Dismal Financial Results Threaten Oregon Hospitals

In the 18 years of hospital profitability data the Oregon Health Authority has collected, only one year—2022, a COVID hangover—yielded lower profits than 2024.

“We are at a tipping point in this state,” Becky Hultberg, CEO of the Hospital Association of Oregon, said in an interview. “Hospitals are on the brink of closure.”

A report Hultberg’s organization released today highlights the lengths to which one rural hospital—Lower Umpqua in Reedsport on the South Coast—went to pay for a mammography machine last year: “two golf tournaments, securing three major grants, and a generous donation from the estate of a community member.”

Like most Oregon hospitals, Lower Umpqua Hospital lost money last year (about $3.6 million, according to OHA figures). Its losses, like those of many Oregon hospitals, have increased since the pandemic. Collectively, Oregon’s 60 hospitals made just $50.5 million in 2024, about one-tenth of their average profitability in the decade prior to the pandemic. (Nearly all of Oregon’s hospitals are nonprofits. State figures measure “operating margin,” the difference between revenues and expenses.)

Available intensive care unit hospital beds shrank to its lowest number since the COVID-19 pandemic began amid a current surge of delta variant cases. Credit: Churehil Via Wikimedia

The association’s report shows Oregon hospitals are faring significantly worse than those in other states. [CHART 1]

It’s not just rural hospitals, such as Lower Umpqua or the South Coast’s largest, Bay Area Hospital in Coos Bay, that are struggling. Three of the state’s largest hospitals reported large losses in 2024: Providence Portland ($86.2 million), Legacy Emanuel ($85.6 million), and Salem Hospital ($50.8 million).

Costs are simply rising faster than revenues for hospitals in a state where about one-third of residents get their health insurance through the Oregon Health Plan, the state’s Medicaid program. [CHART 2]

The report points to two places where Oregon policies have squeezed hospital margins. The first is the large number of patients who are waiting for discharge but have no place to go, either because there are no beds in less acute medical facilities or no suitable accommodations at home. The hospital association says the cost of holding those patients beyond their discharge date totaled $324 million in 2024 and is to some degree a function of the state’s long-term policy of minimizing the number of hospital beds in the state.

Graph showing cost increases aren't slowing down. Physician payroll up 46%. Supplie expense up 45%. Facility parole up 43%. Benefit expense up 32%. Interest up 36%. Miscellaneous up 36%. Deprecation up 3%. — Credit: Hospital Association of Oregon

A second area that the report highlights is Oregon’s generous compensation for nurses. An industry publication, Becker’s Hospital Review, recently looked at nurses’ pay across the country and found that a couple of states, California and Hawaii, pay nurses more in absolute dollars, but when pay is adjusted for Oregon’s lower cost of living, Oregon nurses are the highest paid in the nation. (That may be in part a result of a 2023 law that established the nation’s first nurse-staffing ratios and increased demand for nurses.)

The hospital association would like its largest payers—state and federal government—to increase reimbursement rates. That’s a tall order since primary care physicians and others are also seeking higher Medicaid reimbursement at the state level and politicians in Washington, D.C., are seeking ways to cut federal spending on health care.

Hultberg says something has to give. “The environment has to change for our hospitals to be sustainable,” she says. “Oregonians can’t take our hospitals for granted.”