OHA hospital financial reports show drop in revenue due to COVID-19

The Oregon Health Authority’s (OHA) first quarter hospital financial reports show a detailed look at the significant impact of the COVID-19 pandemic on hospital revenue and operating margins at the beginning of the year.

OHA on Tuesday released the data as an interactive dashboard, allowing users to explore hospital utilization and financial trends from 2007 to 2020.

 

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According to OHA data, Oregon hospitals ended 2019 on strong financial footing. Net patient revenue grew by 7.3% compared to Q4 2018, while total operating expenses grew by 1.2%. At the end of last year, median operating margin statewide sat at 4.2%.

Then on February 28, 2020, health officials announced Oregon’s first case of COVID-19. A few weeks later, on March 19, Gov. Kate Brown issued an executive order putting a halt to elective and non-urgent medical procedures.

“Decreases in hospital utilization in March led to a drop in patient revenue. At the same time, hospital expenses continued to increase, leading to large drops in operating margins in the first quarter of 2020. A drop in hospital stocks exacerbated the losses,” said OHA in a release.

According to the data dashboard, statewide total margin decreased 19.4 percentage points between Q1 of 2019 and Q1 of 2020, dropping from 9.3% to -8.8%. In Q1 2019, the value of the total margin for hospitals statewide was $346 million. That number dropped to -$290 million for Q1 2020.

 

Image: Total Margin as reported by the Oregon Health Authority

 

Statewide net patient revenue declined slightly in Q1 2020, decreasing by $22.8 million (-0.6%) compared to Q1 2019. Total operating expenses increased by 6.3% compared to the start of 2019, jumping from $3.36 billion to $3.58 billion.

“We have been working closely with our partners across the health system to contain the rising costs of health care,” said Jeremy Vandehey, OHA’s director of health policy and analytics. “These data demonstrate the risks health systems face when their revenue depends on the numbers of patients they treat and procedures they perform. We see that paying for volume instead of value can contribute to financial uncertainty during a crisis, just when we need hospitals the most.”

OHA says the second quarter hospital financial reports will be released later in fall. Information in those reports will reflect grants and financial assistance provided to the health system in response to the pandemic.