Oregon’s rural hospitals, including Samaritan facilities in Newport and Lincoln City, beg for financial relief from the state

 

By ELON GLUCKLICH and BEN BOTKIN/The Lund Report

A month after Oregon’s first COVID-19 case was confirmed, state medical officials say the worst of the pandemic is still to come.

Cases are expected to rise in Oregon over the next two weeks with deaths tapering down into June, according to projections by the Institute for Health Metrics and Evaluation at the University of Washington.

On Thursday, the Oregon Health Authority said COVID-19 had claimed six more lives, raising the state’s death toll to 44. It also also reported 83 new cases of COVID-19, bringing the state total to 1,321.

Although the peak is likely to be smaller than originally projected, rural hospitals are struggling with the focus on COVID-19 patients that’s caused the cancellation of profitable elective procedures. Oregon’s rural hospitals normally operate with high occupancy rates or rapid turnover in their daily in-patient treatment. But many now have far fewer patients — and much less revenue — because the state banned elective surgeries and non-urgent medical procedures that would used much-needed personal protective equipment.

In a sharply worded letter to Oregon Health Authority officials, an outspoken Oregon lawmaker is trying to sound the alarm about the plight of rural hospitals and providers.

“OHA and the governor have been told for two weeks rural providers, clinics and hospitals are in complete free fall with massive layoffs operating a half or less capacity,” Sen. Brian Boquist, R-Dallas, said in the email to agency leaders.

All Oregon hospitals and independent health clinics have been affected by the pandemic, canceling lucrative non-urgent procedures under order by Gov. Kate Brown.

In a letter Monday to Brown, the Oregon Association of Hospitals and Health Systems said hospital revenues have dropped between 40 percent and 60 percent and more help is needed so hospitals can stay open.

“At a time of significant community need, hospitals are having to make very difficult decisions about how to keep their doors open, maintain services and retain staff,” said the letter, signed by the association’s chief executive officer, Becky Hultberg; Joe Sluka, CEO of the St. Charles Health System in Bend; and Charlie Tveit, CEO of Lake District Hospital in rural southern Oregon. “Hospitals are having to wrestle with how to maintain a workforce when the facility does not have work for staff to do or revenue coming in to maintain their employment.”

On Friday, 11 rural Oregon legislators followed up with a letter to Brown asking her to support the $200 million for Oregon hospitals.

Large hospital systems in the Portland area appear to be in a better position to weather this revenue loss than their rural counterparts, which often don’t have deep pockets.

Oregon Health & Science University has promised full pay through the end of June to employees who’ve been sent home. Providence Health & Services also has promised to keep paying laid off employees. The Oregon Clinic, one of the Portland area’s largest independent medical and surgery centers, announced Thursday it will begin laying off 820 employees by June because of the ban on elective procedures.

But many rural hospitals don’t have the funds to pay non-working staff for months. Instead, they’ve announced layoffs, including 90 recently at Columbia Memorial Hospital in Astoria and 192 employees of the Curry (County) Health Network in Gold Beach and Brookings.

Unemployment claims in Oregon have spiked among health care and social assistance professionals. Statewide, they filed more than 9,700 unemployment claims in the final two weeks of March. In Lincoln County, the Oregon Employment Department said there were 136 unemployment claims by health care workers between March 21 and April 4. There were none in early March.

Rural hospitals on shaky ground

Rural hospitals in Oregon are often isolated, forced to grapple with the pandemic on their own.

Samaritan Lebanon Community Hospital is located in the middle of a COVID-19 hotspot in Linn County, where 49 people have tested positive and four people have died, including two more deaths announced Thursday. Its parent company, Corvallis-based Samaritan Health Services, which also has hospitals in Newport, Lincoln City, Corvallis and Albany, is grappling with a 50 percent revenue decline caused by cancellation of elective surgeries and related procedures.

One of those deaths announced Thursday was a 74-year-old Benton County man who died Wednesday at Samaritan’s hospital in Corvallis.

Samaritan Pacific in Newport moved into a new $63 million facility 15 months ago, has remodeled one building and is finishing demolition of a 69-year-old building that once served as the main hospital. It now has 25 beds, four operating rooms and had 500 employees. Samaritan North Lincoln just last month moved into a new $42 million building, with 16 patient rooms and three operating rooms. It has 400 employees. Both hospitals were financed primarily with bonds approved by voters.

