CEO of Samaritan’s two hospitals in Lincoln County says “It’s been a year” of financial challenges

 

By CHRISTIAN WIHTOL and QUINTON SMITH/YachatsNews

Lesley Ogden’s job is to oversee the two hospitals in Lincoln County, its 1,000 employees and try to provide the best short- and long-term medical care possible in an economically disadvantaged rural area of the Oregon coast.

That became harder in 2024 as the Samaritan Health Services hospitals in Newport and Lincoln City faced delays in insurance payments, a month-long billing shutdown because of a national cybersecurity breach, inflation and rising costs of everything from drugs to nurses.

“It’s just been a year,” Ogden, the former emergency room doctor who has led Samaritan Pacific Communities Hospital in Newport and Samaritan North Lincoln Hospital in Lincoln City since 2017, said in an interview with YachatsNews.

After several years of growth after the Covid pandemic, a 5 percent decrease in income and rising costs in 2024 led Samaritan to take a series of cost-cutting measures locally. These include everything from trimming rent for clinic space and apartments for new or temporary staff, renegotiating or eliminating some vendor contracts, reducing the use of contract workers, cutting two hospital positions and delaying hires and requiring paid time off use or mandatory absences in some departments.

“We’re trying to do whatever we can to balance the scales,” Ogden said.

Still, Samaritan Pacific in Newport is one of the financial bright spots in the five-hospital Corvallis-based Samaritan Health Services system, according to state and federal records. The 25-bed Newport hospital has increased its patient visits by offering more services, from cardiac care to eye surgeries and orthopedics. The goal, Ogden told YachatsNews previously, is to allow county residents to get their basic or extended care locally.

The Newport hospital made a profit of $23 million in 2023, according to state and federal reports, but that dropped to $8 million for the first six months of 2024.

North Lincoln hospital, which has 16 beds, rarely makes much of a profit — $2 million in 2023 and none for the first six months of 2024.

The two local hospitals don’t keep their profits, however. The Samaritan system’s finances are pooled, with profits from some facilities and services covering money-losing services or going into reserves for capital projects.

The losses at Samaritan Health Service’s flagship Corvallis and Albany medical centers appear to be pushing the five-hospital chain toward bigger financial issues, according to state and federal records.

Profits from the system’s three smaller hospitals, especially Samaritan Pacific in Newport, historically have been enough to offset the two bigger hospitals’ losses and keep the chain in the black, Samaritan’s financial disclosures show. But that balancing act is now wobbling.

The Corvallis-based system reported an operating loss of $33.5 million on revenues of $1.3 billion for the first nine months of 2024, with the losses accelerating from $3 million in the first quarter of 2024 to $19 million in the third quarter, according to the organization’s filings with a federal health agency. That’s up sharply from a $4.9 million systemwide operating loss last year.

The system’s two big hospitals, Good Samaritan Regional Medical Center in Corvallis and Samaritan Albany General Hospital, typically lose money or break even. Profits from the system’s three smaller hospitals – Samaritan Pacific, Samaritan North Lincoln Hospital in Lincoln City, and Samaritan Lebanon Community Hospital, have covered those losses, the filings show.

The Corvallis hospital has reported operating losses totaling $8 million for the first half of this year, on top of losses totaling $54 million the previous two years, according to filings with the Oregon Health Authority.

The Albany hospital, meanwhile, lost $4 million in the first half of this year, following a breakeven year in 2023.

Local challenges

Samaritan’s operations in Lincoln County are also facing some headwinds due to changes in state law on required patient financial assistance that’s resulted in a doubling of its charity, or free, care. Ogden says it is also trying to lower its reliance on “travelers” – skilled nursing or technical positions – that all hospitals turned to during the pandemic when they were hit with resignations and retirements.

“There’s still a shortage of nurses,” Ogden said. “But we want to have all of our beds open and all of our services available.”

There are generally 70-80 open jobs across the two Lincoln County hospitals, Ogden said, with travelers filling half to three-quarters of those. That’s still less than their peak use in 2020-22.

