Temple University Health System reported a $15 million operating loss in the three months that ended Sept. 30.
The result for the first quarter of fiscal 2026 was an improvement from the North Philadelphia nonprofit’s $17 million loss last year.
“We’re pretty happy where we are,” CEO Mike Young said Wednesday. Revenue was above budget and labor costs were on budget in the first quarter for the first time in several years.
Here are some details:
Revenue: Total revenue was $800 million, up 13% from $712.5 million a year ago. Outpatient revenue increased by nearly $62 million, much of it from the health system’s specialty and retail pharmacy business.
Temple participates in a federal program for safety-net hospitals that allows it to buy certain drugs at a discount and then get full reimbursement from insurance companies.
Expenses: Temple noted in its report to municipal bond investors Tuesday that salaries, including higher pay rates for nurses, and higher drug spending for outpatient infusions and other pharmacy business were the biggest expense increases.
Notable: On the labor front, several job categories remain hard to fill, Young said. Those are CT techs, nurse anesthetists, and lab techs. “Other than those three [specialties], it’s not where it was three years ago, where you couldn’t find anybody,” he said.
A lawsuit filed Tuesday in Philadelphia accused Jefferson Health of violating federal labor rules when it laid off 1% of its 65,000 employees in October and this month without providing a 60-day notice.
The purported class-action lawsuit says the proposed lead plaintiff, Ciara Brice, lost her job as a medical assistant on Nov. 12 with no notice and has not received the severance pay she was promised.
Brice was not available for comment, said her lawyer, Jeremy E. Abay, with Philadelphia law firm Pond Lehocky Giordano Inc.
The Worker Adjustment and Retraining Notification Act has a complicated rubric for determining when a mass layoff requires advance notification, which is filed with state labor departments. One of the triggers is an employer cutting at least 500 jobs, according to Abay.
Even though the layoffs happened throughout Jefferson’s entire footprint from South Jersey to near Scranton, Abay said notice is required because Jefferson operates as a single entity.
“We believe the facts will show that there was no violation of the federal WARN Act,” Jefferson said in a statement.
The nonprofit filed a notice of 108 layoffs at Jefferson Cherry Hill Hospital, Jefferson Stratford Hospital, and Jefferson Washington Township Hospital because New Jersey has its own rules, Abay said.
The nonprofit, which grew through acquisitions from three hospitals in Philadelphia in 2015 to more than 30 now, provided no details when it announced the layoffs in mid-October.
That layoff was part of a series of large job cuts starting in the summer of 2023, but may have been the first time patient-facing workers like Brice were hit.
The lawsuit seeks back pay, benefits, and damages for each laid-off employee who did not receive a 60-day notice.
Editor’s note: The headline on this article has been updated to clarify that a lawsuit claims violations.
A Philadelphia jury reached $35 million verdict last week against Main Line Health and the University of Pennsylvania Health System for a cancer misdiagnosis that led a then-45-year old Philadelphia resident to undergo a total hysterectomy in 2021.
Main Line discovered later that the biopsy slides used to make the diagnosis in February 2021 were contaminated. The cancer diagnosis was due an error that involveda second person’s DNA, not that of the plaintiff, Iris Spencer, who did not have cancer.
Main Line settled with Spencer in 2022 for an undisclosed amount, so it won’t have to pay its share of the verdict.
The jury found Penn and its physician, Janos Tanyi, a gynecological oncologist, liable for $12.25 million, or 35%, of the total awarded in damages for her unnecessary hysterectomy. The lawsuit said Spencer suffers from “surgically-induced menopause.”
The lawsuit against Penn and Tanyi said the physician did not do enough to resolve a conflict between biopsy results at Main Line and those at Penn, where Spencer sought a second opinion.
A Penn biopsy did not find cancer. Other tests were also negative, but Spencer did not know about those results.
“The verdict affirms the central importance of the patient and the doctor’s obligation to inform the patient of all of the test results, of all of her options, and that she shouldn’t be dismissed because she’s a patient and not a doctor,” Spencer’s lawyer, Glenn A. Ellis, said Monday.
