Rising labor costs, patient discharge delays contribute to continued Oregon hospital losses

LAKE OSWEGO, Ore. (KTVZ) -- Nearly two-thirds of Oregon’s hospitals lost money in the third quarter of 2022, again posting an average negative margin worse than the lockdown phase of 2020, according to a new analysis released by Apprise Health Insights, the Oregon Association of Hospital and Health Systems said Thursday. 

The full report is attached.

Faced with rising labor costs, an inability to discharge patients to other settings, widespread stock market losses and high inflation, Oregon hospitals' margins remained in negative territory for all three quarters of 2022. For CY 2022 year-to-date, the state’s hospitals lost $301 million from operations, posting an overall operating margin of -2.7% and a median total margin of -3.6%. 

“This report is not just numbers on a page. There are real consequences to patients when hospitals are losing this much money,” said Becky Hultberg, OAHHS President and CEO.

“After two full years of heavy losses, hospitals are making painful budget cuts that absolutely impact patient care. Many hospitals are already dipping into their reserves to cover operating expenses, and rising interest rates only raise the cost of borrowing. We need stable, high functioning hospitals to take care of our loved ones and neighbors, and these ongoing financial challenges pose an existential threat.” 

Workforce issues at hospitals and downstream in post-acute care facilities continue to be a significant driver of poor financial performance through the third quarter. In part due to the use of contract health care workers, hospitals’ labor costs continue to rise. Facility payroll, physician payroll and benefit expense have increased by 35%, 22% and 20% respectively over the last three years. 

Oregon’s system of post-acute care is also suffering from a staffing shortage, causing patient discharge delays at hospitals, OAHHS said. One result is patients “boarding” in emergency departments waiting for a bed to open. The capacity crisis and longer lengths of stay are a further strain on patients and staff, and cut into revenue streams vital to hospital operations. Apprise Health Insights data show that on a regular basis about 700 patients statewide are either boarding or unable to be discharged.   

“As I have often said, a local hospital with an open front door and a closed back door does not work even with the best efforts of our teams,” said Hultberg. “As we head into the legislative session, these numbers should create a sense of urgency to address these significant financial challenges, which are affecting patient care.”