Reeling from a second year of losses, hospitals stress the need for policy changes

March 12, 2024

A combination of factors including high inflation, workforce shortages and escalating expenses continue to squeeze the operating margins of Oregon hospitals, underscoring the urgency of implementing policy solutions to ensure they can continue to support their communities.

New data released this week by Apprise Health Insights shows the state’s hospitals posted an –1.3% median operating margin in 2023, the second consecutive year that hospitals as a group lost money. Without federal CARES Act funds propping up hospitals in 2020 and 2021, last year would have marked the fourth straight year hospitals experienced significant financial losses.   

“Oregonians depend on their hospitals to be there when they need them most,” said Becky Hultberg, Hospital Association of Oregon president and CEO. “But year after year of tough financial conditions have made it increasingly difficult for hospitals to maintain all the services they provide to their communities.”

In 2023, 56% of Oregon’s hospitals reported they were unable to cover the cost of providing care with revenue from core patient activities. The state’s larger urban hospitals had a median operating margin of -0.3%, while rural hospitals fared worse with a median operating margin of -1.8%.

Along with rising salaries, benefits and the cost of supplies, hospitals’ cost of providing care has also increased as it has become more difficult to discharge patients to appropriate settings. The average hospital length of stay, while dropping from peak 2022 levels, has remained high at around five days.

“Our hospitals are not on a sustainable path,” Hultberg said. “We have systemic problems to address including how hospitals are paid for the care they provide, especially for the most vulnerable in our state. It’s one of the reasons we recently worked with the legislature to boost funding for hospitals that care for a higher proportion of Medicaid and uninsured Oregonians.”

The hospital association continues to work with Oregon policymakers and other groups to help build the health care workforce, explore ways to increase capacity outside of hospitals and stabilize the state’s health care system.

“The economists who predicted that 2023 would be another difficult year for hospitals turned out to be correct,” Hultberg said. “We must continue to make progress on these complex policy issues in the 2025 legislative session.”