The $35 million verdict is Philadelphia’s largest this year for medical malpractice, according to data from the Philadelphia Court of Common Pleas.
Medical malpractice costs have been rising throughout healthcare. A factor in Pennsylvania is a 2023 rule change that allowed more flexibility in where cases can be filed.
Spencer’s troubles started in February 2021 at Main Line’s Lankenau Medical Center where her biopsy found that she had cancer in the lining of her uterus despite the lack of symptoms.
For a second opinion, Spencer saw Tanyi at Penn a few days later. A repeat biopsy came back negative, according to Spencer’s complaint that was filed in early 2023. Tanyi also performed other tests, all of which came back negative, but he did not share that information with Spencer, the complaint says.
After Tanyi performed the complete hysterectomy on March 8, 2021, Penn’s pathology laboratory found no cancer in the tissues that had been removed from Spencer’s body.
That’s when Spencer, who has since moved to Georgia, went back to Lankenau seeking an explanation. Seven months later, Main Line informed her that she never had cancer.
Main Line and Spencer subsequently “reached an amicable full and final settlement to resolve and discharge all potential claims for care involving the health system,” Main Line said in a statement. Main Line did not participate in the trial.
Penn said in a statement: “We are disappointed by the jury’s verdict in this case that was unmoored to the evidence presented at trial on negligence and damages. Our physician reasonably relied on the pathology performed at a hospital outside our system that revealed a very aggressive cancer.”
Penn said it plans to appeal the verdict, which could increase by more than $2 million if the court approves a motion for delay damages that Ellis filed Saturday.
Temple University Health System‘s medical malpractice expenses have surged in the two years that ended June 30 as part of a campaign to reduce financial risk by settling old cases.
The hope is that “aggressively” settling cases will pay off over the next few years by reducing medical malpractice expenses, Michael DiFranco, the health system’s chief accounting officer, told investors during a conference call last week on the health system’s fiscal 2025 financial results.
Temple’s annual medical malpractice expenses increased nearly fourfold, to $117.8 million in fiscal 2025 from $31.6 million two years ago. Over the same period, it cut its reserves for future expenses by $88 million, or 22%. Temple’s reserves peaked at $402.9 million in 2023.
Rising medical malpractice costs are reverberating throughout healthcare. Tower Health recently boosted its reserves after its auditor decided they should be higher to deal with anticipated claims. Lifecycle Wellness, a birth center in Bryn Mawr, blamed its decision to stop delivering babies in February in part on rising medical malpractice costs.
The average number of medical malpractice lawsuits filed in Philadelphia every month has risen from 34 and 35 in the two years before the pandemic to 51 last year and 52 so far this year, according to the Philadelphia Court of Common Pleas.In additional to lawsuits against hospitals, the tally includes litigation against physicians, nursing homes, and other healthcare providers.
Contributing to the increase was a rule change at the beginning of 2023 that allowed more cases to be filed in Philadelphia rather than the county where an injury occurred. Malpractice lawyers say they like to file in Philadelphia because the system for trying cases is efficient. Health systems often note that Philadelphia juries sometimes award large verdicts.
A ‘wake-up call’ at Temple
Temple Health started rethinking its medical malpractice strategy after John Ryan started as general counsel in January 2022. A month before he started, The Inquirer published an article about three suicides at Temple Episcopal Hospital in 2020. At least two of the families sued Temple.
“That was a wake-up call,” Ryan said in a recent interview on his approach to handling malpractice cases.
Then in May 2023, a Philadelphia jury hit Temple with a $25.9 million verdict in a case involving a delayed diagnosis of a leg injury leading to an amputation.
After that loss, Temple changed the kinds ofoutside lawyers it hiresto defend it in malpractice cases, Ryan said, swapping medical malpractice specialists for commercial litigators from firms like Blank Rome, Cozen O’Connor, and Duane Morris. Such lawyers cost more, but it’s paying off, he said.
“The settlements we’re getting from the plaintiff lawyers, because they can see that we’re serious, are much better,” Ryan said. The two Episcopal cases were settled this year for undisclosed amounts, according to court records. A birth-injury lawsuit against Temple University Hospital in federal court settled for $8 million this month.
