The woes of Oregon’s small rural hospitals have drawn the attention of policymakers but, in recent years, they’ve actually tended to report rosier finances overall than the state’s largest hospital systems. It has often been the urban operations, like Legacy Emanuel and Providence Milwaukie Medical Centers, which have most struggled to meet costs.
This is one key finding from a report published this week on Oregon hospitals and their finances, which purports to complicate claims of broad financial fragility within the key sector in the state’s health care system.
Beginning its examination in 2013, the study tracks a relative boom period for hospitals, during which the reported value of their net assets more than doubled. It ends in 2023—when hospital finances were starting to look shakier.
“As a whole, the systems over the 11 years have done well,” says Art Suchorzewski, who produced the study, referring to the 2013-2023 period. “It’s been more challenging since the pandemic without a doubt.”
A core factor in those more lucrative years was the Affordable Care Act, a major government investment in the health care system which dramatically reduced the proportion of uninsured Oregonians.
With the COVID-19 pandemic and its aftermath, hospital margins started flagging. Still, for certain subgroups like government-designated “critical access hospitals”—the smaller and more rural outposts that receive better pay for their services—the finances look notably resilient.
Take 2022, the only year in the report’s time span in which Oregon hospitals, as a whole, reported net margins in the red. Boosted in part by better reimbursement rates that year, the state’s 25 critical access hospitals, by contrast, reported a net margin of 6%.
Hospitals are not like any other business. Their economic models are shaped by massive and sometimes fickle government programs, and their finances are notoriously slippery. Thus, researchers have varying modes of analysis.
Notably, the new study comes a year after the Hospital Association of Oregon published its own report, headlined “Oregon hospitals on the brink.” That report sought to raise a warning about the bleak finances of Oregon hospitals, and argued their financial margins compared quite poorly to those of their peers nationwide.
“Oregon hospitals’ aggregate operating margin over time consistently lags the national average,” that industry study said. “This means that Oregon hospitals have less money to invest in services, make necessary capital improvements, and replace equipment than their peers nationally. Something unique is happening in Oregon that is putting patient services at risk.”
The new study is produced by FamilyCare Health, an Oregon health policy group. (Disclosure: WW’s health care reporting is supported by a grant from the Heatherington Foundation for Innovation and Education in Health Care, which FamilyCare Health established in 2014.)
The FamilyCare study focused on “net margins”—arguing it’s the most complete annual measure of financial sustainability.” (It includes information like investments, for example.)
“Certainly when the Hospital Association talks about performance they look at operating [margins],” Suchorzewski says. “But our goal was to capture the entire picture. And the entire picture is your net.”
The Hospital Association of Oregon did not respond to an interview request or a request for comment.
Hospitals’ ability to run robustly—and by extension, everyday peoples’ ability to access them—are a particularly pressing subject in Oregon, which has some of the fewest hospital beds per capita in the nation.
Hospitals have also evolved into major economic forces. They bring billions of federal dollars to Oregon and are foundational institutions of the state’s health care industry, which employs more Oregonians than any other sector.
The study examined Oregon’s hospitals from the state level, and also in terms of individual systems and hospitals. Health systems—like Legacy Health. Providence Oregon, Kaiser Permanente and PeaceHealth—control 73% of net hospital assets statewide, the study says.
The system with the largest net profit margins in the 11 year period, it said, was the Asante Health System, with around 7%. Asante recently drew scrutiny when it used finances as justification to close a Southern Oregon inpatient unit, even though the financial picture it it had reported to the state looked relatively positive.
The Providence and Legacy systems, which are major players in the Portland area in particular, reported net margins of about 3% during the 11 years period, the study said.
Hospital association people would say margins this low do not allow hospital system to reinvest in themselves. Notably, in the case of Providence in particular, the system—and its financial apparatus—goes well beyond Oregon.
In any event, few deny that strong financial headwinds have emerged in recent years for Oregon hospitals. Sometimes, the end result is lost access. In 2023 PeaceHealth closed its Sacred Heart Medical Center, citing persistent losses. This year, Portland’s lone long-term care hospital completely shuttered. Hospitals have shuttered units and clinics, too.
FamilyHealth says it intends to update the study in subsequent years. Suchorzewski says he hopes the study can help the public critically assess hospital systems’ financial claims.