St. Charles Health System, the region’s No. 1 employer with 5,188 people, earned $1.2 billion  in operating revenues in 2024, slightly more than the previous year, according to public consolidated financial statements.

Expenses, however, also were higher in 2024, leaving the health system with less in operating income. In 2024, the year ended with $6.8 million in excess revenue, compared to $79 million the year before. Higher labor and medical supplies contributed to the increase in expenses, according to the financial statement. 

Across the nation, health systems such as St. Charles have experienced revenue shortfalls post-pandemic. 

“We are pleased to share that St. Charles finished 2024 with a positive operating margin of 0.6%,” said Matt Swafford, St. Charles Health System chief financial officer. “While the margin is lower than in 2023, it is a continued sign of St. Charles overall financial stability and is a positive outcome when compared to many health systems across the nation.”

The health system anticipated that 2024 would be more challenging financially than the previous year, Swafford said. To that end, the health system turned its energies to stabilizing its work force through wage increases, enabling it to hire more permanent staff than the more expensive traveling workers.

“Today, we have an incredibly low turnover and vacancy rate and have filled essential positions that help us provide the best possible care to our communities,” Swafford said.

St. Charles operates four hospitals in the region. St. Charles Madras and Prineville operate as critical access hospitals and operate no more than 25 beds with an average length of stay not exceeding 96 hours, according to the financial statement. It also operates St. Charles Bend and Redmond. 

Increased demand for hospital services  among Oregon hospitals and a larger share of Medicare and Medicaid payments is keeping the industry on unstable footing, said Lisa Goodman, Hospital Association of Oregon vice president of communications. 

“Too many are operating at a loss or barely making ends meet,” Goodman said. “Hospitals need positive margins to maintain facilities and invest in technology and medical devices that make it possible to serve their communities.”

That’s exactly what Deschutes County Commissioner Phil Chang said is concerned about. At  the four St. Charles hospitals, 70% of the  patients rely on Medicare and Medicaid for health insurance, Chang said. Those programs traditionally pay lower amounts for care than a private insurer. 

“As Congress works to cut over $1.5 trillion from the federal budget I don’t see how they can achieve those reductions without major cuts to Medicare or Medicaid,” Chang said. “These cuts would harm the health of Deschutes County residents and could also cripple St. Charles.

“If people show up at St Charles seeking care and they don’t have any health insurance, St. Charles still gives them care. Who will cover those costs?”

Because the cost of providing care continues to outpace revenues across the industry,  there has been consolidation. The most recent was the merger of The Center Orthopedic and Neurosurgical Care with St. Charles. It also expanded into new service areas like urology, gastroenterology, orthopedics, neurosurgery and physiatry. 

“We have a solid, strategic plan for the next few years that is focused on continuing to refine and improve our operations, while continuing to grow services,” Swafford said.