In 2024, a jury awarded $45 million to a teen who was shot in the neck and suffered brain damage from aspirating food soon after his release from Temple. Temple appealed and the judge who oversaw the original trial ordered a new one. That case then settled at the end of October for an undisclosed amount.
The new approach has helped Temple reduce the number of outstanding cases at any one time to 65 or so now compared to 110 three years ago, according to Ryan.
Temple is using the money it is saving on malpractice costs to invest in better and safer care, Ryan said. “That’s not a byproduct of all we’re trying to do as the lawyers. It’s the goal,” he said.
Inquirer staff reporter Abraham Gutman contributed to this article.
When Pamela Collins was pregnant, she would talk and sing to her sonthrough her belly, telling him he was loved.
He was the “miracle” that the 32-year-old mother had been waiting for, after four miscarriages and an ectopic pregnancy.
She never expected that her son, John, would arrive early at 29 weeks in September and have tospend his first months in the intensive care nursery at the Hospital of the University of Pennsylvania.
Her family hasrelocated from Mount Pocono to stay at the nearby Ronald McDonald House, a charity, so they canvisit John every day. Even still, she wishes she could be with him all the time, to sing to him and tell him that he is strong and loved — just as she did when he was in her womb.
A new medical device being tested at HUP could help her do just that.
Collins’ son is one of five babies so far to try out the Sonura Beanie, a device that aims to connect NICU babies with their parents and block out harmful noises in the hospital environment.
Invented by five undergraduates at the University of Pennsylvania, the beanie is designed to mimic the womb, by filtering out high-frequency sounds like alarms — which frequently plague the NICU — while allowing human voices at low frequencies to be heard.
The device can also deliver audio messages recorded by parents for their babies.
“It’s as if they were laying on your chest [or] as if they were in the womb,” said Sophie Ishiwari, one of the founders.
Their idea won Penn’s 2023 President’s Innovation Prize, which provided a $100,000 cash award and living stipends for the team to pursue their commercial project after graduation. Three of the original members went onto medical school, leaving two — Gabby Daltoso and Ishiwari — to continue working on the product full-time.
In the two years since graduating, they’ve tested the device in the lab and pitched it to hospitals around the country, earning accolades along the way. Now, they’re putting the beanie on infants in the hospital for the first time.
Over the next several months, Ishiwari and Daltoso will be testing the beanie on 30 infants in HUP’s intensive care nursery. They’ll be looking to see whether the beanie can reduce stress, based on changes in heart rate, respiratory rate, and oxygen saturation.
They will also evaluate how easy it is for nurses to use, and how parents feel about the experience.
Collins joined the study hoping the beanie could help her son feel calmer by hearing her voice, as well as that of his father and teenage sister.
“I know my baby can listen more than he can see, and I’m excited to know he’s listening to our voices instead of this beeping,” she said, gesturing to the noisy NICU machines.
Pamela Collins suffered four miscarriages and an ectopic pregnancy before giving birth to John.
The origin
The first thing Daltoso and Ishiwari noticed when shadowing in the NICU was how loud it was. Between beeping from machines to hospital alarms going off, it felt overwhelming even for adults.
“They can’t turn the alarms off because it’s their job to keep patients alive,” Daltoso said.
In the womb, a fetus would primarily be exposed to low frequency sounds under 500 Hertz. Alarms in the NICU can hit 2,000 Hertz and higher, Daltoso said. Imagine having to hear a fire alarm go off continuously throughout the day.
A 2014 study found that babies in a NICU in Massachusetts were exposed to frequencies over 500 Hertz 57% of the time.
Some medical equipment also emit high frequencies of sounds. Babies on a ventilator, for example, are exposed to sounds in the 8,000 Hertz range of frequencies, Daltoso said.
“They’re in a room of 20, so if one baby’s on it, they’re all exposed,” she added.
In the short term, this noise can stress babies out to the point of not being able to sleep or eat, Daltoso said. Babies may experience trouble gaining weight as a result and show unstable signs such as heart rates that arefaster than normal.
Babies in the NICU could also suffer long-term impacts from what is known as “language deprivation,” Ishiwari said.
