The sniping continues over just how badly – or how little -- the COVID-19 pandemic hurt the financial health of Oregon hospitals.
In a new report, the Oregon Health Authority said that as a group hospitals in the state ended 2020 “in the black,” showing a total operating profit of $483 million. Boosted in part by federal grants under the CARES Act, hospitals had a collective 3.3% operating profit for the year, the agency said.
While net patient revenues suffered in the second quarter of the year, they rebounded in the second half of the year, the state said. CARES money played a significant part in the recovery, and totaled more than an estimated $620 million, the report said.
Operating profits for 2020 were below the 5.3% margin – and $762 million total – of 2019, the state said.
“By one measure, Oregon hospitals experienced higher (operating profit) margins than peers around the nation.” the report said. “In a recent study, consulting firm KaufmanHall found that hospitals nationwide averaged an operating margin of 2.7% (including the) CARES Act funding boosts. Oregon hospitals were at 3.3%.” The figures don’t include the investment returns of hospitals portfolios. The investment portfolios are held not by individual hospitals, but by the hospital systems, which often operate in multiple states. So those returns are not attributed to individual hospitals.
Most hospital systems with hospitals in Oregon reaped big investment returns in 2020 due to the strong stock and bond markets, an analysis by The Lund Report found. Those returns – consisting of both dividend and interest payments and the increase in the market value of the investments – typically more than made up for temporary drops in patient volumes and increases in some COVID-19-related operating expenses, the analysis found.
In contrast, CARES Act money is allocated to individual hospitals and shows up in their financial reports.
(See related story: Most Oregon Hospitals Didn’t Need 2020 Bailout: They Had The Stock Market.)
The health authority’s release of the 2020 hospital financial results quickly from the Oregon Association of Hospitals and Health Systems, the trade group representing hospitals.
“Many hospitals, especially those in rural parts of the state, were pushed to the financial brink in 2020 by revenue losses from cancelled non-urgent procedures and increased costs for PPE, staffing shortages and challenges, bed capacity challenges, and caring for COVID patients,” said association CEO Becky Hultberg.
“Operating margins have been propped up by last year’s infusion of CARES Act funds. Without that infusion, the median operating margin in 2020 was -2.1%. One in three hospitals in Oregon lost money in 2020. Last year Oregon’s hospitals did not come close to covering their total operating expenses. In 2020, net patient revenue was 6.5 percent lower than total operating expenses,” Hultberg said.
And that, in return, from the Service Employees International Union Local 49, which represents clerical, janitorial and food service workers at many Oregon hospitals.
“Many Oregon hospitals finished strong, despite the ongoing pandemic and amid claims by some health systems who’d like us to believe they are on the verge of financial ruin,” said Rose King, a spokeswoman for the union.
SEIU political director Felisa Hagins added: “It’s frustrating to see just how profitable the hospitals were throughout the pandemic, given that when workers asked for PPE, hazard pay, and various protections over the past year they were often told no. It’s time for hospitals whose entire mission is caring for the health of people and communities to stop putting profits first.”
Jeremy Vandehey, director of the Oregon Health Authority’s health policy and analytics division, tried to strike a conciliatory note.
“We’re grateful to hospitals and particularly their staff for their service to Oregonians in this unprecedented global pandemic. With that said, these 2020 financial results, combined with 2019’s high margins, yet again demonstrate the need for our state’s newly created cost growth target program designed to get the cost of health care under control.”
You can reach Christian Wihtol at [email protected].