Many rural hospitals operate on extremely thin profit margins, a review of financial data shows, leaving them with little flexibility to ramp up staffing or purchase new equipment to prepare for demand spikes. Some — like Samaritan’s hospitals in Newport and Lincoln City — are part of larger health systems that have cash reserves, however.

Of the 33 rural-designated hospitals across Oregon that have submitted financial data to the Oregon Health Authority, 82 percent of them, or 27 in total, were operating at a loss at some point last year, filings show. By contrast, 15 of the state’s 27 largest hospitals, or 56 percent, operated with net losses for part of the year.

Preparing for the surge

Officials at several rural hospitals told The Lund Report they are in the early stages of what is expected to be a sharp rise in patients exhibiting COVID-19 symptoms over the coming weeks. The ballooning number of cases reported around the state is putting pressure on smaller hospitals’ staff and equipment, at a time when hospital executives are also trying to stem major financial losses caused by the suspension of elective procedures to prioritize coronavirus treatment.

“The intensity of these efforts in terms of labor and supply usage, when coupled with the severe impact that suspension of elective surgical and ancillary services is having and will continue to have on our financial stability is unprecedented,” said St. Charles Health System spokeswoman Lisa Goodman.

Since the pandemic began, revenue has dropped at least 35 percent across St. Charles’ system, which includes hospitals in Bend, Redmond, Prineville and Madras. Hospital officials are looking to cash-saving measures while trying not to impact employee pay or hours, Goodman said.

In the Portland-area, the four main hospital systems — OHSU, Providence, Legacy Health and Kaiser Permanente — announced in mid-March that they would work together to manage bed capacity during a surge.

While the five-hospital Samaritan Health Systems has a similar plan, there’s no such pact among more rural hospitals, which are smaller than their urban counterparts, with fewer beds and fewer resources. These facilities are often dozens or even 100 miles from each other, making close cooperation largely out of the question.

The Oregon Health Authority said Thursday that 146 people were in hospitals across Oregon with COVID-19 or suspected symptoms, and that 356 had been hospitalized since the outbreak first hit Oregon. Hospitals still have significant capacity. The agency said there are 294 intensive care beds available statewide, 2,237 adult, non-ICU beds and 794 ventilators.

Some communities are using tents for hospital bed space. In Klamath Falls, a pair of military tents outside of Sky Lakes Medical Center contain 80 beds, increasing the capacity of its 11-room intensive care unit.

The Newport hospital and four others owned by Samaritan Health Systems are collaborating and coordinating in their responses, trying to share resources between Good Samaritan Regional Medical Center in Corvallis and the system’s four smaller hospitals.

But those resources are growing increasingly scarce with suspected COVID-19 cases starting to increase in some of Samaritan’s communities, Doug Boysen, president and CEO of Samaritan Health Services, told The Lund Report in an email.

“Almost all of our focus right now is preparing for the potential patient surge,” Boysen said. “The pandemic has affected every one of our sites.”

According to the Oregon Health Authority there have been 74 positive COVID-19 tests and 1,728 negative tests in Lincoln, Benton and Linn counties.

Linn County, home to Albany General Hospital and Samaritan Lebanon Community Hospital, had 44 reported positive cases as of Monday, 14 tied to an outbreak at the veterans’ home in Lebanon in March. As of Thursday, more than 1,072 Linn County residents had been tested for COVID-19. By contrast, in Lincoln County there had been just 193 tests ordered by the patient’s physician or a hospital screener.

Such a large volume of testing and care is time-consuming and costly, Boysen said.

“Much of the same work and challenges are present at every site,” he said. “We have seen our gross patient revenue decline by nearly 50 percent. At the same time, most of our ongoing expenses are still occurring and we are also incurring additional expenses in preparing for a potential patient surge.”

Rural lawmakers angered by shortages

The financial and operational headwinds at St. Charles, Samaritan Health and others are being felt in smaller hospital systems across the country, said Lynn Barr, organizer of the nonprofit National Rural Accountable Care Consortium and CEO of a Caravan Health, a value-based care consortium of more than 20,000 health providers.