Normally, an infant would be exposed to language early in life, which is important for the infant’s neurodevelopment. But a baby in the NICU has less exposure to their parents’ speech.
Studies have shown that preterm babies are generally at higher risk of language delays and deficits.
Daltoso and Ishiwari, alongside those three other seniors majoringin bioengineering at Penn, were inspired to create the beanie for their senior capstone project in 2023.
Through a sound-engineering class and interviews with hundreds of clinicians and parents, they devised the technology inside the beanie to cancel out high-frequency noises, particularly above the 2,000 Hertz range, while allowing lower frequencies through.
A mobile app connects to the hat to enable parents to send songs, stories, audio messages, and recordings of their heartbeat to the baby remotely through a speaker in the hat.
The babies wear the beanies during feeding so that it mimics a real-life interaction, where the baby would normally be lying against their mother’s chest.
Ishiwari said she has teared up listening to some of the messages parents were leaving for their babies. They’ve so far included bedtime stories, songs, and shorter messages like “I love you” and “good night.”
“A lot of them don’t know where to put that love and joy and excitement,” Daltoso said. “This is a place that they can.”
Gabby Daltoso and Sophie Ishiwari are testing the beanie at the Hospital of the University of Pennsylvania.
Sending love from afar
When Collins and her husband, Franqlin, prepared to record messages for John, they turned off the lights in the room and prayed.
Then they started recording.
Collins, who is originally from Brazil, sang a Brazilian song to tellhim that he is perfect the way he is. Her husband made up a story about John, and her 15-year-old daughter narrated another with the messagethat he is enough.
A nurse told Collins that John was laughing when he wore the beanie.
“I can tell he loved that,” Collins recalled the nurse telling her.
Babies in the study wear the beanies for three 45-minute sessions a day, butCollins wishes her son could wear his the whole day.
“I feel babies can be more calm now and [won’t] be crying all the time,” she said.
The beanie designed by Gabby Daltoso and Sophie Ishiwari cancels out high-frequency sounds while allowing low-frequency sounds through.
Michelle Ferrant, a clinical nurse specialist in HUP’s intensive care nursery, was excited that its NICU was chosen as a pilot site.
Herteam has done projects to try to reduce noise levels in the NICU, including putting signs up to remind people to use hushed voices, and closing doors and trash can lids as softly as possible.
“There are a lot of things that might not seem very loud to us, but [if] you’re a small baby and it’s so close to [you], it sounds much louder,” Ferrant said.
However, until the beanie study came along, they didn’t have a way of filtering which noises babies heard.
The Sonura Beanie team is next looking to launch a multi-center trial that will evaluate whether wearing the beanie could help promote weight gain.
Exposure to their mother’s voice and reduced noise levels can help preterm infants with weight gain and feeding, studies have shown.
“We will be looking to prove that our hat is able to soothe the babies to the point where they are taking in more food, gaining more calories, growing faster, and hopefully going home faster,” Daltoso said.
They also plan to launch in other hospitals, including Stanford Medicine Children’s Health, affiliated with Stanford Medicine and Stanford University in California, so that clinicians can test out the product and see how it fits into their workflow. These pilots would function like “a trial for a pre-purchase,” Daltoso said.
They are currently working on submitting their medical device for clearance by the Food and Drug Administrationso they can begin selling it.
Because the product is deemed low-risk in terms of safety, they are eligible for fast-track approval, which they expect to get within the next year, Daltoso said.
The team is still working on setting a price and declined to disclose details.
They would eventually hope to get the product covered by insurance as a sensory-integrative technique. For that, they would need their larger clinical study to show that the beanie has functional outcomes.
‘Holding the miracle’
John weighed only one pound and 14 ounces at birth.
John doesn’t have a specific release date from the NICU. The timeline will depend on when he is able to breathe on his own and put on weight.
At birth, he weighed only 1 pound, 14 ounces. Today, he weighs more than 4 pounds and no longer requires a feeding tube.
Collins was 20 weeks pregnant when she found out that John had a heart defect that doctors said may one day require surgery. A few weeks after that, doctors found an issue with the placenta that ultimately led to his preterm birth.
