Most Oregon Hospitals Didn’t Need 2020 Bailout: They Had The Stock Market

The COVID-19 pandemic has underscored the growing importance of the huge investment portfolios Oregon’s hospital systems have amassed, new financial filings show.

During the pandemic, much publicity focused on the billions of dollars in CARES Act grants the federal government handed to hospital systems nationwide, including hundreds of millions of dollars to hospital systems with Oregon operations.

But stock and bond investment portfolio returns in 2020 often provided a far bigger boost for many of the systems, as they were squeezed during the pandemic by sagging operating revenues and rising operating expenses, the systems’ audited financial filings show.

In fact, even without the CARES Act money, many Oregon hospital systems would have reported profits for 2020, thanks mostly to their big investment returns, the reports show. Some systems, such as PeaceHealth, Salem Health and Asante, have reported huge profits for the latter part of 2020, as patient revenues recovered and outsized investment returns kicked in.

Critics have suggested wealthy hospital systems didn’t need the CARES Act money because they already had rich investment portfolios as a backstop. In a remarkable move last year, the massive California-based Kaiser Permanente hospital system handed back $500 million in CARES Act money to the federal government. Non-profit Kaiser, with 2020 investment gains of over $4 billion, said it would do fine without the taxpayer cash.

Few other hospital systems nationwide followed suit.

And in Oregon, all the other hospital systems kept their CARES money. They say the cash helped, although they also pay kudos to the gains their investment portfolios generated.

Take Salem Health as an example. The nonprofit system, including its flagship Salem Hospital, received about $25 million in taxpayer money last year from the federal government, according to its financial reports. But the vigorous stock market was a far bigger help against COVID-induced financial ailments.

For the fiscal year ended June 30, Salem Health reported a profit of $66 million, including $38 million in investment returns and most of the $25 million in CARES money. And for the six months ended Dec. 31, it reported a profit of $117 million, including $98 million in investment returns. By December 2020, Salem Health’s long-term investment portfolio of stocks, bonds and other securities had grown to about $900 million, a gain of about $135 million from 18 months earlier.

All Oregon’s big hospital systems are nonprofits, and they reap investment gains in two ways: cash from dividends, interest and the like, and so-called unrealized gains, the increased values of the stocks and other securities they hold. National accounting rules require both types of gain to be reported as revenue. The unrealized gains are reported as revenue because, even though the system has not sold the stocks, if it did, as a nonprofit it would not owe taxes on the gain. So the values of the securities – and the values of any gains -- are in effect cash values.

The systems savor their portfolios not just for the gains, but for the financial security blanket they provide. The portfolios impress bond rating agencies and allow the systems to pay low interest rates on the money they borrow.

Excepting the steep but short stock market plunge at the pandemic’s onset, stock prices have risen strongly in the last several years. From July 2019 to December 2020, broad stock indexes were up 25% or more. Bonds were also up strongly, though not by as much.

OHSU’s Gains Far Exceed CARES Act Grants

For big holders of stocks and bonds, including hospital systems, the upbeat market has been a boon, Lawrence Furnstahl, CFO of the Oregon Health & Science University, told OHSU’s board of directors earlier this month. Furnstahl reported to the board that the investments held by OHSU and its foundation gained $236 million in the nine months ending March 31, largely due to stock market gains, although some of the foundation’s gain was due to donations. The portfolios held by OHSU and its foundation now total more than $3 billion. The investment windfall in the first nine months of this fiscal year dwarfs the $56 million OHSU received during that period under the CARES Act.

Providence Health & Services, the seven-state hospital system headquartered in Renton, Wash., had $1.1 billion in investment gains in 2020.  But investment markets can be volatile, cautioned Providence spokesman Gary Walker. “It’s not something that can be counted on every year, and could decline in any given year,” he said.

At Salem Health, spokeswoman Lisa Wood doesn’t apologize for what she terms the system’s “financial stability and robust savings.”

Unlike many hospital systems nationwide, Salem Health didn’t lay off any staff during the pandemic, Wood said. Being financially strong “meant providing security for our staff who have been on the frontlines of the pandemic. This also ensured that we had staff employed and ready for the inevitable surges in very sick patients,” she said. Salem Health was “able to immediately stand up Oregon’s first mass vaccination center without hesitation as quickly as vaccine allocation became available,” she said.

Salem Health ended 2020 in remarkable shape, against the background of the financial drubbing COVID-19 has given many hospital systems.

The CARES Act money helped boost profits in the fiscal year ended June 30.

Then, in the second half of 2020, Salem Health began pulling out of its COVID-19 patient revenue slump, and recorded operating revenues of $427 million and an operating profit of $21 million. On top of that came the $98 million in investment gains, both as dividends and in increased stock values.

Across Oregon in 2020, the pattern was similar, but with many variations. Big hospital systems labored under plunging revenues early in the pandemic and higher expenses for protective equipment and other measures to cope with COVID-19, followed by improved operating fortunes in the second half of the year.

Here’s a rundown of how the biggest systems fared in 2020:


For the nine months ended March 31 of this year, OHSU had operating profits of $46 million, due to rising patient revenues, Furnstahl told the board. In the early days of the pandemic, OHSU had been forecasting a loss for the fiscal year that started July 1.

