Oregon community hospital costs increase to $7.5 billion

PORTLAND — A new report says operating costs at Oregon's 58 community hospitals reached $7.5 billion last year — spending that has far outpaced inflation since 2004.

The report by the Oregon Association of Hospitals and Health Systems says that while inflation in the Portland area climbed 13 percent from 2004 to 2008 Oregon hospital costs went up 40 percent.

Investment losses, increases in charity care and expansion debts are some of the factors driving the increase. The costs reached an average of $2,800 per patient per day. With Oregon unemployment at 11 percent, thousands of Oregonians have lost their jobs and their health insurance — forcing hospitals to rely on a shrinking pool of commercially insured patients to offset losses from charity care and unpaid bills.

"The bottom line is these costs aren't sustainable and we ought to be able to get better quality at lower costs," said Laura Etherton, health policy advocate for Oregon State Public Interest Research Group.

Oregon insurance companies blame rising hospital costs as the primary reason their premiums have soared in recent years to an average of $13,378 a year for family coverage.

Congress will try to bring rising costs under control by combining Senate and House health care reform plans into a final bill. Oregon's new Health Authority also is looking at changes, including collecting claims information to shed more light on hospital costs and results.

Nearly all of Oregon's hospitals are nonprofit, but they can still pay their executives high salaries, invest in new buildings and state-of-the art equipment and keep money that exceeds their costs. Their earnings above expenses are called margins, and their collective margin dropped from 6 percent of revenue and investment income in 2004 to 1 percent in 2008, the association reported.

"If nothing changes, hospitals are very definitely in trouble in Oregon," said Kevin Earls, vice president for policy for the hospital association.

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