Oregon hospitals' second-quarter median operating margin was positive for the first time in five quarters, but it is still far below pre-pandemic levels, highlighting the potential fragility of hospital services, according to the Hospital Association of Oregon.
In the second quarter, Oregon hospitals reported a collective median operating margin of 1 percent and a median total margin of 2.6 percent, which includes investment income, according to a report published by Apprise Health Insights. While both figures have climbed out of the red, they are still far below a healthy level and reflect the ongoing battle hospitals face as operating expenses outpace revenue from patient care.
"Too many hospitals are forced to dip into their savings and find other ways to pay their bills," HAO President and CEO Becky Hultberg said. "We have to go back two-and-a-half years to find a time when hospitals brought in enough operating revenue to cover the cost of patient care."
Average hospital operating expenses continued to rise in the second quarter, with employee costs — which comprise half of total operating expenses — up 31 percent from the second quarter of 2020. At 52 percent, supply expenses also increased sharply, according to the report.
Revenue from patient activities has not kept pace with increases in operating expenses. In the second quarter, Oregon hospitals spent $166 million more than they made, with 43 percent of hospitals continuing to post a negative operating margin in the second quarter of this year.
"I remain concerned about these financial stressors, which jeopardize the ability of hospitals to care for patients in the communities they serve," Ms. Hultberg said. "We have already seen several hospitals make the wrenching decision to reduce services, and I worry that more are on the way."