Oregon hospitals are in ‘crisis’ after several difficult years

Oregon’s hospitals are continuing to struggle years after the COVID-19 pandemic, and some could be on the cusp of collapse.

Nearly half of Oregon’s hospitals (45%) lost money last year, and roughly a quarter (26%) barely broke even, according to a report released this month by the Hospital Association of Oregon.

Becky Hultberg, president and CEO of the Hospital Association of Oregon, tells Chief Healthcare Executive® that Oregon’s hospitals are facing serious trouble. The bleak performance of most of the state’s 61 hospitals last year follows years of disturbing numbers.

“We're very concerned about the financial condition of Oregon hospitals, particularly because this is not just an isolated year of bad performance,” she says. “This is a year of challenging financial performance that was preceded by three or four years of the same.”

Oregon’s hospitals haven’t recovered to pre-pandemic levels of financial performance. That’s true of hospitals in other states, too, but Oregon’s hospitals are lagging behind other health systems around the country.

“What we're seeing now that is really concerning is that the performance of Oregon hospitals have diverged from the performance of hospitals nationally,” Hultberg says. “So something is going on here in Oregon that is unique, and that is pushing hospitals to the brink.”

“Things aren't great anywhere, but they're particularly bad here,” she says.

(See part of our conversation in this video. The story continues below.)

Impact of staffing law

Oregon’s hospitals have faced higher labor costs, which is straining their finances. While hospitals across the nation are paying more on staffing, Oregon’s hospitals are facing a different challenge.

In 2023, Oregon enacted a state law that sets minimum staffing standards for nurses in hospitals. The law has added costs to hospitals and the state hasn’t provided enough support to help hospitals manage those additional expenses, she says.

“We have made policy choices as a state that have impacted the ability of hospitals to sustain themselves, and there are impacts to hospital revenue and impacts to hospital expenses,” Hultberg said. “Those are legitimate policy choices, but unless we're willing to pay more for hospital care, they will drive hospitals to bankruptcy.”

Labor costs account for more than half of a hospital’s expenses, and some hospitals have hired more nurses to comply with the state’s staffing law. That has affected hospital expenses, Hultberg says.

The Hospital Association of Oregon worked with legislators and nursing groups to help craft the state law. But Hultberg says hospitals need more support to meet the demands.

“We worked in a coalition to negotiate that law,” Hultberg says. “We didn't love it from the beginning, that was clear, but we did work in a coalition to pass the package that ultimately included the hospital staffing law. The law has not been implemented as the coalition intended, and that's created challenges, and will create ongoing challenges.”

She says hospitals are going to need more funding if they need to have more nurses.

“If we're not willing, then, to support hospitals financially through increased Medicaid reimbursement or other mechanisms, it creates a really challenging situation,” she says.

Lack of capacity

Oregon’s hospitals are also facing difficulties discharging patients to post-acute care facilities, due to a lack of available beds. Hospitals are keeping patients for longer periods, even when they don’t need acute care, and that’s making it harder to open up beds for those who need hospital care.

While many hospitals have that problem, Oregon has the second lowest number of hospital beds per capita in the country. Oregon’s health system is designed to treat more people outside the hospital.

“That's the system that we envisioned and that we built out,” Hultberg says. “Unfortunately, that system is now under so much strain that we're using the hospital in ways perhaps not contemplated, and hospitals simply don't have the capacity to meet all the demand.”

Rural hospitals are facing serious financial problems as well, though she says they’re not necessarily faring worse than Oregon’s urban and suburban hospitals.

“The interesting thing about this moment in time is that hospitals are equally challenged across the state,” Hultberg says. “In the past, when we've seen times of hospital financial distress, rural hospitals have been the canary in the coal mine. But what we're seeing now is that hospitals are challenged everywhere. They're challenged in rural settings. Our large systems are financially challenged. Our small systems are challenged. So this is really an industry-wide problem.”

But the stakes are high for Oregon’s rural communities. Some residents in rural Oregon are already an hour or two from the nearest hospital, and any additional closures could mean even longer trips to a hospital.

“If you lose a hospital in rural Oregon, patients are driving hours to the next hospital,” Hultberg says. “Communities may dry up and go away if there's no health care in the community. So the implications to rural communities are different than the implications to urban communities if a hospital fails, but we're certainly seeing financial challenges in both environments.”

Federal cuts could prompt closures

Oregon hospitals are also pressing the state’s congressional delegation to preserve funding for Medicaid. Congress is considering legislation that could lead to millions of Americans losing coverage, and placed added financial pressure on hospitals to care for patients who have no means to pay, healthcare leaders say.

Reductions in funding for the National Institutes of Health are also hurting Oregon Health & Science University, the state’s academic medical center, along with the state’s teaching hospitals.

“What's happening on the federal level right now could further destabilize and challenge Oregon hospitals. So we're concerned because we're already at a tipping point, so it's not going to take much to move us to a place where we see hospital closures,” Hultberg says.

“Any adverse change in the economic environment for hospitals will push some hospitals over the edge, because there are no margins,” she adds. “So any negative change is going to have a destabilizing effect.”

While Hultberg focuses on the challenges for the state’s hospitals, she also points to the impact on the state’s residents who may find it harder to get care.

“I think what worries me and keeps me up at night is that when we have a system as stressed as our system today, the impacts will be felt by people,” she says. “The impacts will be that a mom can't get her child in to see primary care in a timely way, that someone waits nine hours in the emergency department when they needed to be seen sooner, that a rural hospital can't transfer a patient into an academic medical center or another large hospital because there's no bed."

"Those are very real impacts on people's lives. They are affecting everyone in Oregon now, and we fear they will get worse.”

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