Providence Hospitals See Oregon Profits Fall 67% in 2014, to Still Respectable $59.8 Million

Financial results for Providence’s Oregon hospitals show a dramatic financial impact that the Affordable Care Act has had on hospitals that once had to spend hundreds of millions of dollars caring for low-income or indigent patients unable to pay their bills

Profits retreated at Providence Health and Services’ Oregon hospitals in 2014, according to newly available financial data that suggests the Affordable Care Act’s benefits to healthcare institutions in the state are still shaking out. While some of Providence’s Oregon hospitals posted losses and others posted gains, the gains did outweigh the red ink – these eight healthcare centers reported a combined $59.8 million profit for the year.

That’s down 67 percent from 2013, when the same eight hospitals reported $181.1 million in combined profit, and below profits that Providence has reported for its Oregon hospitals for the past several years, reflecting higher operating costs in 2014.

In the weeks ahead, we’ll look at how operating cost shifts are affecting other hospitals in the state, as part of a broad examination of how the Affordable Care Act and other political and economic forces are reshaping healthcare in Oregon. Among the questions we’re asking: Are profits going up or down? How are rural and urban hospitals reacting differently to a shifting healthcare climate?

For the fourth year, The Lund Report is digging deep into the finances of Oregon’s hospitals. We’re looking at how profitable they are and how many people they serve.

The figures underpinning these reviews come from multiple sources:

  • Hospital-specific profit, revenue and charity care figures come from audited financial reports prepared by each hospital and submitted to the Office for Oregon Health Policy & Research.
  • The size and reach of each hospital, as summarized through available beds, and inpatient, outpatient and emergency room figures, are reported by hospitals to the state-mandated Databank program.
  • Additional financial details about hospital chains come from IRS 990 forms and from the systems’ own unaudited reports.

Our series starts with a look at Providence Health & Services, and its eight Oregon hospitals. Next week we’ll dig into the finances of the Legacy Health chain.

Providence Health and Services

Overview

Providence Health and Services has its roots in a Canadian community of nuns, who served orphans and the elderly when they arrived in Vancouver, Washington, in 1856. Over the following decades, Providence grew by founding hospitals on its own, taking over or agreeing to run healthcare systems established by others and offering health insurance plans.

Today, Providence is the third-largest nonprofit health system in the U.S., with 34 hospitals, 600 physician clinics, 22 long-term care facilities, 19 hospice and home health programs and 693 supportive housing units across five states.

Eight of Providence’s hospitals are in Oregon, with Willamette Falls the newest to join the system as of 2009.

Headquartered in Renton, Washington, the chain is seeking to grow even larger. In 2014, Providence took over St. John’s Health Center in Santa Monica, California, from Colorado-based Sisters of Charity of Leavenworth Health System; affiliated with PacMed Clinics, a multi-specialty provider group based in Puget Sound; and affiliated with Kadlec Regional Medical Center, based in Richland, Washington.

Other efforts to grow have not reached fruition, including talks between Providence and Tuality several years ago; 2014 affiliation discussions with Silverton Hospital, which instead opted to align with Legacy Health over concerns that a Catholic affiliation might lead to restricted access to reproductive care; and 2015 discussions with PacificSource before the insurance company opted instead to partner with Legacy.

Financial results for Providence’s Oregon hospitals show a dramatic financial impact that the Affordable Care Act has had on hospitals that once had to spend hundreds of millions of dollars caring for low-income or indigent patients unable to pay their bills. In 2013, Providence’s Oregon hospitals provided $204.7 million in charity care. In 2014, as enrollments in ACA-backed health plans climbed, the chain’s charity care expense dropped to $89.2 million.

Click here for last year’s report on Providence

Providence Hood River Memorial Hospital

Providence’s Columbia River Gorge hospital has experienced several years of worsening financial results, mirroring challenges that small and rural hospitals have continued to face, even as urban institutions see gains. After a $2.04 million profit in 2012, Providence Hood River Memorial Hospital reported a $225,390 net loss last year, and then a $5.6 million net loss in 2014.

Finances, year 2014:

Net loss: $5,589,336, compared to a net loss of $225,390 last year.

Net patient revenue: $73,215,602, up 8.09%. Charity care: $4,244,577, down 31.78%. Profit margin: negative 7.51%, down from negative .33% a year earlier.

Size and scope, 2014:

Available beds: 25, the same as last year. Inpatient days: 3,906, down 3.58%. Emergency department visits: 8,851, up 10.89%. Outpatient visits: 160,564, up 47.67%.

Providence Medford Medical Center

One of two Medford hospitals (the other is Asante Rogue Regional Medical Center), Providence Medford offers a full range of services to patients in southern Oregon and northern California. It offers a cancer center, along with heart, spine and surgical services. Profits have historically bounced up and down at Providence Medford, which reported a $5.3 million profit in 2012, $8.1 million in 2013, and $64,300 in 2014.

Finances, year 2014:

Net income: $64,300, down 99.21% from 2013.

Net patient revenue: $176,683,458, up 11.74%. Charity care: $11,606,603, down 60.79%. Profit margin: .04%, down from 4.91% a year earlier.

Size and scope, 2014:

Available beds: 138, up from 114 last year Inpatient days: 26,372, up 2.48%. Emergency department visits: 28,584, up 5.1%. Outpatient visits: 344,697, up 3.89%.