“But we just can’t get back to where we were,” she said, but expressing hope of more nurses training locally and across the state.

In Lincoln County, 25 percent of Samaritan’s patients are on Oregon’s Medicaid program for low-income residents and 50 percent on Medicare for the disabled or retired. Those programs generally pay 70 cents on the dollar in reimbursement.

“We’re taking care of a growing number of Medicaid patients,” Ogden said, because of the expansion of the program in Oregon.

While trimming costs, Ogden is also trying to find ways to increase revenue. The number of visits to the emergency room in Newport continue to increase but inpatient stays at both hospitals “are a little down,” she said.

That prompted Samaritan to get state permission to operate both hospitals as “skilled nursing facilities” to continue treating a small number of patients when the facilities have beds available and when there’s no room – as if often the case — at local rehabilitation facilities. There have been 13 such patients since January in Lincoln City, Ogden said, and nine since September in Newport.

Samaritan also opened a pharmacy Jan. 6 on its Lincoln City campus to help area residents deal with the dwindling number of outlets in north county.

Robotic surgery options in Newport, introduced earlier this year, have also proven popular and met a year’s goals for use in just months, Ogden said.

“You usually just can’t cut your way to profitability,” she said. “What we’re trying to do is make wise decisions, stay within the law and deal with inflation.  Most people in the health care industry see this all the time and we’re in much better shape than many hospitals. We just hope this is not apparent to people and they won’t notice.”

Reimbursement issues

For Samaritan Health Services as a whole — but especially the Corvallis hospital — revenue, payments from commercial insurers, Medicare and Medicaid are increasingly falling short of covering soaring expenses, especially for fast-rising wages and salaries, the state and federal reports indicate.

From 2020 to 2023, the system’s wages and salaries rose 24 percent to $589 million, the system’s audited financial statements show.

That pressure from wage increases will continue to grow.

Registered nurses at Samaritan Pacific in Newport earlier this year won a contract giving them wage increases totaling nearly 28 percent over the next three years in base pay and annual step increases. At the Corvallis hospital, nurses are negotiating for a new contract to follow the one that will expire next summer. The current contract, counting base pay and step increases, raises wages about 23 percent over three years.

Samaritan Health Services has never been among Oregon’s most financially robust hospital chains.

Traditionally, the system has eked out a modest profit each year and salted the money into its investment portfolio, which now stands at $184 million.

Samaritan’s financial fortunes actually prospered a bit during the pandemic, in part due to federal aid. In 2022 the system reported an operating profit of $22 million on revenues of $1.6 billion.

But Samaritan’s overall finances soured in 2023, with an operating loss $4.9 million on revenues of $1.7 billion. Then came the bleak operating results of the first nine months of 2024.

The picture isn’t completely dire, however.

The system has its investment portfolio as a backstop. In its financial disclosures, the growth and income from the portfolio are tallied separately from operating results. When the investment results are wrapped in, however, they help mitigate the losses from operations.

Taking investment growth and income into account, the Samaritan system has had an overall bottom-line loss of only $7 million in the first nine months of 2024.

But hospital executives at systems nationwide want their operations to stand on their own legs and not rely on investment portfolio income and growth.

The average for all Oregon hospitals for the first half of 2024 was 5.3 percent, following last year’s 3.8 percent, according to the Oregon Health Authority’s hospital financials database.

At Samaritan, the Newport hospital’s financial performance has been strong for many years. From 2019 through to the first half of 2024, the hospital generated a total of $86 million in profits for the chain. It has had an 11.3 percent profit margin for the first six months of 2024, following a 14 percent profit margin last year.

North Lincoln is a different story. It typically breaks even or produces a small profit.

The large Corvallis hospital, by contrast, reported a 2.5 percent loss for the first six months of 2024, after losses of 4.9 percent and 4.7 percent the previous two years, according to the OHA database.

• Christian Wihtol is a Eugene-based freelance journalist specializing in health care and can be reached at wihtol@Yahoo.com
• Quinton Smith is the editor of YachatsNews.com and can be reached at YachatsNews@gmail.com