OHSU Exceeds Budget Targets After Mid-year Corrective Action
September 12, 2013 – The Oregon Health & Science University (OHSU) Board of Directors today heard preliminary FY 2013 financial results that exceeded budget targets thanks to actions taken during the fiscal year.
Unaudited results show FY 13 operating income at $96 million, $36 million ahead of budget. These earnings represent revenues above expenses but are not "profits” as they are often described. OHSU is a public corporation, and earnings are reinvested in OHSU's missions. Operating income at or above budget targets is vital to fund important capital projects such as information technology, building upgrades and other infrastructure investments, and to fund new programs.
A declining trend line in the first half of the year led to a hiring freeze, scrutiny over expenses and other belt-tightening measures. As a result of these actions and OHSU's competitive position in the health care marketplace, OHSU saw a strong second half recovery. Higher revenues – $40 million ahead of budget – were driven largely by greater patient complexity while administrative, support and interest expenses were all held well below budget. With an A+ credit rating, OHSU was able to restructure debt to achieve lower interest rates.
The preliminary results also serve as a positive indicator for the current FY 2014 budget, as OHSU continues to manage its way through a turbulent funding environment. Ongoing challenges include federal sequestration and a declining outlook for National Institutes of Health research funding, national health care reform and downward pressure on payment rates for patient care, and increasing costs of the PERS pension program.
The Board of Directors also heard a timetable for consideration of arming OHSU's police officers. OHSU has been examining this issue since 2008, in the wake of the Virginia Tech shooting. President Joe Robertson convened a public task force to evaluate our critical incident readiness. As recommended by the task force, OHSU chose to professionalize its officers by bringing their authority, training and certification to the levels required of police officers throughout the state. At that time OHSU chose to examine contracting with an existing police force rather than arm its own police officers. After an extensive evaluation, OHSU concluded that contracting was an unworkable option for a variety of reasons.
As a result, OHSU took forward to the Oregon legislature a bill modeled on authority similar to that given to the Oregon University System schools in 2011. The bill, SB 565, passed both the House and Senate unanimously, and gives the OHSU Board the final decision on arming. The board will be asked to review early next year a proposed officer training regimen that will reflect OHSU's unique environment and will require more training than the state standard for police officers. In mid-2014, the Board will review progress in training and vote on arming, subject to successful implementation and officer completion of the training regimen.