Most Oregon hospitals now in jeopardy, according to report

Oregon hospitals are “on the brink,” according to a recent Oregon Hospital Association report. Half of them are losing money on operations, and more than two-thirds say they don’t have the resources to keep up with patient care. The data is from 2024, and anticipated federal cuts to Medicaid make the outlook even worse. Becky Hultberg, the President and CEO of the Hospital Association of Oregon, said in the report that if the trends continue or worsen, the state will see “a cascade of service closures, hospital consolidations or hospital closures.” Hultberg also said, “Oregon already has the second fewest hospital beds per capita. We can’t afford to lose these beds.”

Hultberg joins us to tell us more about some of the interrelated and complex factors that have led to this state of affairs, and what she sees as possible solutions.

Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.

Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Oregon hospitals are on the brink. That is according to a recent report by the Hospital Association of Oregon. Half of them are losing money. More than two-thirds say they don’t have the resources to keep up with patient care. And this data is from 2024, before potential federal cuts to Medicaid could make the situation a lot worse.

Becky Hultberg is the president and CEO of the Hospital Association. She joins us now. It’s great to have you on Think Out Loud.

Becky Hultberg: Thanks so much for having me on.

Miller: There are a lot of scary numbers in the new report. I mentioned two of them just now briefly in my intro. What do you see as the most worrisome parts of the data your association just put out?

Hultberg: Well, there are a couple of things, and I really appreciate this conversation because I think it’s a really important one and an important time for it. The first thing is when we looked at the numbers this year, we saw that we’ve been in this persistent period of low to negative margins for hospitals. So this is the 2024 data, but when we go back and look at data since the end of the pandemic, it’s not been much better. So it’s not like we’ve had one year of bad hospital financial performance. We’ve had three or four really bad years.

And as everyone knows, if you’re managing a small business or balancing your checkbook, you can sustain a downturn for a few months. You can sustain having higher expenses maybe for a few months. But whenever, over years, your income or your revenue doesn’t equal your expenses, you’re in trouble. And I think that’s where our hospitals find themselves today, is really in trouble.

The second thing to note is that we looked at national data to say, how are we doing? Is this normal? Are things bad everywhere or is something going on here? And what we found is that things aren’t great everywhere, but Oregon is persistently seeing hospital financial performance worse than the national average. So something unique is going on in Oregon that we need to figure out and address, if we want to have sustainable hospitals for people in Oregon today and into the future.

Miller: On that note, I was really struck by one of the charts in the new report that shows, as you’re noting, the operating margins in Oregon compared to the national average. What struck me there was, that wasn’t about the end of the pandemic to now, the last couple of years. That went back to 2018, and when you compare Oregon to the national average for those seven years or so, we’ve been doing much worse than the national average for a while now. So this is not just about a lack of a post-pandemic recovery. This seems to be a more long-standing issue.

So let’s dig into some of the specific issues and policies that are outlined in the report. One of them has to do with patients staying as inpatients in hospitals, past the point at which they could be discharged. Why is this happening, first of all?

Hultberg: This seems like something that is not intuitively a problem, because it means hospital beds are full, people are in beds. So aren’t hospitals getting paid for those people in the beds?

Miller: Yeah, if you were a hotel as opposed to a hospital, this would be amazing news. The convention ended, but they’re there five days past that and you’re getting all that extra revenue.

Hultberg: And hospitals are not hotels and that is the problem here. The problem is that for hospitals, when a patient has finished their treatment, they’re ready to be discharged. They are medically at a point where they can leave the hospital. If they stay longer, the hospital usually is not getting paid for those extra days. So that becomes a problem for the hospital because they’re incurring these expenses of the patient in the hospital bed. But they’re not getting paid for it ...

Miller: Just to be clear, not getting paid commensurate with what they’re spending or not getting paid at all? I imagine there’s still some billing, right?

Hultberg: It depends on the payer. For some payers, they’re paying for an episode, essentially a diagnosis or an episode of care. So they’re making one payment. So if that patient stays three days or 10 days, the payment might be the same.

Miller: But there’s still orderlies coming in, nurses checking on the patient, doctors doing rounds?

Hultberg: Nurses still have to check on them. You still have to do all of the normal things for a patient who’s hospitalized. So you can’t lower the expenses. The expenses are still really high. But the hospital may not be getting paid for those extra days. So that becomes a problem for the hospital financially. It’s a problem for the patient in that bed because the hospital is not the best place for them at that point.

