The economic picture at Oregon Health & Science University looks brighter than ever with revenues exceeding projections by 10 percent -- $29 million over budget – since last July.
What’s driving that increase? Specialty pharmacy use, particularly for cancer, hemophilia and neurological services, Lawrence Furnstahl, chief financial officer, told OHSU’s board last week.
The number of uninsured patients seeking care at OHSU has also witnessed a significant decline since implementation of the Affordable Care Act. Charity care has dropped by 80 percent since 2012.
Uninsured patients only accounted for 1.1 percent of patients since last July, while OHSU’s share of Medicaid patients has increased to 26.8 percent in the past four years. Medicare payments represented 30.5 percent of visits; commercial insurers paid for 41.3 percent of patient care.
Inpatient admissions continued to climb, reaching 19,460 through February (+1%), while emergency room visits grew by 3 percent, (32,284); ambulatory visits, 4 percent (554,687) and surgical cases rose by 4 percent (21,584).
The increase in patient revenue, well above projections, also includes the first three months of OHSU Partners, a new venture with Salem Hospital, Tuality Healthcare (as of February). A single executive team leads this partnership.
Many patients can now be hospitalized in their own community, avoiding the heavy capital costs of opening new beds at OHSU, which is well over 90 percent occupancy, Dr. Joe Robertson, OHSU’s president, told the board.
“A single operating income ‘bottom line’ is shared across sites based on a six-year (fiscal year10-15) historical average of earnings of 81 percent at OHSU Hospital and 19 percent at Salem Health,” according to Furnstahl’s report.
“Through February, this results in a net $5 million true-up towards OHSU because Salem Health operating income has recently increased faster, reflecting both program growth and relatively more gain from the Affordable Care Act,” he added.
He also told the board:
- OHSU’s operating income through the first eight months of the 2015-16 fiscal year is $71 million, which is $2.6 million below budget but 33 percent above last year’s earnings, and
- Research revenues are $24 million off budget with delays in drawing on grants and gifts during the first half of the fiscal year.
Robertson on Moda Health
Late last year, OHSU announced its intent to enter into an ownership agreement with Moda Health and convert its $50 million surplus note into a 25 percent equity position in the insurer.
Since then, OHSU has been conducting due diligence but holding off on a firm decision until Moda’s financial position can be reevaluated given its shaky situation which resulted in selling assets and raising $179 million to keep its doors open.
When asked the likelihood of moving forward with such an arrangement. Robertson told The Lund Report that OHSU was “still observing the market to see what happens,” adding that he had nothing else to report, and gave no indication of when a decision would be made. OHSU has until December to formalize that agreement.
In the meantime, OHSU officials are undoubtedly on the hunt for another insurer partner, but given the recent consolidation in the market with PacificSource and Legacy Health joining hands, its options are much slimmer. The only other obvious choice might be Regence BlueCross BlueShield, but if such talks are under way, no one is divulging anything.
Consolidation between insurers and providers is definitely the wave of the future, with Providence Health and Kaiser leading the march.
Diane can be reached at [email protected].
