Rising expenses, workforce shortages, and stalled revenue cratered Oregon hospitals’ operating margins in 2022, putting hospitals in one of the worst overall financial positions seen since 1993.
Expenses have outpaced revenues for more than two years, or nine consecutive quarters. Hospitals’ median operating margin, which includes federal CARES Act funding, declined to -2.8% in 2022,compared to 3.2% in 2021 and 4.1% in 2020. The data is part of a new Apprise Health Insights report on calendar year 2022 financial results. The full report is attached.
“After two years of losses, hospitals are facing extraordinarily difficult choices,” said Becky Hultberg, OAHHS president and CEO. “Organizations will struggle to remain sustainable in this type of environment.”
Rising expenses, especially labor, negatively impacted hospitals all year long. Labor expenses per FTE increased 26% over pre-pandemic levels. The health care workforce shortage contributed to rising labor costs. Meanwhile, total operating expenses rose 11% compared to 2021, exceeding net patient revenue (which also increased, but only by 5.8%) by $1.6 billion.
At the same time, the inability to safely discharge patients to other settings continued to plague hospitals in 2022. Average length of stay (ALOS) was up 20%, and those longer stays often came with no additional reimbursement to pay for staff and other services necessary to care for those patient needs. Apprise Health Insights data show throughout 2022 between 600 and 700 patients statewide were either “boarding” or unable to be discharged, continuing to cause strain on hospitals and families focused on placing patients in the best care setting.
Amid these persistently poor financial conditions, OAHHS has proposed a package of bills in the 2023 legislature that will help rebuild the health care workforce, exempt certain labor costs from the state’s cost-growth target and create a task force to explore ways to increase capacity in care settings outside of hospitals.
“These record losses should create a sense of urgency for legislators to act,” said Hultberg. “Economists are predicting 2023 will also be a difficult year for hospitals. We can’t sit back and do nothing, waiting for things to improve.”