As Central Oregon nears a 70% vaccination rate for those 16 and older, and the fear of COVID-19 fades, the virus continues to pose a real financial threat to the region’s four hospitals.
Patients are filling hospital beds. Demand for personal protective equipment is still high. Elective surgeries are down. Hospital stays are longer and the number of deaths continue to climb.
All this affects St. Charles Health System’s financial performance and the ability of a hospital to serve the community, said Jenn Welander, St. Charles Health System’s chief financial officer.
One in three Oregon hospitals lost money in 2020, according to the Oregon Association of Hospitals and Health Systems. Had it not been for the Coronavirus Aid Relief and Economic Security Act, St. Charles’ balance sheet would be in the red, Welander said.
“If we had not received the government funds, we’d have lost over $30 million,” Welander said. “COVID’s impact was truly devastating even with the support we received from the government.
“It was one of the worst years that St. Charles has faced financially and operationally in over a decade.”
The amount of money the hospital earned in patient care declined by $32.4 million, or 4%, in 2020, compared to 2019, she said. At the same time, the hospital saw a 9% increase in expenses in 2020 to $862 million because of additional costs for labor and supplies, Welander said.
The year closed out with an excess revenue over expenses of $1.25 million, she said. That’s a $32.6 million decline over 2019. In all, the hospital system received $37.1 million in federal and state COVID-related funds.
At St. Charles, the operating margin was 0.1% in 2020, compared to 4.1% in 2019, and that was with the federal funding. The margin is calculated as the difference between operating revenue and total expenses divided by operating revenue.
Before the pandemic, the hospital was experiencing a higher volume of revenue from patient care because of the growth in the region, according to the annual financial report.
But all that stopped in March when the governor ordered everyone to stay home and the hospital canceled elective surgeries as a way to maintain surge capacity in case it was inundated by COVID-19 cases.
“Without the infusion of CARES Act funding, Oregon hospitals overall would have lost money in 2020,” said David Northfield, Oregon Association of Hospitals and Health Systems spokesman. “While some hospitals had a positive operating margin in 2020, 1 in 3 had a negative operating margin last year.”
Without federal financial support, Oregon hospitals faced a negative 2.1% median operating margin in 2020, which was compounded by a 6.5 % drop in patient revenue. That meant patient care revenues did not come close to covering expenses in 2020, said Northfield.
Overall, Oregon hospitals reported an operating margin of 2.9%, according to the Oregon Health Authority reported.
Hospitals were hit hard by the pandemic, particularly those in rural parts of the state, especially when elective surgeries were canceled to allow resources to respond to the pandemic. St. Charles is considered a large hospital
Each quarter Oregon hospitals send financial data to the Oregon Health Authority to keep tabs on the financial health of the health care system, said Jeremy Vandehey, Oregon Health Authority health policy and analytics division.
“During the pandemic, OHA was active in seeking to help hospitals to weather the financial storm, especially in the second quarter of 2020,” Vandehey said in an email. “Our data show that by and large, hospitals were able to survive the pandemic financially due to both federal funds and a robust stock market.”
Hospitals could not have done as well, Vandehey said, had it not been for the hospital workers from the doctors, nurses, clinical and support staff.
Going forward, however, the financial picture is a concern for the four hospitals in Bend, Redmond, Prineville and Madras, Welander said. Positive cases of COVID-19 may be on the wane, but hospitalizations are still up, she said. St. Charles Health System is the only Level II Trauma Center east of the Cascades and the largest employer in the region with more than 4,200 employees, according to Economic Development for Central Oregon’s 2020 list of private employers.
Last week patient counts were as high as they were in most months in 2020, she said. And while the community feels that it is putting COVID-19 behind it and the restrictions put in place to contain the spread, the hospital is seeing the highest number of patients and deaths since December 2020 when there was a surge of cases, said Lisa Goodman, St. Charles Health System spokeswoman.
“We need the community to continue to get vaccinated and to allow our region to get to herd immunity, so the hospital can return to normal operations,” Welander said. “We need everyone’s help.”