Now, when she holds her son in her arms, she feels like “I am holding the miracle,” she said.
Temple University Hospital’s Episcopal campus was cited by the Pennsylvania Department of Health for failing to maintain cleaning logs for the crisis center in May.
The incident was among more than a dozen times inspectors visited Temple’s main campus, Jeanes campus, or Episcopal campus to investigate potential safety problems between September 2024 and August. The three campuses operate under a shared license, and inspection reports do not always distinguish which campus inspectors visited.
Here’s a look at the publicly available details:
Sept. 27, 2024: Inspectors came to investigate a complaint but found the hospital was in compliance. Complaint details are not made public when inspectors determine it was unfounded.
Oct. 1: Inspectors followed up on a January 2024 citation and found the hospital was in compliance. The Episcopal campus had been cited for failing to properly update and document mental health patients’ records and treatment plans every 30 days.
Jan. 6, 2025: The Joint Commission, a nonprofit hospital accreditation agency, renewed the hospital’s accreditation, effective May 2024, for 36 months.
Jan. 11: Inspectors came to investigate three separate complaints but found the hospital was in compliance.
Jan. 16: Inspectors came to investigate a complaint but found the hospital was in compliance.
Jan. 21: Inspectors came to investigate a complaint but found the hospital was in compliance.
Jan. 29: Inspectors came to investigate a complaint but found the hospital was in compliance.
Feb. 5: Inspectors came to investigate a complaint but found the hospital was in compliance.
Feb. 11: Inspectors came to investigate a complaint but found the hospital was in compliance.
Feb. 21: Inspectors came to investigate a complaint but found the hospital was in compliance.
March 4: Inspectors came to investigate a complaint but found the hospital was in compliance.
March 10: Inspectors came to investigate a complaint but found the hospital was in compliance.
March 12: Inspectors visited for a monitoring survey and found the hospital had violated rules related to patients’ rights to care by competent personnel. Details of the problem were not made public because the issue was fixed before inspectors arrived. The hospital’s correction plan included educating staff about how to protect vulnerable patients from leaving the hospital against medical advice. Administrators also established a system to review patients at risk and an environmental safety checklist.
March 31: Inspectors came to investigate a complaint but found the hospital was in compliance.
April 4: Inspectors came to investigate a complaint but found the hospital was in compliance.
May 6: Inspectors cited Temple’s Episcopal campus for not having sanitation documentation and cleaning logs for the crisis response center. Administrators retrained staff on the hospital’s sanitation policies and record-keeping requirements.
May 8: Inspectors came to investigate a complaint but found the hospital was in compliance.
June 10: Inspectors came to investigate a complaint but found the hospital was in compliance.
July 14: Inspectors came to investigate a complaint at the Jeanes campus but found the hospital was in compliance.
Jefferson Abington Hospital has closed its inpatient behavioral health unit and will use the 23 beds to accommodate extra patients in its emergency department, the health system said this week.
Abington will continue to provide crisis services to stabilize patients who are experiencing a mental health emergency when they arrive at the hospital, and will provide psychiatric evaluations needed to transfer them to specialized facilities. The hospital will also continue to provide outpatient behavioral health services.
The shift “will better serve our emergency department patients both with and without behavioral health needs,” Jefferson Health said in a statement.
A spokesperson confirmed the change on Tuesday but declined to say when the hospital had transitioned the 23 behavioral health beds into an emergency department “surge unit” or whether any staff members were laid off.
Jefferson Health announced in October that it had laid off between 600 and 700 of its 65,000 employees. The system reported an operating loss of $104 million in the first quarter of fiscal 2026, which ended in September, driven largely by its struggling insurance business.
The spokesperson also declined to say whether the hospital had plans to reopen the psychiatric unit in the future, or whether the change was part of ongoing restructuring across the sprawling 32-hospital system. Jefferson leaders have said they plan to streamline services across the Jefferson network, which has grown significantly through acquisitions since 2015.
The hospital’s inpatient psychiatric unit treated 350 patients in 2024, according to the most recent data from the Pennsylvania Department of Health.
