This past spring, Oregon hospitals had to tighten the belt as revenue took a sudden, steep drop.
The Oregon Health Authority is now giving the public a glimpse of how the coronavirus pandemic is affecting hospital revenue. OHA said revenue and operating margins suffered significant declines at the end of March, likely because of COVID-19. A newly released online dashboard lets users search hospital financial data from 2007 to 2020.
“The broad health and economic impacts of COVID-19 highlight why we need a sustainable healthcare system that ensures everyone has access to quality, affordable care when they need it,” said Jeremy Vandehey, OHA director of health policy and analytics.
Samaritan Health Services
The impact has been felt locally as well. Ian Rollins, a Samaritan Health Services marketing and communications strategist, said there was a 50% decline in gross patient revenue after suspending elective services in Mid-March. As of late August, revenue had largely returned to pre-pandemic levels thanks to careful fiscal management, cost-saving measures, virtual visits, and Coronavirus Aid, Relief, and Economic Security Act funding, according to Rollins.
“While the executive order was in place last spring, it created a backlog of these types of cases, but we have been able to schedule these cases since the executive order was lifted in May,” Rollins said. “We are managing expenses closely to our budget and we have used federal grants for pandemic-related expenses such as the needed amount of personal protective equipment.”
One stipulation of the order being lifted is a certain number of beds be kept ready for a possible COVID-19 surge as well as maintaining designated levels of protective equipment. Rollins said those requirements are being met while the hospital continues to provide patient care to those who need it. There are also rigorous infection-prevention protocols in place.
“To date, we have been able to manage the financial impacts of the pandemic. Patient care has not been at risk or impacted patient care in any negative way,” Rollins said. “We are doing everything possible to ensure a safe environment for our patients and employees.”
Rollins said it’s still not clear what CARES Act fund Samaritan is eligible for and whether the funds already received can be kept, and the lack of clarity makes fiscal planning difficult. He added that access to testing equipment and supplies has been a struggle throughout the pandemic, and said a clear national plan for the use of testing equipment and supplies would be beneficial.
“Also, Oregon hospitals, doctors and nurses are supporting a “yes” vote on Measure 108 on the November ballot,” Rollins said. “The vaping/tobacco tax would support tobacco prevention and cessation programs and help fund the Oregon Health Plan for low income adults, children and seniors.”
OHA Financial Report
Oregon hospitals ended 2019 in a strong financial position, with revenue outpacing expenses. Net patient revenue increased 7.3% compared with the fourth quarter of 2018, while operating expenses increased only 1.2%. Uncompensated care remained essentially flat during that period. Hospitals closed out 2019 with a robust median operating margin of 4.2%.
OHA said the end of 2019 stands in stark contrast to the first quarter of 2020. Elective and non-urgent medical procedures were banned by executive order of the governor in hopes of preserving medical supplies. The decreased hospitalizations meant a dip in patient revenue, while at the same time hospital expense went up, leading to large drops in operating margins. A fall in hospital stocks exacerbated the losses, according to OHA.
Key findings from the report include:
- Statewide total margin fell from 9.3% in the first quarter of 2019 to -8.8% in the first quarter of 2020, a decrease of 19.4%.
- Median statewide total margin fell 11.3% from 6.7% to -4.6% in the same time period.
- Statewide net patient revenue was down slightly, $22.7 million or -0.6%, when compared with the first quarter of 2019.
- Total operating expenses remained on trend, increasing $215 million, 6.3%, when compared with the first quarter of 2019.
The first quarter reports don’t include financial assistance in response to the pandemic, but second quarter reporting coming later this fall will reflect federal and state grants and other aid that was provided to stabilize the healthcare system.
“These data demonstrate the risks health systems face when their revenue depends on the numbers of patients they treat and procedures they perform,” Vandehey said. “We see that paying for volume instead of value can contribute to financial uncertainty during a crisis, just when we need hospitals the most.”
For more information about OHA’s hospital reporting program, go to the Health Policy and Analytics website.
By Cody Mann