Undated file photo of Oregon Health & Science University.
Courtesy of Michael McDermott / OHSU
Leaders at Oregon’s major research hospital are considering operating at a $25 million loss next year as the university pursues merging with a rival health care nonprofit.
Oregon Health & Science University’s audit and finance committee presented the proposed budget to the board at a public meeting Friday. Ahead of the meeting, OHSU’s chief financial officer alerted the committee and other board members that, over the last 11 months, the institution has had a $64 million operating loss.
“Finance and health care is especially challenging right now, both across the country and especially here in Oregon,” board member Steve Zika said. “We’re faced with rising labor costs, drug costs and other operating supplies that are increasing at a very rapid pace.”
Health care facilities across the country are still recovering from the COVID-19 pandemic, which overwhelmed hospitals and strained resources. Meanwhile, frustration over staffing shortages, pay cuts and long hours have bubbled up into labor feuds in Oregon and other states. Hospitals have had to shut down facilities or cut back on hours.
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Coming out of the pandemic, OHSU leaders said they’ve seen more emergency room visits and fewer specialized surgeries, which make more money for the hospital.
The budget proposal with a $25 million operating loss comes as OHSU leaders double down on a bid to merge with Legacy Health. OHSU and Legacy representatives signed a binding, definitive agreement to merge as OHSU Health in May. Officials have not disclosed financial details for the proposed transaction, and the move still needs approval from regulators.
Shortly after the agreement was signed, OHSU leaders said the hospital would cut around 500 positions, according to an internal email obtained by OPB and first reported by Willamette Week. Hospital leaders have said the cuts are necessary because expenses are rising faster than revenue.
Related: OHSU leaders warn crowded emergency room is hurting finances
At Friday’s meeting, members of the finance and audit committee said OHSU will finance the Legacy merger with 30-year bonds.
“Those capital funds cannot be used to close gaps in our operating budget or to pay our members,” Lawrence Furnstahl, OHSU’s chief financial officer, told board members. “Our strategic alignment and budgetary work would be necessary with or without the Legacy Health integration.”
So far, OHSU has reported 142 layoffs to the state. Connie Seeley, OHSU’s chief administrative officer and chief of staff, said the proposed plan includes more cuts, mostly to positions in communications, marketing and administrative offices.
“Despite our efforts to increase our revenue, our financial position requires difficult choices,” Seeley said with a hitch in her voice. “Those decisions, known as the strategic alignment process, will result in the elimination of approximately 515 full-time equivalent positions, or about 2.7% of OHSU current staffing level.”
Related: OHSU and Legacy Health agree to merge, shaking up the Portland region’s health care landscape
Seeley said the numbers could change, but at current count it breaks down to laying off 373 workers and eliminating 143 positions that are currently vacant.
“To be clear, we’ll continue to recruit frontline health care workers,” Seeley added.
The board of directors is expected to vote on the proposed budget at their next meeting on June 28.