“We continue to recover well from the pandemic,” Furnstahl told the board.

With CARES Act money, the surging investment values on its portfolios, and operating revenues improving, “although many risks remain, OHSU has preserved its underlying financial position,” he told the board.

Providence Health & Services

Giant health care provider Providence, whose operations include eight hospitals in Oregon, received about $1 billion in CARES Act grants in 2020. But that boost, plus cost cutting measures, wasn’t enough to offset patient revenue declines and staffing cost increases. Providence posted an operating loss of $306 million on operating revenues of $25.7 billion for the year. Investment returns came to the rescue, though. Returns totaled $1.1 billion on the system’s portfolio of investments and cash, which topped about $15 billion by the year’s end.

That income erased the operating loss, handing Providence a $740 million profit for the year.

“CARES was important in offsetting lost revenues and higher expenses, but only partially offset those impacts,” said spokesman Walker. He acknowledged that investment returns “helped offset operating losses in 2020.”

Providence’s investment and cash portfolio was up substantially in 2020, ending the year at $15.3 billion, up from $12.3 billion. But a big slice of that increase was temporary due to Medicare reimbursements that the federal government paid the system in advance – part of the federal bailout program for hospitals nationwide – plus increased borrowings that are being held by the system for capital and other expenses.


Vancouver, Wash.-based PeaceHealth, with hospitals in three states, including four in Oregon, had a financially difficult first half of 2020, with operating revenue drops and operating expense increases.

In its fiscal year that ended last June 30, PeaceHealth received $124 million in CARES money. It recorded $41 million in investment returns. Even so, the system reported an overall loss of $67 million on revenues of $2.8 billion for the year.

But investment returns in the following six months have more than made up for the loss.

In its current fiscal year, which started July 1, the system received $4 million in CARES money, and saw operating revenues increase and costs stabilize. It still reported an operating loss. But the system booked an overall profit of $251 million, due to whopping investment returns of $291 million -- $41 million in income such as dividends, and $250 million in stock price gains according to its financial filings.

In other words, even without the CARES money, in the 18 month period that ended Dec. 31, PeaceHealth would have recorded a profit of about $180 million.

The system’s pool of investments and cash by year’s end stood at $3.2 billion. That was up about $1 billion from the end of 2019. But much of the increase was temporary due to nearly $300 million in advance Medicare payments from the federal government, plus cash from increased borrowing by PeaceHealth.

PeaceHealth declined to comment to The Lund Report.


Medford-based Asante, with three Oregon hospitals, received $33 million in CARES Act money in the fiscal year ending last Sept. 30. That helped the system record a $19 million operating profit on operating revenues of $940 million. But those numbers don’t include investment returns, which totaled $27 million and pushed the system to an annual profit of $42 million. Put another way, even without the $33 million in CARES money, the system would have recorded a profit of about $9 million for the fiscal year.

And in the final quarter of 2020 – the first quarter of Asante’s current fiscal year – Asante’s profits surged. It reported operating profits of $9 million on revenues of $270 million, plus $70 million of investment returns -- $8 million in dividends and $62 million in unrealized gains.

Asante’s portfolio of marketable securities rose to $761 million by year’s end, from $694 million 12 months earlier “due to favorable market performance,” the latest audit states.

Asante declined a Lund Report request for comment.

St. Charles Health System 

Bend-based St. Charles Health System, with four hospitals, received $32 million in CARES Act money, which largely cancelled out operating losses and handed the system a $1.2 million operating profit on operating revenues of $863 million for 2020. But those figures exclude investment returns, which, when added in, put the system solidly in the black. The investment gains – both dividends and increased stock and bond prices – totaled $50 million.

The system’s stash of cash and investments stood at $907 million by the end of 2020, up from $640 million at the end of 2019, although much of the increase was due to advance Medicare payments of $95 million, plus cash on hand from more borrowing.

Legacy Health

How the six-hospital Portland-based Legacy Health system fared financially in the pandemic is not clear.

Legacy’s latest publicly released financial audit is for the 12 months ended March 30, 2020, covering just the onset of the pandemic. It shows Legacy with a $79 million operating profit on revenues of $2.3 billion, but with additional non-operating losses – including a net loss on investments of $37 million, and a $76 million increase in pension liabilities, leaving the system with a $42 million loss for the 12 months.

The system has an investment portfolio of about $900 million.

Legacy has not yet released its financials for the 12 months ended March 31, 2021, and does not release quarterly reports, said spokesman Brian Terrett.

The system has received $93 million in CARES money, he said.

“CARES Act funding provided critical financial support to partially offset the lost revenue and increased expenses for the pandemic,” Terrett said. “We definitely saw a decline in revenues and an increase in expenses” in 2020, he added.

Individual Legacy hospitals appear to be recuperating financially. In total they reported to the Oregon Health Authority profits of $46 million for the April 1-Sept. 30 2020 period. However, individual hospital results don’t include system-wide information, such as investment returns.

You can reach Christian Wihtol at [email protected].



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