St. Charles Health System ended last year with an operating income of $79.5 million, bucking the statewide trend of two years of losses.

In all, the Central Oregon hospital system recorded $1.17 billion in revenue for 2023, up $169 million from 2022, according to the health system’s most recent fiscal filings. The health system attributed the rise in revenue to an increase in net patient revenue from reducing the lengths of stay and improved payer rates, according to a statement.

Despite the rosy financial picture, hospitals statewide saw negative operating incomes for the second year in a row in 2023, according to the Hospital Association of Oregon.

In 2023, Oregon hospitals reported they were unable to cover the cost of care. Rural hospitals, with a median operating margin of -1.8%, fared worse than urban hospitals, which had a median operating margin of -0.3%, according to the association’s March report.

“Oregonians depend on their hospitals to be there when they need them most,” said Becky Hultberg, Hospital Association of Oregon president and CEO, in a prepared statement. “But year after year of tough financial conditions have made it increasingly difficult for hospitals to maintain all the services they provide to their communities.”

While St. Charles experienced a year in the black, the health system recognized the challenges facing the hospital and health care industry, said Matt Swafford, St. Charles Health System chief financial officer.

St. Charles’ location and growth fuel financial upswing

“We do not anticipate that the exceptional operating performance we reported in 2023 will continue at the same level, as we are subject to the same headwinds that our fellow hospitals and health systems are experiencing,” Swafford said.

“As a community nonprofit organization serving a vast, rural, and geographically isolated region, we are especially concerned for the plight of rural hospitals and health care services.”

As the region’s largest employer and only hospital system in Deschutes, Crook and Jefferson counties, profitability is important to the broader economic picture of meeting the needs of the community, Swafford said.

Among some of the key components contributing to the positive balance sheet are attracting and retaining a stable workforce and reducing the reliance on costly traveling staff, Swafford said. The health system’s vacancy rate was below 10% systemwide and 6% for nursing staff, he said. Other measures include achieving the Sole Community Provider status with the Centers for Medicare and Medicaid Services, improving operational effectiveness and increasing patient volumes in the cancer center and operating rooms, he said.

In 2023, the average length of stay at one of the four hospitals in the St. Charles system was 4.2 days, compared to 5.1 days in 2021, according to the financial report. On average the hospital daily patient population was lower in 2023 at 239.5, compared to 274.1 in 2021, according to the financial report.

And inpatient surgeries, a profitable aspect of hospital business, rose to 7,300 in 2023, compared to 6,403 in 2021.

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The total operating expenses at the health system increased $53.7 million to about $1.1 billion for 2023, compared to about $1 billion the year before.

Workforce costs declined 1.4% despite nursing wage increases approved earlier in mid-2023.

In 2023 the health system’s net income — operating income and investment gains — combined was $155.1 million, compared to a revenue deficit of $122 million in the prior fiscal year, according to the report.

The efforts of the health system also affected its bond ratings with both Moody’s Investor Services and S&P Global Ratings earlier this year. The credit reporting agency Moody’s upgraded the health system’s rating from negative to stable on Feb. 22.