Hospitals finish 2022 in the red, no end in sight for losses

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"Like hospitals across Oregon, Sky Lakes is not alone in dealing with workforce shortages, rising labor costs and increased operating expenses,” said David Cauble, President & CEO Sky Lakes Medical Center.

Rising expenses, workforce shortages, and stalled revenue cratered Oregon hospitals’ operating margins in 2022, putting hospitals in one of the worst overall financial positions seen since 1993.

Expenses have outpaced revenues for more than two years, or nine consecutive quarters. Hospitals’ median operating margin, which includes federal CARES Act funding, declined to -2.8% in 2022, compared to 3.2% in 2021 and 4.1% in 2020. The data is part of a new Apprise Health Insights report on calendar year 2022 financial results. The full report is below.

“After two years of losses, hospitals are facing extraordinarily difficult choices,” said Becky Hultberg, Oregon Association of Hospitals & Health Systems president and CEO. “Organizations will struggle to remain sustainable in this type of environment.”

Rising expenses, especially labor, negatively impacted hospitals all year long. Labor expenses per FTE increased 26% over pre-pandemic levels. The health care workforce shortage contributed to rising labor costs. Meanwhile, total operating expenses rose 11% compared to 2021, exceeding net patient revenue (which also increased, but only by 5.8%) by $1.6 billion.

At the same time, the inability to safely discharge patients to other settings continued to plague hospitals in 2022. Average length of stay (ALOS) was up 20%, and those longer stays often came with no additional reimbursement to pay for staff and other services necessary to care for those patient needs. Apprise Health Insights data show throughout 2022 between 600 and 700 patients statewide were either “boarding” or unable to be discharged, continuing to cause strain on hospitals and families focused on placing patients in the best care setting.  

"Like hospitals across Oregon, Sky Lakes is not alone in dealing with workforce shortages, rising labor costs and increased operating expenses,” said David Cauble, President & CEO Sky Lakes Medical Center. “The foresight of the Board of Directors and past leadership to create a solid financial foundation is enabling us to weather this unexpected storm. We are focused on creating sustainable solutions that will strengthen our ability to care for our community far into the future and our commitment to serving the community has never been stronger.”

Cauble added, "Workforce shortages remain one of our greatest challenges and we are actively engaging in efforts to impact this issue in the short term and long term. We have intensified our recruiting efforts and we have successfully motivated several contracted staff to make Klamath Falls their home. In addition, we are putting great effort into workforce development strategies that include Earn to Learn programs to invest in educational opportunities for those that are interested in healthcare careers.”

Cauble went on to say, “Despite the current challenges, we are excited for the future, and we want everyone to know that Sky Lakes Medical Center has always been and will always be here providing excellent care and positively impacting the well-being of our community. "

Amid these persistently poor financial conditions, OAHHS has proposed a package of bills in the 2023 legislature that will help rebuild the health care workforce, exempt certain labor costs from the state’s cost-growth target and create a task force to explore ways to increase capacity in care settings outside of hospitals. 

“These record losses should create a sense of urgency for legislators to act,” said Hultberg. “Economists are predicting 2023 will also be a difficult year for hospitals. We can’t sit back and do nothing, waiting for things to improve.”