The first quarter of 2015 revealed some striking financial gains for Oregon’s acute care hospitals. Measured by operating margins, the statewide median profit gain was 154 percent, accented by a sharp decline in charity care more than 40 percent statewide (contributing upwards of $62 million in savings).
A newly released Oregon Health Authority (OHA) quarterly financial report attributed healthy 2015 first quarter revenue and profit gains to the Affordable Care Act – one year after roll out – plus a remarkable decline in hospital’s uncompensated care (including charity care and bad debt).
The Centers for Medicare and Medicaid Services reports that hospital care alone accounts for more than 30 percent of all healthcare costs annually. Therefore, the role of OHA’s quarterly reports are to track financial costs and utilization of Oregon’s hospitals to monitor healthcare transformation efforts across the state.
The Lund Report took a closer look at statewide financial data and found that a majority of Oregon’s hospitals (65 percent) showed profit gains in the first quarter of 2015. McKenzie-Willamette Medical Center rose to the top with a 20 percent increase in operating margin as compared to the same time period last year. Urban hospitals with healthy profits not far behind were Willamette Valley Medical Center (17 percent), Legacy Mt Hood Medical Center (17 percent), and Legacy Meridian Park Medical Center (15 percent – which was incidentally, an 1100 percent increase from the first quarter in 2014).
While many rural hospitals previously in the red were showing an upswing, not all was rosy for some of Oregon’s hospitals. Providence Medford Medical Center showed a continued net revenue slide from 2014 to 2015 first quarter (from -2 to -18 percent decline), and Coquille Valley Hospital (from -13 to -24 percent decline).
Most striking costs savings were for hospital charity care with OHSU showing a whopping decline of 61 percent (from $17.7 to $6.9 million), and Legacy Emanuel Medical Center with a savings in nearly 50 percent (from $12.3 to $6.3 million).
Hospitals saved more than $100 million in uncompensated care. The top 10 hospitals showing the most cost savings in uncompensated care (including charity care and bad debt) were:
- OHSU Hospital, $15.7 million
- Legacy Emanuel Medical Center, $13.8 million
- Providence St Vincent Medical Center, $7.8 million
- Adventist Medical Center, $6.3 million
- Asante Rogue Medical Center, $4.4 million
- Providence Portland Medical Center, $3.9 million
- Bay Area Hospital, $3.7 million
- McKenzie-Willamette Medical Center, $3.5 million
- Salem Hospital, $3.5 million
- Legacy Good Samaritan, $3 million
Upswing in Revenue Gains for Rural Hospitals
More than half of Oregon’s hospitals benefited from net revenue gains greater than 10 percent in the first quarter of 2015, as compared to the same time period last year. Oregon’s small rural hospitals demonstrated the strongest gains in net revenues with Lower Umpqua Hospital (23 percent), Columbia Memorial Hospital (22 percent), and West Valley Hospital (22 percent) leading the way.
As shown in the table below, urban hospitals (identified as DRG in the “Type” column) with healthiest earnings were McKenzie-Willamette Medical Center and OHSU hospital at 29 percent and 18 percent revenue gains when comparing 2014 and 2015 first quarter periods.
Increased Emergency Room and Inpatient Discharge Visits
Comparing the first quarters of 2014 and 2015, emergency room visits and inpatient discharges were on the rise. The OHA financial quarterly report attributes this not only to expanded health insurance and pent up demand, but also population increases particularly in the Portland metropolitan area along with aging baby boomers.
Emergency visits increased for all but three hospitals in Oregon. Once again leading the way for increases when comparing 2014 and 2015 first quarter time periods – but not so beneficial to the bottom line - McKenzie-Willamette Medical Center experienced a 30 percent increase in emergency room visits.
Several rural hospitals reported emergency room visit increases of 20 percent or more in the first quarters of 2014 and 2015:
- Pioneer Memorial Heppner, 30 percent
- Blue Mountain Hospital, 28 percent
- Curry General Hospital, 27 percent
- Pioneer Memorial Prineville, 26 percent
- Southern Coos Hospital, 24 percent
- Providence Newberg Medical Center, 21 percent
- Samaritan Pacific Community Hospital, 20 percent
Across the state, small rural hospitals demonstrated the greatest increases for hospital inpatient discharges. Those with more than 20 percent increases were:
- West Valley Hospital, 58 percent
- Pioneer Memorial Heppner, 36 percent
- Blue Mountain Hospital, 33 percent
- Curry General Hospital, 31 percent
- Grande Ronde Hospital, 22 percent
Urban hospitals were not far behind with Providence Milwaukie Hospital, McKenzie-Willamette Medical Center, and Legacy Mt Hood Medical Center experiencing increased inpatient discharges for the first quarter of 2014 and 2015 of 17 percent, 14 percent, and 13 percent respectively.
The seven hospitals under the umbrella of Providence Health & Services took the greatest hit with declining trends in outpatient surgeries including:
- Providence Milwaukie Hospital, -53 percent
- Providence Medford Medical Center, -52 percent
- Providence Seaside Hospital, -50 percent
- Providence Hood River Hospital, -40 percent
- Providence St Vincent Medical Center, -34 percent
- Providence Portland Medical Center, -33 percent
- Providence Newberg Medical Center, -32 percent
OHA’s quarterly report speculated that increased competition from ambulatory surgical centers may have contributed to falling outpatient surgeries.
It’s important to note that Kaiser does not submit financial data for individual hospitals and therefore its financial performance measures were not included in the OHA quarterly report.
Kathryn can be reached at [email protected].
