Temple Health will trim capital spending amid uncertainty over federal healthcare funding

Temple University Health System will trim capital spending in the fiscal year that starts July 1 amid uncertainty over federal healthcare funding, the North Philadelphia nonprofit’s CEO told investors Tuesday.

“I’m not sure what will happen, so we’re going to be prudent and we will spend somewhat less,” Temple Health CEO Mike Young said.

Spending on buildings and equipment is expected to decline by $10 million to $15 million, putting the total in the range of $60 million to $65 million, Temple said in an email response to questions from The Inquirer.

A large percentage of Temple’s patients have Medicaid, a publicly funded insurance program for low-income people and many with disabilities. Republicans in Congress are targeting Medicaid for spending reductions to help pay for the extension of tax cuts approved during President Donald Trump’s first term.

Young’s comment on capital spending came during an online presentation for municipal bond analysts on Temple’s financial results for the first three quarters of fiscal 2025, which ends in June.

Temple reported a $10.4 million operating loss for the nine months that ended March 31. That represented a sharp swing from the $13.5 million operating profit in the first half of fiscal 2025.

Chief accounting officer Mike DiFranco cited two factors in that shift to a loss. Temple continued losing money under its Medicaid contract with Jefferson Health Plans, though a rate increase effective Jan. 1 started to improve those results in March, he said.

Another factor was substantially higher professional liability expense, as Temple worked on catching up on settlements from COVID-19 delays and the system tried to reduce the medical malpractice risk it faces by settling older cases, DiFranco said. A financial report to bondholders cited a $28.4 million increase in professional liability insurance, compared to a year ago.

Temple’s overall revenue growth was strong. Revenue climbed to $2.32 billion, up 12% from $2.08 billion a year ago.

Chestnut Hill Hospital, which Temple owns in a joint venture, continues to recover financially. Temple’s share of Chestnut Hill’s loss this year was $1 million, compared to $12.5 million last year.

Jerry Oetzel, the health system’s chief financial officer, told analysts that he expects Temple to meet its financial targets for the year that ends June 30. Those goals include an operating margin of 0.5%, or $16 million.

Growth initiatives include the hiring of eight oncologists at Fox Chase Cancer Center and 34 practitioners for Temple’s community physician practice, Oetzel said. Temple’s new Women & Families Hospital in Juniata opened two operating rooms Monday for outpatient procedures. Labor and delivery serves are expected to start in July.

Temple is holding a ribbon-cutting Thursday for an expanded crisis response center at Episcopal Hospital. The expansion of the psychiatric emergency department from 4,000 to 14,000 square feet cost $4 million, $3 million of which came from state sources.

Editor’s note: This article has been updated to correct the day of the ribbon-cutting at Episcopal.