Providence Milwaukie Hospital

With 51 staffed beds, Providence Milwaukie is one of the smallest acute-care hospitals in Oregon, seeing an average of just 22 acute-care patients per day. It’s succeeding at an effort being undertaken by hospitals across the U.S. to reduce overnight stays – inpatient days fell 5.5 percent in 2014 – and to shift toward more outpatient care – outpatient visits climbed 33.7 percent. Emergency department visits also climbed by 11.3 percent.

Finances, year 2014:

Net loss: $1,948,539, compared to net income of $5,587,739 last year. Net patient revenue: $91,082,774, up 7.63%. Charity care: $5,288,577, down 58.63%. Profit margin: negative 2.1%, down from 6.42% a year earlier.

Size and scope, 2014:

Available beds: 51, the same as last year. Inpatient days: 8,167, down 5.52%. Emergency department visits: 31,185, up 11.28%. Outpatient visits: 243,707, up 33.68%.

Providence Newberg Medical Center

With just 40 beds, Newberg Medical Center is one of Providence’s smaller hospitals, but it has deep local roots. It has served its community for more than 40 years, and its current hospital building, a $70.6 million LEED-certified structure, turns 10 this year. It opened in June 2006.

Finances, year 2014:

Net income: $8,645,798, down 38.37% from 2013.

Net patient revenue: $95,188,540, up 13.82%. Charity care: $4,951,697, down 56.16%. Profit margin: 8.71%, down from 15.9% a year earlier.

Size and scope, 2014:

Available beds: 40, the same as last year. Inpatient days: 8,452, up 20.01%. Emergency department visits: 19,037, up 11.24%. Outpatient visits: 218,882, up 12.33%.

Providence Portland Medical Center

Providence Portland is one of the busiest hospitals in Oregon. It had more outpatient visits in 2014 than any other hospital in the state, and ranked No. 4 for emergency department visits and No. 6 for inpatient days. More than 3,000 people work at this hospital’s large Northeast Portland campus, which houses a well-regarded cancer center and also a child treatment center.

Despite an increase in net patient revenue and a substantial drop in charity care, Providence Portland reported a financial loss for 2014. The blame appears to lie with high operating expenses, which climbed 9.4 percent to $676.6 million that year.

Finances, year 2014:

Net loss: $11,722,340, compared to net income of $40,404,326 last year.

Net patient revenue: $608,553,018, up 2.4%. Charity care: $25,308,442, down 59.31%. Profit margin: negative 1.76%, down from 6.23% a year earlier.

Size and scope, 2014:

Available beds: 397, the same as last year. Inpatient days: 97,163, down 3.66%. Emergency department visits: 51,965, up 4.31%. Outpatient visits: 1,257,976, up 7.93%.

Providence Seaside Hospital

Founded in 1914, Seaside's hospital has been part of the Providence system since 1981. The largest primary care provider in Clatsop County, the hospital has been working to expand its services to communities on Oregon’s north coast. Increasingly, that effort involves telemedicine. Providence Seaside was a pilot site for testing treatment of stroke via telemedicine networks, and in 2014 it began offering overnight access to hospitalists via telemedicine networks.

Finances, year 2014:

Net income: $2,401,924, up 230.47% from 2013.

Net patient revenue: $50,706,287, up 6.28%. Charity care: $1,931,973, down 68.03%.  Profit margin: 4.61%, up from negative 3.8% a year earlier.

Size and scope, 2014:

Available beds: 25, the same as last year. Inpatient days: 3,376, up 17.67%. Emergency department visits: 9,023, up 6.89%. Outpatient visits: 68,655, down 42.28%.

Providence St. Vincent Medical Center

Providence St. Vincent is one of the busiest hospitals in Oregon, ranking second in the state for most inpatient visits (after OHSU Hospital), second for emergency department visits (after Salem Hospital) and third for most outpatient visits (after Providence Portland Medical Center and OHSU). About one in every seven babies born each year in Oregon is delivered at this hospital.

Providence St. Vincent Medical Center is home to the West Coast's only movable intraoperative magnetic resonance imaging, used for operating on brain tumors. The hospital has been designated a center of excellence for its heart and vascular programs, its brain and spine institute and its healthcare ethics program.

Finances, year 2014:

Net income: $65,853,950, down 38.79% from 2013.

Net patient revenue: $789,552,296, up 1.4%. Charity care: $32,159,628, down 49.99%. Profit margin: 8.18%, down from 13.55% a year earlier.

Size and scope, 2014:

Available beds: 529, down from 552 last year. Inpatient days: 118,161, down 4.39%. Emergency department visits: 59,702, down 8.79%. Outpatient visits: 811,785, down 2.96%.

Providence Willamette Falls Medical Center

Willamette Falls Community Hospital joined Providence in 2009, after several years of financial losses. Since 2012, the hospital has been profitable – although net income in 2014 was $2.1 million, down from the $7.4 million profit of the year before.

Finances, year 2014:

Net income: $2,127,936, down 71.4% from 2013.

Net patient revenue: $115,266,404, up 22.49%. Charity care: $3,749,065, down 69.39%. Profit margin: 1.82%, down from 7.72% a year earlier.

Size and scope, 2014:

Available beds: 111, the same as last year. Inpatient days: 16,872, up 29.57%. Emergency department visits: 26,859, up 5.17%. Outpatient visits: 151,652, up 20.7%.

Corrections: An earlier version of this story contained errors. The nuns who founded Providence arrived in Vancouver, Washington, in 1856, not in 1956. And incorrect figures were printed for Providence Seaside net income. The story has been updated to correct the errors.

-- Reach Courtney Sherwood at [email protected]; follow her on Twitter at @csherwood.

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