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Data released by the Oregon Health Authority (OHA) show hospitals across the state are struggling with sharp growth in operating expenses. This has impacted operating margins throughout the state, resulting in over half of Oregon’s hospitals reporting operating losses on the quarter.
Net patient revenue (NPR) was $3.78 billion in the first quarter of 2022, an 8.2% increase from the first quarter of 2021. Total operating revenue was $4.13 billion in the first quarter of 2022, a 10.9% increase from the first quarter of 2021. An additional round of CARES Act funding, which began distribution in late December of 2021, contributed to the revenue growth.
While revenue was up compared with the first quarter of 2021, the rate of revenue growth is slowing. Net patient revenue amounts have been effectively flat from the second quarter of 2021 through the first quarter of 2022.
All in all, hospitals finished the first quarter with $103.5 million in operating losses. This sharp decline in margin is attributed to the equally sharp growth in expenses, particularly payroll expenses.
“OHA recognizes rising personnel expenses are a growing concern for Oregon’s hospitals,” said Dave Baden, OHA chief financial officer. “Anecdotally, we hear that temporary staffing costs made up a large portion of the increased expense. We hope that with a return to normal staffing some of the expense growth will taper off.”
Total operating expense grew $559.1 million compared with the first quarter of 2021, a 15.2% increase. Payroll was the largest contributor to this growth, accounting for $330 million (59%) of the increase. Statewide, payroll was up 23.4% compared with the first quarter of 2021, while at the same time the total number of payroll hours worked was down 2.5%.
All hospital types faced expense challenges, and operating expense growth was similar across all hospital types in Oregon.
OHA receives hospital financial data 90 days after a calendar quarter ends. Based on conversations with various hospital leaders, ongoing struggles with expense growth and hospital staffing is expected to persist through the second quarter and into the fall.
“Everyone was aware that the pandemic was likely to have long lasting effects on our health care system and cause challenges for institutions like hospitals,” added Baden. “In the wake of these data and the picture they paint of the hospital financial situation, OHA will be monitoring closely to ensure that Oregon patients’ experiences continue to be the same.”
Source: Oregon Health Authority