Children’s Hospital of Philadelphia Finishes Fiscal Year with Narrow Operating Profit Despite Challenges

Children’s Hospital of Philadelphia (CHOP) faced financial challenges in the past fiscal year, but managed to finish with a narrow operating profit of $23 million, representing a margin of 0.57%. This is a significant drop from the previous year’s operating profit of $154 million, as well as historically low compared to CHOP’s average operating profit margin of 8% in the years before the pandemic.

CHOP CEO Madeline Bell warned employees of the changing healthcare environment, citing shifts in payment mix from insurers and rising labor and supply costs as factors adding risk to the organization’s financial position. The hospital also faced financial strain due to a surge in respiratory viruses, including RSV, flu, and Covid-19, which led to a decrease in revenue from insurers.

To address the financial challenges, Bell announced cost-cutting measures such as deferring discretionary spending, limiting hiring to essential positions, and reducing overtime and temporary staffing expenses. Despite these measures, CHOP plans to increase capital expenditures and investments by 15% in the current fiscal year, including the development of a children’s crisis and behavioral health inpatient center in West Philadelphia.

Despite the financial constraints, CHOP remains committed to providing merit pay raises and compensation equity adjustments for all employees. The hospital’s dedication to investing in new projects and employee well-being demonstrates its resilience in the face of financial challenges.