The number of patients stuck in hospital limbo exploded in the second quarter of the year, another worrying sign of Oregon hospitals’ descent into critical financial condition.
About 757 patients — enough to fill Legacy Emanuel Medical Center, Adventist Health Portland, and Providence Milwaukie Hospital — are being warehoused in hospitals around the state because rehabilitation facilities and nursing homes don’t have the nurses and other caregivers to treat them.
No one expected Oregon hospitals to recover in the second quarter after a historically bad first quarter. Neither did they expect things to get worse. But they did. Collectively, Oregon hospitals lost $111 million from operations in the three months ended June 30, compared to $105 million in the first quarter.
The turbulent investment environment also took a toll. Add it all up and Oregon hospitals suffered a $317 million bloodbath in the first half of 2022.
“This dismal financial picture calls into question the ability of some hospitals to provide essential and life-saving care for patients in their communities now and in the future,” said Becky Hultberg, president and CEO of the Oregon Association of Hospitals and Health Systems. “This should be a wakeup call to all of us who rely on functioning hospitals to take care of our loved ones and neighbors. The system can break, and we are getting ever closer to that breaking point.”
Hospital lobbyists have been outspoken and public about the severity of the financial crisis. They convinced a panel of state lawmakers to grant nearly $12 million in emergency financial assistance to state hospitals earlier this month.
Others suggest hospitals, particularly the large urban health systems, have sufficient resources to survive this tight spot without additional government assistance.
“I absolutely agree that hospitals, along with all segments of health care, are facing a dire staffing crisis that doesn’t have a lot of easy, short-term answers,” said Pat Allen, director of the Oregon Health Authority.
Providence Health & Services, Legacy Health and PeaceHealth sued the health authority earlier this week claiming it has failed to provide adequate facilities for mental health patients. The lack of adequate state beds forced the hospitals to house these patients for weeks, even months at a time.
St. Charles Health System in Bend has shown more outward signs of distress than just about any other large hospital system in the state. It has laid off staff, eliminated unfilled positions, its longtime CEO resigned, and its debt has been downgraded by debt analysts.
The nurse shortage forced St. Charles to spend $106 million more so far this year on salary and compensation, a 31% hike. Like most of its peers, it had to hire expensive temporary workers, known as travelers, to cover for its departed in-house nurses. Oregon hospitals in all spent $586 million more in the first half of 2022 on salaries in benefits than they did in the same period a year ago, a 16% jump.
The high cost of staffing pushed St. Charles into a $34.1 million operating loss through the first eight months of the year. It would have been worse had the organization not received some $25 million in federal emergency grants.
Steve Gordon, interim CEO and a physician at St. Charles, vowed to resist radical cost-cutting measures. “Yes, we certainly could reach some degree of financial sustainability with a draconian reduction in services,” he said. “That wouldn’t be right for our patients. It wouldn’t be right for our community. It’s not who we are. "
Gordon called on the federal government to intervene and help hospital systems deal with the short-term crisis. But Mark Pascaris, a hospital finance analyst with FitchRatings, predicted there will be no more federal bailouts. “There is not going to be another CARES Act,” he said. “That’s off the table.”
St. Charles has raised nearly $400 million through the sale of bonds to investors. Like many other health systems around the country, St. Charles has found itself, in the words of Chief Financial Officer Matt Swafford, “perilously close” to not being able to make its debt payment on time while also remaining in compliance with certain debt ratios and other debt covenants.
Should worst come to worst, hospitals can take money out of its cash reserves to pay the debt service. Swafford likened that to an individual raiding their personal 401k retirement savings to meet daily expenses.
As it is, St. Charles’ cash reserves have shrunk. The health system had sufficient reserves to fund the operation for 358 days in June 2021. A year later, that number had shrunk to 243.
The severe shortage of nurses and other healthcare workers has made it difficult for hospitals to discharge patients in a timely manner. Just as hospitals are short of clinical staff, skilled nursing facilities and other post-hospital options don’t have the staff to treat them.
That means patients are occupying hospital beds longer than they would otherwise, and that’s delayed procedures that could generate more revenue for hospitals. It also slowed admissions from hospitals’ emergency departments.
St. Charles as of Friday had 35 patients at its hospitals in Bend, Redmond, Prineville and Madras that in normal times would have been discharged by now. They had worked the number down to 20 only to see the system get clogged again, according to St. Charles spokeswoman Lisa Goodman.
The Oregon Legislature also approved millions in incentives for long-term care facilities to take on more patients discharged from hospitals.
-- Jeff Manning; jmanning@oregonian.com
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