Oregon hospitals continue to struggle with finances and capacity concerns

Apprise Health Insights, a subsidiary of the Oregon Associations of Hospitals and Health Systems (OAHHS), released their Q1 2021 Utilization and Financial Analysis last Friday, detailing hospital finances and capacity in the first quarter of 2021. The data showed current hospital capacity is worse than at the height of the COVID-19 pandemic, dropping operating margins, and lower net patient revenue. 

 

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According to an OAHHS press release, urban and rural hospitals are having continuous difficulties in retaining and acquiring staff, which is causing significant gaps in the workforce. These gaps cause continuous capacity concerns even though fewer beds are being used, according to OAHHS. These staffing shortages are coupled with larger patient volumes, higher needs due to delay of patient care, and an 8% increase in average length of stay from Q1 2020 to Q1 2021. 

In Q1 2021, hospital utilization for inpatient visits and emergency department (ED) visits remained below pre-pandemic levels as outpatient visits continued to increase significantly.

 

Image: Apprise Health Insights

 

Despite overall hospital occupancy being lower than pre-pandemic levels, continuing workforce shortages are making the issue persist. According to OAHHS, other factors affecting capacity include difficulty in transferring patients into specialized continuing care facilities and a 10% increase in ED boarding, patients staying longer than 6 hours, from December 2020 to March 2021. These factors also contribute to a downward trend in overall hospital margins. 

In terms of finances, Oregon’s hospitals are continually falling short of covering expenses, according to OAHHS. The median operating margin is at 0.7% and the median total margin is at 3.7%. This marks a continued downward trend since Q3 2020 when the CARES Act funds were assisting hospitals financially.

 

Image: Apprise Health Insights

 

Andy Van Pelt, CEO of Apprise says:

“The data shows that after a period when the federal CARES Act funding supported hospital operations, two key measures are dropping. That means revenues are down and expenses are up.”

Net patient revenue (NPR) in Q1 2021 fell short of total operating expenses by $200 million, according to data from Apprise. NPR saw a decrease from Q4 2020 while total operating expenses saw its third consecutive increase. 

According to OAHHS and Oregon Nurses Association (ONA), staffing shortages are leading to the use of travel nurses, which drive up expenses. Labor costs have increased about 15.3% in the last three years, and are exacerbated by travel nurses and the loss of a reliable workforce. Pelt says:

“According to Apprise data, labor costs are up significantly, with Total Payroll Expense up over 15 percent over a three-year period. Hospitals are now having to pay more for increasingly scarce labor resources, due in part to the staffing crunch we’ve seen during the pandemic.”