For the second time in less than a month, a financial reporting agency has recognized the improving financial health of Central Oregon’s only hospital system.

St. Charles Health System’s favorable location in a growing region fueled its strong growth, according to Moody’s Investor Services statement. The credit reporting agency upgraded the health system’s rating from negative to stable on Feb. 22.

Earlier last month, S&P Global Ratings raised its ratings of the health system, signaling a sign of confidence. S&P recognized the health system’s dominance in the market, healthy cash reserves and improved revenue stream from surgeries and cancer treatments as signs that the health system can withstand any future concerns.

As the region’s largest employer, having a stable and credit-worthy health system is an asset for the economy as it attracts more workers, said Nicole Ramos, Oregon Employment Department regional economist.

“When people are aging or sick, they need quick access to medical facilities and good health care,” Ramos said. “If that’s not available, they’ll move and that could possibly create labor issues. Stable health care is something that people will factor in when they move to an area.”

The health system was pleased that Moody’s upgraded its rating and saw it as recognition for the work that has been done to stabilize the workforce and improve finances, said Alandra Johnson, St. Charles Health System spokeswoman.

Among the steps taken by the health system:

• Raising nurses wages to allow for retention and hiring;
• Reducing the number of vacant positions to below 10% among the four hospitals and below 6% for nurses, which reduced reliance on traveling nurses and staff;
• Renegotiating payer rates and obtained a higher rate from the Centers for Medicare and Medicaid Services for both St. Charles Bend and Redmond. The higher rates are because the hospitals are sole community hospitals and are relatively remote and serve smaller populations, according to the government agency.
• Creating efficiencies and increasing patient volumes at the cancer center and operating rooms.

“We have been working incredibly hard for the past 18 months to stabilize the health system, and it is nice that the experts at Moody’s recognize our improvement,” said Dr. Steve Gordon, St. Charles Health System CEO and president. “We are now able to lay the groundwork to better meet our region’s growing needs for essential services now and in the future.”

St. Charles Health System’s ratings increase signal financial stability

The financial belt tightening turned around two years of losses. Moody’s reported that if the health system continues on its trajectory, it could close its fiscal year with cash-flow margins above 8% with more than 220 days of cash on hand.

The health system reported more than $1 billion in annual revenues in 2023, compared to $826 million reported in 2019, according to Moody’s.

“(The health system) will continue to benefit from capable management, which has been responsible for a speedy and very significant financial and operational turnaround,” according to the Moody’s report.

However, some challenges remain, according to Moody’s. The health system has a heavy reliance on Medicare and Medicaid payments. A high union presence among nurses and other staff was considered a challenge by Moody’s. The credit rating agency also mentioned that in 2022, some 300 doctors attempted to form a union.

Over the past four years, the health system has not invested much in capital projects. Going forward that could change, and affect the cash on hand, according to Moody’s.