Months after announcing controversial layoffs of about 500 employees as well as a new focus on more profitable surgeries, Oregon Health & Science University’s finances performed better than expected in July and August.
While the university has continued to rack up operating losses in the first two months of its new fiscal year, they are smaller than it expected, according to a Sept. 16 memo and report to the OHSU board of directors from Lawrence Furnstahl, the university’s executive vice president and chief financial officer.
For July and August, OHSU operating expenses exceeded operating revenues by $16 million, according to the report. But the institution had budgeted for a much higher loss for the two months — $35 million.
A string of money-losing years led OHSU leadership to embrace stiff measures — including hundreds of layoffs — aimed at restoring operating profitability over the next several years.
OHSU’s so-called “strategic alignment” changes, combined with its hoped-for merger with Legacy Health, have sparked concerns from nurses, faculty and other employees, including questions over how the changes will affect the organization’s functioning and reputation.
For this fiscal year, the institution aims for an operating loss of $25 million on operating revenues topping $5 billion. That would be a sharp improvement from the $97 million operating loss it recorded for the just-completed fiscal year ending June 30.
In his memo to the board, Furnstahl cautioned that financial trends and results can fluctuate sharply month to month.
“There is a significant amount of noise to signal in these (financial) patterns, especially on a month-by-month basis,” he wrote.
OHSU expects higher operating losses in the first few months of the current fiscal year in part because of costs related to the layoffs it is implementing, Furnstahl added. As the year advances and OHSU completes the layoffs and makes progress on other cost-cutting steps and revenue enhancements, operating results are expected to improve.
For the current fiscal year “the budget (profit) spread shifts from a loss to a gain” as what OHSU calls its “strategic alignment work” kicks in, Furnstahl wrote. OHSU is redeploying beds, operating rooms and diagnostic capacity toward “complex care” that can be provided by an academic health center, he wrote. That shift toward complicated surgeries, including cancer care, aims to bring in higher revenues and profits that will help move OHSU into the financial black, Furnstahl has said.
The report will be discussed at the board’s meeting Friday.