Miller: In general, ideally, but the less time any of us is in hospitals, the better.

Hultberg: Exactly. We’re all happy [that] hospitals are there, but we don’t really want to check into them voluntarily. We don’t necessarily want to stay there longer than we have to. And it’s also a problem for the patient and the community who might need to come in for surgery, but it has to be delayed because there’s no bed available.

Miller: Now, remind us … this is something we’ve talked about, but not for a little while. So why is it that patients are getting stuck past when they could be released in hospital beds all across the state?

Hultberg: It’s for a couple of reasons. First of all, we just don’t have a lot of bed capacity in Oregon. So sometimes, [since] we don’t have a lot of excess capacity, it means whenever patients are in hospital beds and can’t be discharged, there’s no room there. But the reason that they can’t be discharged is complicated but can go into a few buckets.

First of all, it might be that they need to go to a skilled nursing facility, but their network doesn’t cover one that has a bed available. So sometimes they need to go somewhere else for a higher level of care. And either there’s not a physical bed available or their insurance won’t cover it. Sometimes they need to go home, but there’s no one to take care of them and help them at home. They could be there, but there’s no one to come in and check on them. Or it could be that they need to go to another type of facility like a behavioral health facility or something else, and there’s just simply no room.

So essentially, it’s that there’s no safe place to discharge them to. And again, the reasons for that can be complicated, but usually come down to either lack of the bed or the service, or an insurer that’s not willing to pay for it.

Miller: This is something that hospitals and state regulators, the OHA, insurers, a lot of folks came together in recent years to talk about how to improve, I think it’s so-called, the continuum of care. Have any meaningful solutions been put forward that could change this soon?

Hultberg: Well, that’s the good news. There is a bill in this legislative session that will address some of the issues related to Medicaid patients, specifically, who are unable to be discharged. So that bill has not yet passed, but the prospects look good. We’re optimistic about it. That could help with a little bit of a relief valve. Many of these patients, however, are Medicare patients. And of course that’s a federal program. So the state bill is going to help with a certain patient population. It will not solve the problem entirely, so we need to continue working on this challenge. But this is not the only reason that hospitals are struggling financially. It is just one among several significant factors in hospital financial challenges.

Miller: Another one that the report outlines is nurses’ wages. How do wages for nurses in Oregon compare to those in other states?

Hultberg: I think that’s something we’ve been looking at that’s really interesting as well. When adjusted for cost of living, Oregon nurses are now the best paid in the nation. And I think we should be happy because many of us know nurses. I have a family member who’s a nurse. It’s good to have nurses that make a living wage, where the pay is good and where that can be a job people aspire to as a good career path. That’s all really important.

But the problem is, as these wages have gone up, which is one of the biggest expenses that hospitals have, payment has not gone up to match it. So we just have a situation where the math isn’t working anymore. Revenue does not equal expenses and that is causing, quite frankly, challenges right now in patients getting access to care.

Miller: When you say payment – and this gets to just the incredibly complicated way that healthcare is paid for in this country – it’s not one system. There is private employee-based healthcare. There is private healthcare that comes from the Affordable Care Act marketplaces. There are various federal payers through CMS, through Medicaid, Medicare, there’s the VA. Has none of that kept up, or are we mainly talking about the knock-on effects that stem from about a third of Oregonians getting their health care through the Oregon Health Plan, through Medicaid?

Hultberg: Great question. And when you think about hospital payment, again, if we could set a system up from scratch, it would look nothing like this. So it is a really complicated system. But we think about it in three main buckets. It’s an oversimplification, but three big buckets: Medicare which covers people over the age of 65, Medicaid which covers people with a lower income level and a few other populations, and commercial insurance.

Medicare pays hospitals 82 cents for every dollar it costs to provide care in Oregon. Medicaid pays 56 cents for every dollar that it costs to provide care, and about a third of Oregonians are covered by Medicaid. So that really is a critical problem in Oregon. The lack of reimbursement for Medicaid is a big problem. And it’s affecting the ability of people all over the state to get care.

Commercial insurance, on the other hand, creates a really complicated administrative burden for hospitals that has also been growing. So it’s not like there’s any one of those three that is a great payer and is creating an environment where hospitals can get reimbursed what it costs to provide care. However, the significant problem, as you highlighted, is Medicaid.

Miller: I think most Oregonians don’t care about the financial state of hospitals per se. They care about health. They care about being able to get healthcare when they need it. The current situation and the curves you’re looking at, just in the next couple of years, what does it mean for the provision of health care in Oregon?

