Emergency room personnel care for patients at St. Charles Bend in August 2021.

Expenses outpaced income in the first quarter of the year for St. Charles Health System, despite an increase in surgical procedures, according to its first quarter financial returns.

The health system reported a $2.4 million operating income for the first three months, ending March 31, compared to $15.2 million during the same period the year before. The declines in operating income are due to fewer discharges, lower than expected respiratory illnesses and lower oncology diagnoses and imaging volumes, according to the health system’s publicly disclosed financial statements for the first quarter of the year.

The shift in expenses outpacing revenues was not entirely unexpected by the health system, citing higher wages and costs.

In recent months two financial reporting agencies reflected on how the health system was uniquely positioned to fuel revenue growth because it was in a favorable location in a quickly growing region.

Revenue, however, did increase at the health system by $21.5 million in the first three months of the year compared to the same period the year before, according to financial reports. The 7.95% increase to $293.2 million was due to improved patient rates, reduced patient lengths of stay and revenue cycle performance, according to the statement.

“St. Charles has been here for more than 100 years, and we target financial performance in terms of long-term stability that goes beyond one quarter or one year,” said Matt Swafford, St. Charles Health System chief financial officer.

The increased expenses in the first quarter, compared to the same period the year before can be attributed to an increase in workforce related costs, as St. Charles reinvested in its people in order to recruit and retain caregivers, Swafford said.

The 13.4% growth rate of those expenses was higher than the growth rate of revenue, which was 7.9%, said Swafford.

The Oregon Hospital Association did not have a sense of how other health systems in the state are faring as data collection for the first quarter is a month away from being compiled, said David Northfield, the association’s director of communications. The association represents 62 hospitals.

Economists have said hospitals play an integral part of a community. St. Charles is the largest employer in Central Oregon, operating four hospitals and employing more than 4,700 people.

2023 financials

St. Charles ends 2023 in the black, bucking the statewide trend of record losses

The year to date net operating income, combined with the investment income, produced a net income of $27.4 million, less than the $41.7 million reported for the same period the year before, according to the financial statement.

St. Charles reported earnings of $1.17 billion in revenue in 2023, up $169 million from 2022, according to financial reports.

Hospital shortfalls could mean that services get cut or hours are reduced, which limits access to health care.