OHSU Brings Home $22 Million from Medicaid Expansion
Medicaid expansion has treated Oregon Health & Science University very well. In a program designed to evaluate healthcare quality at hospitals, OHSU walked away with $22 million after paying a 1 percent provider tax on its revenues -- $12-13 million – while the federal government kicked in the rest.
It’s likely that most hospitals saw their revenues spike by a similar amount, roughly 40 percent, after paying the tax, said Lawrence Furnstahl, chief financial officer at OHSU.
Next year OHSU might not be as fortunate because the hospital payback dollars are going to be based on the actual performance of these quality metrics. “This is part of a growing shift to pay for value rather than volume, and we’ll get more money if other hospitals drop the ball,” Furnstahl told the OHSU board recently.
This time around, OHSU only expected to receive $19 million, but several hospitals ended up failing to respond to the outcome and quality measures and their federal share was distributed to other hospitals, said Furnstahl, who couldn’t identify those hospitals.
Following the passage of House Bill 2216 in 2013, which established the program, the Oregon Health Authority developed 11 metrics for hospitals to show how they were advancing health system transformation, reducing costs and improving patient safety.
With the $1.9 billion the federal government is plowing into Oregon under the Affordable Care Expansion over five years, the coordinated care organizations – on average – are receiving $5,000 a year per patient for each of the 380,000 newcomers on the Oregon Health Plan, Furnstahl said. How many of those dollars actually end up in the bank accounts of hospitals such as OHSU is unknown. And, in the CCO world, OHSU is a board member of Health Share, which has over 230,000 members in the tri-county area.
Shift in Care
Since Furnstahl started working in academic medicine at the University of Chicago 30 years ago, there’s been a dramatic shift in the healthcare delivery model. Back then, 85 percent of care was done inside the hospital and only 15 percent on the outpatient side.
Today those numbers look remarkably different, and hospital admissions only amount to 55 percent, compared to the growing number of people treated in outpatient settings – 45 percent.
“Over the past 30 years there’s been a long-term trend of 1 percent, which is accelerating, Furnstahl said.
Nowhere is that more true than at OHSU. Its adult beds are jam packed, at 90-95 percent occupancy, while Doernbecher has a 70-80 percent rate.
Meanwhile, OHSU’s operating income through the first eight months of fiscal 2015 was $53.6 million, $8 million above budget but still $5 million less than last year, while net patient revenue per case has risen by 11.5 percent over the past two years, Furnstahl told the board.
Between fiscal year 2013 and 2015, the years spanning ACA implementation—OHSU’s net patient revenue per case (adjusted for case mix and outpatient activity) rose from $14,200 to $15,850, or about 11.5 percent over two years. This aggregate rate growth is approximately 5 percent higher than inflation, an increment currently worth $80 million annually, and seen at other Oregon health systems
With $54 million in operating income through the past eight months, months, consolidated net worth is up only $53 million, largely due to a small decline in the Foundation’s endowment market value.
Also, OHSU’s U.S. fixed income and stock investments all had positive returns in line with the overall markets. However, longer-term funds that have allocations to international and commodity assets for wider diversification, experienced negative returns, offsetting the U.S. gains, Furnstahl added.
In terms of hospital care, OHSU has had 19,214 admissions this fiscal year, compared to 19,099 in 2014, while length of stay barely increased from 5.8 to 5.9 days and emergency room visits have grown from 29,992 to 31,289, representing a 4 percent increase.
When it comes to ambulatory care visits, OHSU has seen a sharp upswing – 511,610 in 2014, compared to 538,553 during the first eight months of fiscal 2015, while surgical visits are relatively the same, thus far, 20,286 compared to 20,791 as of April. Overall, outpatient visits have increased from 44.7 to 46.6 percent.
Diane can be reached at [email protected].