Hultberg: This is the crux of the problem. And honestly, what keeps me up at night, as someone who’s had family members whose lives have been saved by hospitals, I really care deeply about having hospital doors open for patients today, and then for my kids and into the future. And the situation we’re finding ourselves in now is that there are some big, giant red flags about whether or not hospitals will be able to continue to provide care.

So as an example, it’s taking people months sometimes to get an appointment with a specialist. People can’t find primary care doctors or they have to wait a really long time to get in. And if you’ve been to an emergency department recently, it’s likely that your wait was really, really long. We’re seeing hospitals close down services. We have entire hospitals at risk of shutting their doors.

And we’re seeing hospitals do things that they don’t want to have to do, like cut jobs, seek partnerships, and again, reduce the services that they offer. So this is really the red flag. We need to come together as a state and make sure that we have an environment that supports what’s important, which is people getting access to healthcare when they need it. And that’s really why we’re raising the alarm here.

Miller: What exactly do you want Oregon lawmakers to do about this, or Congress?

Hultberg: As you know, I’m actually back in Washington D.C. right now. Congress is looking at significant Medicaid cuts. Those cuts could tip Oregon hospitals over the edge. So we need to explain that. We need to do the best we can to fight against the kind of cuts that could destabilize our healthcare system. We also need our state legislature to look at what the state can do.

The state can do two things. The first is it can reimburse, make the decision to prioritize basic care and fund Medicaid at a higher rate, so that hospitals can be sustainable. The second thing we can do is look at our regulatory structure, which is incredibly complex in this state, and make some decisions to simplify our regulatory structure, and do away with laws that just add red tape and don’t actually help hospitals take care of patients.

Miller: What’s an example of that? I forget the exact number, but I think it says there are 2,000 regulations that hospitals have to follow just at the state level. But what’s an example of one where you think it’s burdensome but does not lead to a higher likelihood of quality care for Oregonians?

Hultberg: A simple example, and I could give you a long list of them – we’ll be doing some work on this over the summer and we’ll have more to say on that this fall – is our licensing framework where everyone agrees a hospital should be licensed. Everyone agrees that the state has an interest in making sure that hospital buildings and equipment are functional. But it can take six months to get an MRI machine operative in a hospital because of the state’s licensing framework.

It took Adventist Tillamook over six months to get inpatient dialysis restarted in the same space that it had been doing it the year before. [During] that entire six months, you had patients needing dialysis driving across the mountains to Portland to get dialysis multiple times a week. That’s just wrong. So those are the kinds of things we have to change if we’re going to get serious about making sure that we have good quality care in our communities for everyone who needs it.

Miller: Before we go, I want to just zero in a little bit more on the potential of federal cuts to Medicaid. I say potential because this has to do with the Republican budget framework and how to make nearly $1 trillion in cuts, many of which may come from Medicaid. But we don’t know what shape they’ll be and we don’t know really what decisions that would lead states like Oregon to make.

But it’s possible that it would mean simply fewer people would be on the Oregon Health Plan. So right now, if we have a third of Oregonians getting their health care through Medicaid, through the OHP, it may be that that number would go down. What would that mean? It doesn’t necessarily mean that those Oregonians are getting some other health insurance. So play that out. How would that affect hospitals?

Hultberg: As you noted, there could be federal cuts, some of which then would be clear and the state would have to do something specific like put in Medicaid work requirements. Or we could just have big general cuts that then the state would have to manage. So as you noted, we don’t know. But specifically, if the cuts resulted in fewer people on the Oregon Health Plan, it is highly likely that our uninsured rate would start to climb again. It would mean that people would not have health insurance and that we would be back to hospitals having uncompensated care because people could not afford to pay for it.

Miller: So instead of getting reimbursed at 56 cents per dollar of healthcare expenditures, as you noted earlier, it would be closer to zero cents per dollar?

Hultberg: Exactly. Now some of those people might lose Medicaid coverage and be able to get on commercial health insurance. We don’t really know exactly what percentage that would be or how many that would apply to. But the likelihood is that our uninsured rate would go up, people would not have coverage, hospitals would not get paid. So that would deepen the problem that we have.

Miller: Becky Hultberg, thanks very much.

Hultberg: Thanks so much.

Miller: Becky Hultberg is the president and CEO of the Hospital Association of Oregon. They just put out a recent report talking about the dire straits that Oregon hospitals are facing financially.

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