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Oregon Hospital Profitability Climbs by 146.2 Percent

During the same time period, charity care declined by 29.1 percent, according to financial reports released by the Oregon Health Authority
July 28, 2016

The profitability of Oregon hospitals has exceeded all expectations, with charity care reaching rock bottom, thanks to the Affordable Care Act.

Earlier this week, the Oregon Health Authority released the latest figures comparing data from fiscal 2014 and 2015 that show:

  • Uncompensated care––a combination of charity care and bad debt––dropped by $342 million, or 38.4 percent.
  • Net hospital income increased $367 million, or 53.8 percent.
  • Oregon hospitals’ operating margins increased nearly 35 percent indicating high profitability.

In fact, Oregon’s hospitals have performed extremely well over the past decade. Since 2006, their overall profitability has increased by 146.2 percent, while charity care has declined by 29.1 percent.

Could hospitals be making too much money? State officials said that discussion was outside their purview and belonged in the legislative arena -- that their role was to gather and analyze the data, not engage in political discussions.

“Generally we have no problem with hospitals performing well. We want them to perform well,” said Steven Ranzoni, hospital policy analyst and advisor for the OHA. “It’s not within our authority to comment on their profitability.”

His colleague, Stacey Schubert, research and data manager, who helped compile the report, agreed. “It’s absolutely imperative that hospitals be financially successful to offer the widest range of services.”

But, the huge hospital profits are having a direct impact on the increasing insurance rates, with consumers feeling the pain, said Jesse O’Brien, consumer advocate for OSPIRG.

“We have no problem with companies and organizations making a profit, but we know from extensive research that our healthcare costs are one-third more than they should be, and our health insurance rates are out of whack with what’s happening with windfall profits by our hospitals.”

O’Brien is also quite aware of the lobbying power of the hospital association, which defeated legislation in 2015 that would have required hospitals to post their prices for common procedures paid by health insurers, Medicare and Medicaid.

O’Brien’s not sure the best approach to bring hospital costs under control, mentioning the possibility of establishing a new taxing structure or expanding the requirements about how hospitals should spend their money. “The bottom line is I’d like to see lower rates instead of windfall profits to hospitals.”

Each year OHA is required to collect financial data from acute care hospitals under ORS 442.400-442.463.

This year’s report, “Oregon Acute Care Hospitals: Annual Financials Reporting Highlights,” aims to provide a transparent source of healthcare information and inform policy conversations. “This data shows us that the new healthcare environment is providing more people access to affordable care while improving the financial stability of hospitals in Oregon,” said Lynne Saxton, director of the OHA. “Hospitals are a critical part of our healthcare delivery system, and their financial viability ensures that essential community services are delivered effectively and efficiently. This report provides patients and policymakers an accessible and transparent vantage point for exploring future opportunities.”

Here are the top performers in fiscal 2015 among Oregon’s 60 hospitals:

  • Willamette Valley Medical Center (for-profit) – 33.7% total margin and $32 million in net income
  • McKenzie-Willamette Medical Center (for-profit) – 30.1% total margin and $54 million in net income
  • Good Shepherd Medical Center (non-profit) – 21.2% total margin and $21 million in net income
  • Providence St. Vincent Medical Center (non-profit) – 19.6% total margin and $189 million in net income
  • PeaceHealth RiverBend Medical Center (non-profit) – 18.9% total margin and $122 million in net income
  • Legacy Meridian Park Medical Center (non-profit) – 18% total margin and $40 million in net income
  • Asante Rogue Regional Medical Center (non-profit) – 12.5% total margin and $58 million in net income

When it came to the decrease in charity care from 2015 to 2015, the two hospitals run by PeaceHealth, University District and RiverBend, saw their numbers decline -- 61.9% and 64.1% respectively.

The four Oregon hospitals run by Legacy Health also witnessed significant declines in charity care – Legacy Emanuel 64.7%, Legacy Good Samaritan, 63.3%, Legacy Meridian Park, 58.7% and Legacy Mount Hood, 56.8%.

Charity care at OHSU Hospital dropped by 53.3% while Providence Portland Medical Center witnessed a 12.4% decrease, and Providence St. Vincent Medical Center’s percentages fell by 20.6%.

When asked to comment about the profitability of hospitals, Andy Van Pelt, OAHHS Executive Vice President, sent the following statement to The Lund Report:

"The ACA was a tremendous success in increasing access to health care and we should all be proud of this. While 2015 is the first year where we see the full impact of the Affordable Care Act to our health care system, we are noticing in the preliminary data in the first part of 2016 that these trends have started to shift back to their historic norms. The system is adjusting to the changes and absorbing the new influx of insured patients.

“And as our health care system changes, Oregon hospitals are changing with it. From their pledge to maintain community benefit levels to their dedication to financial assistance for those in need, hospitals are demonstrating their continuing dedication to giving back to the communities they serve in this rapidly changing environment."

Diane can be reached at [email protected].