“Rural hospitals are particularly challenged because they have an older population with a higher risk of serious illness from COVID-19 and less equipment than an urban hospital,” Barr told The Lund Report. “Many of them have no ICU beds. They have no isolation rooms. They don’t have ventilators, so what’s going to happen? People are going to come in and (the hospitals) haven’t been stockpiling protective equipment. They’re likely to run out.”

Twenty-two of Oregon’s 36 counties, including Lincoln County, had 10 or fewer confirmed cases. All of them are predominantly rural.

But the tenuous financial condition of many of these communities’ hospitals has officials like Boysen, the Samaritan Health president and CEO, pleading for assistance.

Legislators representing rural Oregon communities are growing increasingly frustrated about what they see as a lack of direct support from the state.

“Nobody in rural Oregon should trust OHA for anything,” Boquist wrote in the email obtained by The Lund Report. “Rural Oregon needs to be prepared to go it alone. My belief with the data at hand is OHA is more dangerous to our citizens than anything else at this time.”

In a statement, OHA spokesman Jonathan Modie said the agency is “in close communication with health providers around the state, including rural hospitals” to ensure they have the workforce and supplies they need for coronavirus patients.

“There’s more to be done on all fronts, but we’re working on these challenges non-stop, across agencies,” Modie said.

Uncertain financial assistance

The $2 trillion Coronavirus Aid, Relief, and Economic Security Act that Congress passed last month sets up a $100 billion fund designed to help hospitals accommodate a surge in COVID-19 cases.

But clinics other than hospitals can vie for a share, and Samaritan’s Boysen said it’s unclear how much money Samaritan might receive or when it would get it.

“It is critical that federal and state funding be quickly made available to help stabilize our hospitals,” he said. “While we can withstand an immediate, short-term hit to our revenue, if the current situation lingers over several months we – along with many other hospitals in Oregon – will be challenged to continue operations.”

Modie said the health authority has released nearly $100 million in so-called quality pool funds for coordinated care organizations that administer health care services to low-income residents on the Oregon Health Plan. Those funds are usually paid to coordinated care organizations to reward them for cost-saving performance, but “there is some flexibility in this funding stream and it should be able to reach rural hospitals that are facing challenges,” Modie said.

The authority also has released $1.85 million in rural hospital grants to the Oregon Association of Hospitals and Health Systems, he said.

However, both of those steps are not enough, the hospital association said in its letter. The money to coordinated care organizations, while “greatly appreciated, are not new funds but moving resources earlier in the payment cycle,” the association said. “They will also not be enough to sustain a hospital that needs millions of dollars month after month to meet payroll.”

The $1.85 million in rural hospital grants will give each of the state’s 33 small and rural hospitals about $56,000 each, the association said.

“While every bit of support helps, the dollar amounts are small compared to the need,” hospital leaders said.

The hospital association has requested $250 million from the state. The request seeks $50 million for personal protective equipment and supplies for COVID-19 patients. But most of that, $200 million, should go directly to hospitals so they can continue providing services, the association’s letter to lawmakers said.

The association said small and rural hospitals need a funding source to respond to any workforce reductions.

“It is vital that these rural communities maintain the workforce but also local, community hospitals remain viable during this time,” wrote Andi Easton, the association’s vice president of government affairs, in the letter.

The Oregon Legislature established a joint special committee to map lawmakers’ response to the coronavirus pandemic. But discussion about assistance to hospitals has been limited to protection from so-called bed taxes incurred when hospitals expand their capacity.

Several lawmakers questioned how some of the smaller hospitals in their districts could weather more losses due to the suspension of elective procedures.

Sen. Lynn Findley, R-Vale and a member of the legislative COVID-19 committee, said some hospitals in his 11-county district are only 60 percent full after postponement of elective surgeries. Those hospitals will have an immediate funding need if COVID-19 cases do start filling up their emergency rooms.

“Our hospitals are going broke in rural Oregon,” he said, “and probably most of Oregon.”

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Quinton Smith of YachatsNews.com contributed to this report.

You can reach Elon Glucklich at elon@thelundreport.org.

You can reach Ben Botkin at ben@thelundreport.org or via Twitter @BenBotkin1.