Today the Oregon Health Authority (OHA) provided the agency’s first look at how COVID-19 has impacted hospital revenue during this public health crisis. Hospital revenue and operating margins suffered steep drops at the end of March, likely due to the COVID-19 pandemic.
For the first time OHA is releasing its quarterly hospital financial reports as an interactive online dashboard. The dashboard allows users to interact with hospital financial data from 2007 to 2020, displayed monthly or quarterly.
“The broad health and economic impacts of COVID-19 highlight why we need a sustainable health care system that ensures everyone has access to quality, affordable care when they need it,” said Jeremy Vandehey, OHA’s director of health policy and analytics.
Hospitals ended 2019 in a strong financial position, with revenue outpacing expenses. Net patient revenue increased 7.3% compared with the fourth quarter of 2018, while operating expenses increased only 1.2%. Uncompensated care remained essentially flat during that period. Hospitals closed out 2019 with a robust median operating margin of 4.2%.
However, the strong fourth quarter of 2019 stands in stark contrast to the first quarter of 2020. Oregon’s first COVID-19 case was identified on February 28, 2020. To conserve hospital capacity and preserve personal protective equipment (PPE) for the COVID-19 emergency, on March 19, 2020, Governor Kate Brown issued executive order 20-10, prohibiting elective and non-urgent medical procedures.
Decreases in hospital utilization in March led to a drop in patient revenue. At the same time, hospital expenses continued to increase, leading to large drops in operating margins in the first quarter of 2020. A drop in hospital stocks exacerbated the losses.
Key findings from the report include:
- Statewide total margin fell from 9.3% in the first quarter of 2019 to -8.8% in the first quarter of 2020, a decrease of 19.4 percentage points.
- Median statewide total margin fell 11.3 percentage points, from 6.7% to -4.6% in the same time period.
- Statewide net patient revenue was down slightly, $22.7 million or -0.6%, when compared with the first quarter of 2019.
- Total operating expenses remained on trend, increasing $215 million, 6.3%, when compared with the first quarter of 2019.
The first quarter financial reports don’t reflect financial assistance that was provided to the health system in response to the COVID-19 pandemic. The second quarter hospital financial reports, released later this fall, will reflect federal and state grants or other assistance that was provided to hospitals to stabilize and support the health system.
“We have been working closely with our partners across the health system to contain the rising costs of health care,” said Vandehey. “These data demonstrate the risks health systems face when their revenue depends on the numbers of patients they treat and procedures they perform. We see that paying for volume instead of value can contribute to financial uncertainty during a crisis, just when we need hospitals the most.”
Quarterly reporting on Oregon’s acute care hospitals assists policymakers and the public in monitoring the impact of state and federal health reforms on hospital care and financial stability. These reports track key measures of hospital finances and utilization including profitability, charity care, bad debt, and inpatient, outpatient, and emergency department visits.
For more information about OHA’s hospital reporting program, go to the Health Policy and Analytics website.