OHA report highlights financial impact of COVID on hospitals, CCOs, providers, and insurers

The latest data from the Oregon Health Authority (OHA) indicates Oregon’s hospitals and hospital systems have bounced back financially thanks to funding from the CARES Act. An OHA report released last week details COVID-19’s financial impacts on hospitals, coordinated care organizations (CCOs), health care providers, and insurers during the first 6 months of 2020.

 

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In the early months of the pandemic, hospitals and hospital systems saw a significant drop in patient visits and revenue. In April 2020, hospitals in Oregon saw 75% fewer outpatient surgery visits and received 38% less revenue compared to December 2019. During this time, total operating expenses stayed relatively steady.

 

Image: Oregon Health Authority

 

By June 2020, hospital revenues and operating margins increased and were back to typical levels. The report says the federal CARES Act – which funneled about $436 million into Oregon’s hospitals – helped keep the system afloat and allowed it to bounce back financially.

“The median hospital’s operating margin fell to -2.5% in in January-March 2020, but then rebounded to +2.4% in April-June 2020,” reads the report.

The pandemic also significantly impacted CCOs, which saw total payments for services shrink by 25% in April 2020 but then experienced a rebound by June to within 10% of the pre-COVID average.

“As a result, CCOs collectively went from an approximate $10.8 million dollar loss and -1.0% operating margin in January-March 2020 statewide, to a $9.7 million dollar profit and +2.2% operating margin in April-June 2020,” the report continues.

Over the course of six months, from January to June, CCO revenues grew in the aggregate by 4.4% and medical spending grew by 5.0% compared to this same period in 2019.

The report credits CCO’s stabilization payments to providers, sub-capitated arrangements, and other value-based payments for the quick rebound of spending on individuals’ health care services.

The report notes that medical spending did not increase evenly across all categories. For example, hospital-based spending decreased 31% from March to June 2020, while mental health care spending increased 7%.

In the first half of 2020, the Oregon Department of Consumer and Business Services reported a decrease in medical and hospital spending across commercial carriers related to the cancellation of elective procedures and reduced demand for services.

“Carriers’ net premium income increased 6%, and medical spending decreased nearly 4% as compared to January to June 2019.”

Carriers may see an increase in spending if more individuals seek care in the second half of the year.

The report also details the significant financial impact experienced by health care providers during the pandemic. A survey of primary care providers in Oregon found that 70% of providers saw a decrease in patient volume by half. The same survey found that about half of these providers received support from the Payroll Protection Program and over 40% reported “other” financial support.

OHA says it will release new financial reports for hospitals and CCOs for the second half of 2020 in the coming months.

“We are closely tracking the financial health and viability of our health care system as we move through this pandemic,” said Jeremy Vandehey, OHA’s director of health policy and analytics in a statement. “Across the system, our health care partners performed admirably in a crisis with the help they received from the federal government, CCOs, and other partners.”

“While hospitals received significant aid, primary care, behavioral health and other smaller provider groups received less help and we remain concerned about providers on the front lines of this crisis. This data shows the need for ongoing federal support as cases increase, especially for providers who couldn’t easily access previous support. It also further illustrates the need to move to value-based payment models that are not tied to the number of visits to a providers office.”