Q2 2022 was the worst financial quarter of the pandemic, exceeding record Q1 losses
Lake Oswego, Ore. – September 30, 2022 – Nearly two-thirds of Oregon’s hospitals lost money in the second quarter of 2022, with margins plunging to depths below the lockdown phase of 2020 when all but basic operations ceased, according to new analysis released by Apprise Health Insights.
Driven by sharply increasing labor and other costs combined with flat revenue, hospital losses from operations collectively reached $111 million in the second quarter. Through the first six months of 2022, hospitals have lost $215 million from operations.
“The wheels have come off the financial model that keeps hospital doors open to patients,” said Becky Hultberg, OAHHS President and CEO. “This dismal financial picture calls into question the ability of some hospitals to provide essential and life-saving care for patients in their communities now and in the future. This should be a wakeup call to all of us who rely on functioning hospitals to take care of our loved ones and neighbors. The system can break, and we are getting ever closer to that breaking point.”
Median Operating Margin continued to decline sharply in Q2, to -4.7%, following the Q1 margin of -2.5%. Both numbers are below where they were at the early stages of the pandemic. Once again, hospital revenue is not covering the cost of patient care. Net Patient Revenue (NPR) fell short of Total Operating Expenses in Q2 2022, and the gap continues to be considerable. Labor costs, hospitals’ largest expense, have risen 16% compared to last year. Labor accounts for at least half of a hospital’s cost, so even a small increase in labor cost has a big impact.
Oregon’s system is breaking down across the care continuum, from ambulances to hospitals to post-acute, and creating a capacity crisis in hospitals. The capacity crisis, which threatens patient access to care, is adding to the strain on hospital staff and finances. Around 500 patients per day are ready to be discharged from hospitals into a care setting that better meets their needs, but there is nowhere for them to go. Meanwhile, hundreds more wait in the ED, “boarding” and waiting for a staffed bed to open. Emergency departments are often full, which can mean long wait times for ambulance companies and our community members.
“A local hospital with an open front door and a closed back door does not work even with the best efforts of our teams,” said Hultberg. “These numbers should create a sense of urgency in addressing the significant challenges in our health care system, like the inability of hospitals to discharge patients.”
About OAHHS: Founded in 1934, OAHHS is a statewide, nonprofit trade association that works closely with local and national government leaders, business and citizen coalitions, and other professional health care organizations to enhance and promote community health and to continue improving Oregon’s innovative health care delivery system.
Apprise Health Insights is the most reliable and complete source of hospital data in Oregon. As the data subsidiary of the Oregon Association of Hospitals and Health Systems (OAHHS), Apprise staff have gathered and analyzed data about Oregon hospitals and health systems since 1985. We strive to provide data, tools, and expertise to help hospitals understand the healthcare landscape in the Pacific Northwest.