Oregon hospitals end 2020 in the black

May 15, 2021 GNCadm1n Oregon Comments Off on Oregon hospitals end 2020 in the black

Statewide hospital financials show $483 million in operating margin despite pandemic

Data released by the Oregon Health Authority today shows hospitals ended 2020 in the black, with a surplus for the year of $483 million representing a 3.3% statewide operating margin including CARES Act funding. Hospitals statewide ended the year with positive margins and net patient revenue returning to trend in Q3 and Q4 after falling sharply in the second quarter of 2020.

While improved from its lows in Q2 of 2020, net patient revenue (NPR), revenues derived from direct care to patients, did not completely counter the drop in Q2 when much of the state was shut down. But the recovery in NPR, coupled with CARES Act funding, saw hospitals ending 2020 with a positive margin. In 2020, Oregon received CARES Act funds likely in excess of $620 million statewide. The 2020 margins were not as high as in 2019, when hospitals ended the year with a 5.3% margin representing $762 million in profit.

Meanwhile, hospitals’ total margin – which includes investment income as well as CARES Act funds – was 6.6% of revenue statewide, or $983,514,298.

“Due to the CARES Act and investment income, along with a robust return to nearly normal operations in Q3 and Q4, Oregon hospitals had a positive year in 2020 from a financial perspective,” said Jeremy Vandehey, director of OHA’s health policy and analytics division. “We’re grateful to hospitals and particularly their staff for their service to Oregonians in this unprecedented global pandemic. With that said, these 2020 financial results, combined with 2019’s high margins, yet again demonstrate the need for our state’s newly created cost growth target program designed to get the cost of health care under control.”

  • Hospital Net Patient Revenue, Total 2020: $13,144,101,486
  • Hospital Operating Margin, Total 2020: $483,771,479
  • Hospital Total Margin, Total 2020: $983,514,298

Overall utilization was down from 2019 but showed a strong recovery in the second half of the year from the lows of Q2 of 2020. Inpatient discharges are down 10.5% when compared with 2019, but rose 14.7% in Q4 compared with Q2 2020. Similarly, outpatient surgeries were down 16% from 2019 levels but up 55.3% in Q4 when compared with Q2 2020. And emergency department visits ended the year down 17.2% from 2019 but up 16% in Q4 compared with the lows of Q2 2020.

Despite utilization being down in comparison with 2019, operating expenses increased in the second half of 2020. Total operating expense was $3.7 billion in Q4, an increase of 4.3% from Q4 2019. Year-end total operating expense totaled $14.0 billion, an increase 2.4% or $330 million from 2019.

By one measure, Oregon hospitals experienced higher margins than peers around the nation. In a recent study, consulting firm KaufmanHall found that hospitals nationwide averaged an operating margin of 2.7% after CARES Act funding boosts. Oregon hospitals were at 3.3%.

The full data set is available on the OHA hospital financial and utilization dashboard.