Portland-based Legacy Health reported a $41.7 million operating loss (‐5.9% margin) for the quarter ending June 30, compared to a $10.1 million operating gain (1.4% margin) for the same quarter in the prior fiscal year, according to financial documents published Aug. 15.
Legacy said its financial performance was significantly affected by a challenging labor market that resulted in a steep increase in contract labor and premium pay. Additionally, higher patient acuity as well as constraints in sub‐acute care facility capacity led to increases in hospital length of stay across all facilities.
Operating revenue in the first quarter of fiscal 2025 increased 0.9% year over year to $709.3 million while expenses grew by 8.4% to $751.1 million. Labor costs increased 4.5% year over year to $453.5 million and supply expenses rose 5.3% to $115.2 million.
"We have sustained and continued to improve length of stay but increases in staffing related to regulatory requirements as well as continued pressure in market rates for contract services are putting pressure on operating improvement made in FY24," the health system said in its financial report. "Contract labor and premium pay stabilization will be dependent on successful hiring of new roles required by House Bill 2697."
After accounting for nonoperating items, such as investment returns, Legacy ended the first quarter of fiscal 2025 with a net loss of $18.7 million, compared to a net income of $61.6 million in the first quarter of fiscal 2024.
Kathryn Correia recently retired as Legacy president and CEO, and George Brown, MD, returned to lead the system July 1.
Legacy and Portland-based Oregon Health & Science University in May signed a definitive agreement to unite as one health system under OHSU Health. OHSU plans to invest about $1 billion over 10 years to support primary- and community-based services that will be part of the combined, 10-hospital system.