PeaceHealth hospitals in Eugene, Springfield recover after recession

Sherri Buri McDonald / The Register-Guard (Eugene) /

Published Nov 12, 2012 at 04:00AM

EUGENE — PeaceHealth’s hospitals in Springfield and Eugene are recovering financially after the bruising effects of the recession, according to PeaceHealth’s latest financial filings with the state.

In the fiscal year that ended June 30, 2010, PeaceHealth was feeling the strain of the cost of its new flagship RiverBend hospital, heavy losses at the University District hospital, and soaring bad debt and charity care for patients who wouldn’t or couldn’t pay their bills in a bad economy.

Those challenges continue, but the latest filings — for the year ended June 30, 2011 — show that PeaceHealth’s Sacred Heart Medical Centers at RiverBend in Springfield and in the University District in downtown Eugene both boosted net patient revenues while keeping a grip on expenses. RiverBend increased profit by 6.4 percent to $26.6 million, and the University District cut its losses by almost a third, to $9.68 million in the past fiscal year.

The financial filings for the year ended June 30, 2011, are the latest figures publicly disclosed by PeaceHealth, although the nonprofit hospital group says the improving trend has continued since that period.

PeaceHealth, a Catholic-sponsored health care system based in Vancouver, Wash., is the main health care provider in Lane County. With 4,768 full-time-equivalent employees, it is one of the largest employers in Lane County. It operates the Sacred Heart hospitals, the physician group PeaceHealth Medical Group, PeaceHealth Labs, Cottage Grove Community Hospital and Peace Harbor Hospital in Florence.

RiverBend’s operating margin, a measure of profitability, was 5.3 percent last year, up from 3.8 percent in 2010, according to the Oregon Community Hospital Report prepared by Apprise Health Insights, a subsidiary of the Oregon Association of Hospitals and Health Systems.

That compares with an average operating margin of 4.27 percent in 2011 for the 58 community hospitals analyzed in the report.

PeaceHealth also is stemming the losses at the University District hospital, home to such services as a 24-hour emergency department, the Johnson Unit for people experiencing mental health crises, and the Oregon Rehabilitation Center, which treats patients who have had a stroke, spinal cord injury, brain injury or amputation.

University District’s operating margin of minus 7.37 percent was still in negative territory last year, but it had improved significantly from minus 12.74 percent in 2010, according to the Oregon Community Hospital Report.

Reorganization

PeaceHealth’s Sacred Heart hospitals are managing to improve their books while their parent organization repeatedly restructures operations in an industry rocked by change.

PeaceHealth absorbed the nonprofit Southwest Washington Health System in Vancouver and opened a “shared services center” there in January to handle back-office functions for PeaceHealth’s nine hospitals in Alaska, Washington and Oregon.

PeaceHealth is shifting jobs in accounting, technology, human resources and several other departments from the regional offices to the centralized office in Vancouver, including 94 Lane County jobs by 2014, PeaceHealth officials have said.

Another big merger may be on the way for PeaceHealth. It is waiting for government approvals to partner July 1 with the Northwest arm of Catholic Health Initiatives, a nonprofit hospital chain based in Denver.

Eliminating jobs

And the health care landscape continues to shift as more national and state health care reforms take effect.

“PeaceHealth’s current financial position is strong,” said John Hill, CEO of PeaceHealth’s Oregon operations.

“Looking ahead, however, we know our Medicare and Medicaid payments, which constitute about 60 percent of our business, are expected to drop by millions of dollars over the next two years as various components of health care reform take effect,” he said. “That reduction requires us to continue to find ways to reduce expenses and operate more efficiently.”

So far, PeaceHealth’s Oregon operations — in effect its Lane County entities — have cut about $11 million in expenses and are roughly halfway to the goal set in December 2011 to cut $23.6 million in expenses annually from the budget.

Staff reductions are part of that — PeaceHealth officials confirmed that 120 Lane County jobs had been eliminated as of late September — but so are redesigning operations, improving efficiencies and lowering purchasing costs, Hill said.

Combined, the two hospitals saw a 2.7 percent increase in patient days, a system used to track patient volume, and emergency department visits were up 4.7 percent, Hill said.

Sacred Heart Medical Center at Riverbend

Net patient revenue: $519 million in fiscal year ended June 30, 2011, up from $492 million in fiscal year 2010

Profit: $26.6 million in fiscal year 2011, up from $25 million in fiscal year 2010

Bad debt: $20.72 million in fiscal year 2011, down from $27.69 million in fiscal year 2010

Charity care: $48.59 million in fiscal year 2011, up from $37.13 million in fiscal year 2010.

Salaries and benefits: $194.4 million in 2011 , up from $172.5 million in 2010

Source: Latest state financial filing and 2012 Oregon Community Hospital Report

Sacred Heart Medical Center, University District

Net patient revenue: $85.89 million in fiscal year ended June 30, 2011, up from $61.19 million in fiscal year 2010

Loss: $9.68 million in fiscal year 2011, down from a loss of $14 million in fiscal year 2010

Bad debt: $6.13 million in fiscal year 2011, down from $6.96 million in fiscal year 2010

Charity care: $10.3 million in fiscal year 2011, up from $8.28 million in fiscal year 2010

Salaries and benefits: $54.39 million in 2011, up from $50.23 million in 2010

Source: Latest state financial filing and 2012 Oregon Community Hospital Report

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