the banks of the Susquehanna River in the south-central section of the state. The Harrisburg-Lebanon-Carlisle metropolitan statistical area (MSA) comprises Cumberland, Dauphin, Lebanon and Perry counties, and includes the towns of Carlisle, Hershey and Lebanon. The principal hospital organization is PinnacleHealth System, which owns all four hospitals in the city of Harrisburg. The main health plans are Keystone Health Plan Central, HealthGuard of Lancaster and Aetna U.S. Healthcare. The pressing issue facing hospitals in the Harrisburg region, and in the state as a whole, is controlling costs in the light of ongoing federal Medicare reimbursement reductions. Unless the federal government enacts legislation to roll back the Medicare reimbursement cuts mandated by the 1997 Balanced Budget Act, Pennsylvania's hospitals will suffer serious financial losses during the next few years. According to the Hospital and Healthsystem Association of Pennsylvania, reduced Medicare reimbursements to Pennsylvania's hospitals for 2000 exceed the total net income of the state's hospitals for 1999. Pennsylvania's hospitals must shoulder the additional burden of the state's low Medicaid reimbursement rate (77 percent of costs), which is among the lowest Medicaid reimbursement rates in the country. To remain solvent in the face of these financial pressures, PinnacleHealth System, the area's sole integrated delivery system (IDS) and the owner of all four hospitals in Harrisburg, is restructuring its entire organization to cut costs, consolidate duplicate services and improve efficiency and quality. Penn State...
©2020 Gartner, Inc. and/or its affiliates.
All rights reserved.
Gartner is a registered trademark of Gartner, Inc. and its affiliates.
This publication may not be reproduced or distributed in any form without Gartner’s prior written permission.
It consists of the opinions of Gartner’s research organization, which should not be construed as statements of fact.
While the information contained in this publication has been obtained from sources believed to be reliable, Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information.
Although Gartner research may address legal and financial issues, Gartner does not provide legal or investment advice and its research should not be construed or used as such.
Your access and use of this publication are governed by Gartner’s Usage Policy.
Gartner prides itself on its reputation for independence and objectivity.
Its research is produced independently by its research organization without input or influence from any third party.
For further information, see
Guiding Principles on Independence and Objectivity.