Patients experiencing severe mental and behavioral health emergencies often need to be admitted to a specialized psychiatric hospital. General hospitals like Abington are critical entry points, helping to stabilize these patients and providing psychiatric evaluations, said Carla Sofronski, executive director of the PA Harm Reduction Network, a nonprofit organization that advocates for people with mental and behavioral health needs.
Patients must be evaluated by a psychiatrist or psychologist before being transferred to a specialized facility.
Sofronski said she worries that being in the emergency department could become even more stressful and scary for patients in a mental health crisis if they do not have dedicated rooms to decompress.
“It’s a very busy emergency department — what does that experience look like for people who are suffering?” she said.
Last year, an Abington security guard was accused by the Pennsylvania Department of Health of using excessive force against a patient being treated in the hospital’s psychiatric unit. Video footage of the hallway encounter obtained by The Inquirer showed the guard bringing the patient — who was naked beneath a hospital-bed blanket wrapped around her body — to the floor after she ignored his orders to stop walking. Jefferson has said the guard followed protocol.
Jefferson declined to say where it planned to transfer patients.
Other options nearby for patients in need of these services include Holy Redeemer Hospital’s 24 inpatient psychiatric beds, according to health department data from 2024, the most recent year available.
Elsewhere in the Jefferson network, Jefferson Einstein Philadelphia has 37 inpatient psychiatric beds and the system’s flagship hospital has 16.
Philadelphia is the newest destination forLilly Gateway Labs, an incubator for early-stage biotech companies backed by pharmaceutical giant Eli Lilly & Co., the companyannounced Wednesday.
The Center City incubator will be Lilly’s fifth in the United States. Biotech hotbeds Boston, South San Francisco, and San Diego already have them. (South San Francisco has two.) Companies at those locations have raised more than $3 billion from investors since the program started in 2019, Lilly said.
Lilly’s Philadelphia operation will occupy 44,000 square feet on the first two levels of 2300 Market St. in Center City.
Lilly expects to house six to eight companies there, aiming to welcome the first startups to the site in the first quarter of next year, said Julie Gilmore, global head of Lilly Gateway Labs. She did not identify prospects.
Typically, Gateway Labs residents are at the stage of raising their first significant round of capital from investors, called Series A, and are two or three years from clinical testing, she said.
The arrival of high-profile Lilly, which has seen resounding success with its GLP-1 drugs for diabetes and weight loss, could turn out to be a shot in the arm for a local biotech scene. Philadelphia has a growing biotech sector but has lagged places like Boston, despite the presence of world-class scientists atlocal research universities.Their work has fueled groundbreaking discoveries in cell and gene therapy, as well as vaccines.
But Lilly is interested in supporting ideas that go beyond the city’s cell and gene therapy strengths, said Gilmore. Gateway labs is part of Lilly’s Catalyze360 Portfolio Management unit, which provides broad support to fledgling biotech firms, including venture capital.
“What we like is to go after innovative science. Who are the companies trying to solve really hard problems?” Gilmore said. “And we do know that Philadelphia has had a ton of success in gene therapy and CAR-T and I hope we can find some great companies in that space, but we’re going to be open to other types of innovative science as well.”
Expanding Philly’s life sciences footprint
Indianapolis-basedLilly already has a small presence in Philadelphia with Avid Radiopharmaceuticals Inc., a company it acquired in 2010. Avid still operates in University City. Lilly’s chief scientific officer, Daniel Skovronsky, founded Avid in 2004 after receiving a doctorate in neuroscience and a medical degree from the University of Pennsylvania.
Lilly is interviewing people to lead Philadelphia’s Gateway Labs location. They like to hire people who are familiar with the local universities and venture funds for those jobs, but that’s not all that matters. “We’re also looking for somebody who’s got deep drug development expertise,” Gilmore said.
Lilly’s incubator adds to the life sciences activity at 23rd and Market Streets.
Breakthrough Properties, a Los-Angeles-based joint venture of Tishman Speyer and Bellco Capital, announced plans for the eight-story, 225,000 square-foot building in 2022. Last week, Legend Biotech, which is headquartered in Somerset, N.J., celebrated the opening of a new cell therapy research center on the building’s third floor.
