Oregon hospital finances are positive, yet uncertain

Although Oregon hospitals ended 2020 with a positive operating margin of 3.3%, they are still negatively impacted by the financial consequences of the pandemic. 

 

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A report released by the Oregon Health Authority (OHA) on Thursday shows that Oregon hospitals ended 2020 “in the black.” According to the report, the recovery of net patient revenue (NPR) in Q4, along with CARES Act funds, allowed hospitals to end 2020 with a positive margin. 

Oregon hospitals took a dive in Q2 of 2020, but were able to bounce back in Q4. According to the report, Q4 NPR was $3.5 billion, which is a 26.5% increase from Q2 2020 and a slight increase from Q4 2019. CARES Act funds also played a role Q4 profits with roughly $620 million given to Oregon. 

Jeremy Vandehey, director of the health policy and analytics division at OHA said in a statement: 

Due to the CARES Act and investment income, along with a robust return to nearly normal operations in Q3 and Q4, Oregon hospitals had a positive year in 2020 from a financial perspective.”

Q4 succeeded in other ways. Q4 saw a 55.3% increase in outpatient surgeries in comparison to Q2 2020. By the end of Q4 2020, the operating margin was 4.6% or $178.1 million.

However, hospitals are still struggling. According to a press release in response to OHA’s report, overall NPR is still down about 4% in 2020 compared to 2019. 

The amount of revenue supplied by NPR was not enough to keep hospitals financially secure. In 2020, NPR was 6.5% lower than total operating expenses. 

Though the operating margin for the year was positive, the assistance through the federal government was essential. Without the CARES Act aid, the median operating margin lies at -2.1%. 

Becky Hultberg, president and CEO of the Oregon Association of Hospitals and Health Systems (OAHHS) said in a statement:

“Many hospitals, especially those in rural parts of the state, were pushed to the financial brink in 2020 by revenue loss from cancelled non-urgent procedures and increased costs for PPE [personal protective equipment], staffing shortages and challenges, bed capacity challenges, and caring for COVID patients. These costs are reflected in figures for operating margins, which offer a more accurate look at hospital finances. One in three hospitals in Oregon lost money in 2020.”

According to the OAHHS, in 2020, emergency room visits decreased by 18%, inpatient discharges decreased by 11% and hospital-based outpatient surgery visits decreased by 17%. Hultberg said:

“We are still a long way from being able to say that the financial impacts of the pandemic are behind us.”