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‘We continue to struggle’: St. Charles Health System taking steps to recover from major losses

'Two-thirds of our expense base is in managing our workforce cost,' St. Charles CFO says

BEND, Ore. (KTVZ) -- "We are not able to meet the increase in costs in the health care industry right now with a requisite increase in revenue," St. Charles Health System Senior Vice President and Chief Financial Officer Matt Swafford told NewsChannel 21 Monday.

Over the course of this year, the four-hospital system has had to release several workers, a majority of whom were in support services like human resources, information technology, project management and finance.

Swafford said 181 positions were eliminated, over 100 through layoffs, and most recently two executives were laid off and their positions scrapped to cut costs.

“Two-thirds of our expense base is in managing our workforce cost," Swafford explained.

The hospitals still have about 430 vacant positions they're looking to fill.

The hospitals' revenue for the the first quarter of 2022 was 2.4% higher than predicted, but expenses were a whopping 11.9% above projections. Swafford said the hospitals' 2021 total expenses was nearly $228 million, and this year's total expenses amounts to just over $274 million.

Swafford listed several contributing factors to the health system's financial struggles.

"One is surgeries. We have inpatient surgeries running about 15% lower than expected," he said. "No. 2, three-quarters of our revenue come from the federal government in Medicare and Medicaid programs."

"Those programs don’t change revenue rates more than a few percentage points at best on an annual basis," Swafford said. "The remainder of our revenue come from commercial contracts. They’re usually up to three years long and also don’t offer more than a few percentage points difference, on an annual basis.”

The major challenge they’re facing, Swafford said, is having a static revenue model with a fluctuating, market-driven expense base.

Amid COVID-19's challenges, the hospital system received $31 million in federal aid in 2021 and $32 million in 2020. So far this year, it has received $7.4 million.

The federal dollars helped compensate for lost revenues and added costs from a government-ordered halt to elective surgeries and additional PPE gear, among many factors.

The hospitals also rely heavily on contract workers, which Swafford said drives additional expenses.

"We continue to struggle," Swafford said.

As a means to pull resources together, because internal resources are not sufficient, Swafford said they've reactivated an incident command system, which helps assess and adjust priority needs.

Swafford said they're also looking at other initiatives to help St. Charles recover financially over the next two years.

Article Topic Follows: Business

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Bola Gbadebo

Bola Gbadebo is a multimedia journalist for NewsChannel 21. Learn more about Bola here.


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