Lilly Gateway Labs companies agree to stay for at least two years, and they can apply for up to another two years, Gilmore said.
“The goal is, a company moves in and they can just worry about their science, worry about their team, and moving their mission forward, and we try to take care of everything else,” she said.
Tower Health’s preliminary financial report in August for fiscal 2025 showed a $5.9 million operating profit, a gain that came thanks for the sale of a shuttered hospital in Chester County.
But that apparent annual profit, the Berks County nonprofit’s first since 2017, turned into a $20.6 million loss when Tower released its annual audit.
Auditors from KPMG decided that Tower should boost medical malpractice reserves and give up on collecting millions owed by patients, Tower said in a statement.
“As part of our standard accounting process, the audited financials for the full year reflect increased malpractice insurance reserves and final adjustments to accounts receivable,” Tower said.
Most of the $26 million swing to a loss came from medical malpractice, but Tower also reduced what is called patient accounts receivable, representing unpaid bills, to $236.6 million from $251.6 million in August’s preliminary results, according to Tower’s audited financial statements that were published Friday.
Separately, Tower reported a $15.9 million operating loss for the three months that ended Sept. 30. That loss was a bit bigger than the $14.2 million loss in the same period last year. Tower’s revenue for the quarter was $501 million, up 4% from $479.8 million last year.
The results for the first quarter of 2026 did not include expenses for Tower’s layoff of 350 employees, or about 3% of its workforce, earlier this month. The cuts hit Pottstown Hospital particularly hard. Tower is eliminating 131 jobs there and eliminating some services.
The closures include the combined intensive care/critical care unit, the Pottstown location of the McGlinn Cancer Institute, and the hospital’s endoscopy center.
Two unions that represent Pottstown employees, the Pennsylvania Association of Staff Nurses and Allied Professionals and SEIU Healthcare Pennsylvania have decried the cuts and called on management to engage in discussions on how to preserve jobs and services.
Jefferson Health says it will terminate Lehigh Valley Health Network’s contracts with UnitedHealthcare next year, stating United, the nation’s largest health insurer, is paying less than their negotiated rates, Jefferson said Monday.
The contracts will remain in effect until Jan. 26 for Medicare Advantage patients and until April 25 for patients with commercial insurance through their employer. In the last 18 months, Lehigh Valley Health facilities treated 70,000 people with United insurance, Jefferson said.
“Like all health systems, we are facing significant headwinds as costs rise faster than reimbursement,” Mark Whalen, Jefferson’s chief strategy and transformation officer, said in an email.
“When reimbursement falls substantially below negotiated levels, it threatens our ability to fulfill our mission of providing exceptional care to all patients.”
Whalen said Jefferson will continue working to secure a better deal with United, as it has for more than two years.
United said in a statement that its most recent proposal went to Lehigh Valley in April. “We have yet to receive a counter proposal from the health system, whose last proposal was provided in December 2024 and included a near 30% price hike in the first year of our contract,” the statement said.
Jefferson countered with a statement saying that its dealings with United are not part of a normal contract renegotiation. “This ongoing dispute is caused by United Healthcare’s implementation of a multiyear 30% price decrease that was not agreed to, not accepted and is not sustainable, Whalen said.
The timing of the United announcement is noteworthy. Medicare Advantage open enrollment is underway until Dec. 7 for plans that take effect Jan. 1.
The potential termination of United’s Medicare plans on Jan. 26 puts United’s customers who depend on Lehigh Valley for health services in a quandary. Should they stick with United or switch to another plan, such as those offered by Jefferson’s insurance arm?
United said Jefferson’s decision to make its announcement during open enrollment looked like “a negotiating tactic.”
The Minnesota company has about 27,500 Medicare Advantage enrollees in the main counties served by Lehigh Valley Health doctors, according to federal data from September.
The impasse does not affect Philadelphia-area Jefferson patients with insurance from UnitedHealthcare.
Insurance regulations require notice to patients before contracts end.
In March, Jefferson went out-of-network with Cigna Health for a few weeks during a similar impasse in negotiations. Jefferson and Cigna quickly reached a deal after the termination.
