OHA Data Show Hospital Finances Rebounding in Q3 of 2020, March 8

The Oregon Health Authority released hospital financial data showing that in the third quarter of 2020, hospitals’ finances rebounded after the declines due to the COVID pandemic earlier in the year. The earlier financial declines were offset by large infusions of federal funding, leading hospitals to operate in the black for the year, with a year-to-date statewide operating margin of 2.9%. “Oregon depends on a stable health care system. During the pandemic, we’ve been focused on protecting people from the virus. But we also have been worried about the financial of effects the pandemic on our health care system,” said Jeremy Vandehey, director of health policy and analytics at the Oregon Health Authority. “We remain concerned about the toll that the pandemic has taken on health care providers and workers over the last year, but today’s data show that most of Oregon’s hospitals are returning to normal financial levels. We will continue to monitor this situation but some of our concerns about financial stability of the health system have been alleviated.” Data show that net patient revenue recovered quickly after elective procedures resumed in May 2020. Additionally, statewide “other operating revenue,” which includes residual CARES Act funds, remained higher than normal in the third quarter, indicating that some federal funding was still flowing in. The report shows that utilization helped drive the Q3 revenue rebound, but federal aid was likely still a factor but to a far less substantial degree than in Q2. In Q3 2020, other operating revenue made up only 7.2% of total operating revenue, suggesting that hospitals relied less on grants, which appear as other operating revenue, and more on net patient revenue than in Q2 2020. Net patient revenue is the money a hospital receives from providing health care services to patients, while other operating revenue is the money a hospital receives from services not related to patient care such as gift shop sales, grants, or cafeteria sales. And while net patient revenue rose substantially from Q2’s very low levels, operating expenses remained flat. Year-to-date total operating expense was $10.4 billion, which was 1.8% higher than the same period in 2019. The full data set is available on the OHA hospital financial and utilization dashboard.