Q2 2021 report indicates increasing revenue, expenses, and utilization for Oregon hospitals
Apprise Health Insights, a subsidiary of the Oregon Association of Hospitals and Health Systems (OAHHS), released their Q2 2021 Utilization & Financial Analysis last Thursday, outlining hospital finances and capacity in the second quarter of 2021 and current trends in Oregon. The data shows improved median operating and total margins, but is coupled with significant increases in capacity challenges.
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In the report, Net Patient Revenue (NPR) continues to be lower than the Total Operating Expenses (TOE) for Oregon hospitals for the fourth consecutive quarter. However, the gap between the revenue and expenses narrowed in Q2.
NPR increased by 8.3% from Q1 2021 and TOE increased by 5.4% from the same period. In Q2, NPR was at $3.81 billion while TOE was at $3.72 billion.
However, the high cost of labor continues to be a threat to expenses and is a major contributor to the 8.3% rise in expenses, said OAHHS. Costs for labor have gone up 20% within the last three years as hospitals continue to report staffing shortages due to burnout, illness, and stress.
OAHHS said many hospitals in Oregon report success in recruiting through incentives such as higher pay and sign-on bonuses, which places more of a burden on expenses. OAHHS said:
“While [increasing hospital stays] are contributing to revenue increases, any gains are offset by higher care costs for treating patients with more severe conditions.”
Rising revenues and expenses are both due to higher hospital utilizations, including more patients with longer stays. Statewide inpatient, outpatient, and emergency room (ER) visits have significantly increased in Q2 as compared to Q1.
ER visits increased the most for Q1 and rose by over 16% — Q1 showed ER visits at -19.5% change since Q3 2018. Total outpatient visits also rose by roughly 10%.
Hospitals are also seeing longer lengths of stay for inpatient cases — including patients with COVID-19. The average length of stay increased from 4.7 days in 2019 to 5.2 days in the first six months of 2021. ER boarding — stays longer than six hours — also increased by 5% between Q1 and Q2 and saw an overall increase of 15% between Dec. 2020 and June 2021.
Andy Van Pelt, CEO of Apprise Health Insights, expects these trends to get worse in the next quarter as the Delta variant broke records for COVID-19 cases and hospitalizations over the summer. Throughout Q3, hospitals reported bed shortages, deferral of elective care, and limited community placements after discharge. Pelt said:
“The data tell the story of our overwhelmed hospital system, which has been pushed to the breaking point by the recent surge. Adding to the stress from staff shortages is the financial pressure from rising labor costs and lower Net Patient Revenue. We believe these trends will continue into the next quarterly reporting period.”
However, the Median Operating Margins and Median Total Margins both improved in Q2 after declining for two consecutive quarters before Q2.
The Median Total Margin rose over 5% between Q1 and Q2. Federal funding from the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) continues to appear on hospital balance sheets in the state.