Officials at St. Charles Health System expected a six-fold surge of patients during the solar eclipse. (Bulletin file photo)

St. Charles Health System’s finances are on solid footing with a strong balance sheet, according to S & P Global Ratings and Moody’s Ratings.

Both financial rating agencies reflected on the Central Oregon health system’s stable outlook last week and forecasted modest growth throughout the rest of the year and into the next.

St. Charles has a dominant position in Central Oregon, Moody’s pointed out, and the health system offers a comprehensive array of clinical offerings, which combined with a growing community will continue “to fuel strong revenue growth,” according to the report.

The health system, the only hospital system for more than 100 miles, is the largest employer in Central Oregon with 5,188 employees, according to an Economic Development for Central Oregon annual ranking.

“We are pleased that Moody’s Ratings affirmed our bond revenue rating and stable outlook,” Matt Swafford, St. Charles Health System chief financial officer, said in an email. “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.”

Last year,  the health system broke ground on a cancer treatment center in Redmond that will open in 2026. In April,  the health system partnered with WovenX Health, a virtual speciality care system, to provide additional gastroenterology services and last month opened a community pharmacy in Madras.

The four-hospital health system closed the books on 2024 with a positive operating margin — a metric indicating profitability — of 0.6%, Swafford said.

“While lower than 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 state and nation,” Swafford said.

According to a report by the Hospital Association of Oregon, demand for care has surged in 2024, but the state’s hospitals recorded year-over-year losses due to rising costs of patient care. At the same time, the report noted, Oregon nurses have the highest hourly wage in the nation. Payroll and benefits account for 51% of the budgets for Oregon hospitals from 2021 to 2024, according to the same report.

Much of the losses are due to lower Medicaid payments, which account for 31.9% of Oregon hospital insurance coverage.  Swafford noted that proposed cuts to Medicaid could pose a “significant headwind.”

Other challenges facing St. Charles hospitals include the risk of drought and wildfire, but the health system has environmental mitigation plans that lowers those risks, according to the S&P Global Ratings report.

Management has implemented initiatives to alleviate credit risks from inflation and labor costs, but “we believe there could be additional pressures to recruit physicians and clinical staff given the. more isolated geographic area  in which the facility operates,” noted S&P.

“The stable outlook reflects our expectation that St. Charles Health System will maintain its balance sheet strength and that management will make progress improving operations,” according to the S&P report.