Expenses are outpacing revenues at St. Charles Health System, which is affecting its bottom line, despite an increase in overall revenues, according to financial records for the first nine months of 2024.

The Bend-based health system reported $12.6 million in operating income for the first nine months of the year, a decline of $36.9 million from the same period the year prior, according to publicly released financial documents.

The decline in operating income comes despite a 2.2% increase in discharges over the same period in 2023 and a 5.1% increase in surgeries. Shorter stays and higher surgical volumes affect the bottom line in a positive manner.

The health system reported 18,511 surgical procedures during the first nine months of the year, according to the financial documents.

Overall the health system reported a $57 million increase in total revenue to $910.3 million year-to-date compared to $853.4 million during the same period the year before. The health system credits its care model improvements and reduced patient length of stay for improved revenues, according to the report.

“Our third quarter financials paint a very similar picture to what we saw in the second quarter, so you will see much of what we are sharing here matches the information we provided a few months back,” said Matt Swafford, St. Charles Health System chief financial officer. “St. Charles had an 6.7% increase in revenue when compared with the first nine months of 2023, but during that same timeframe we also experienced an 11.7% increase in expenses.

“This is not a sustainable path over the long term.”

The situation is the same for other hospital systems in Oregon, said Lisa Goodman, Hospital Association of Oregon vice president of communications. Nearly half of Oregon hospitals are operating at a loss, Goodman said.

“Oregon hospitals remain financially unstable, with their cost of providing care still outpacing the payments they receive,” Goodman said. “Labor expenses, which make up more than half of a hospital’s costs, have surged 43% since the second quarter of 2020.

“We urgently need investment from state policymakers to ensure hospitals can continue to serve their communities.”

St. Charles in talks to employ The Center doctors and staff

St. Charle sin talks to employ The Center doctors and staff

Having a financially healthy health care system is vital to maintain sustained economic growth in the region. The nearest hospital system is in Portland, a nearly three-hour drive away that can take even longer in snowy weather. St. Charles has four hospitals in Central Oregon employing more than 4,500 people.

As the population in Central Oregon ages, more people will need health care. According to U.S. Census Bureau data, 22% of people in Deschutes County are 65 and older, 20% in Jefferson County and 25% in Crook County.

At the same time, the health system is expanding. It’s building a state-of- the art cancer center in Redmond and it’s in talks to incorporate a majority of providers and staff at The Center Orthopedic & Neurosurgical Care & Research, the region’s largest, private orthopedic clinic, which has about 105,000 patient visits a year in Central Oregon.

St. Charles starts construction on Redmond cancer center

St. Charles starts construction on Redmond cancer center

“Additionally, the health care industry continues to experience issues with payments for services not keeping up with the costs of providing that care. St. Charles is not immune to these pressures,” Swafford said. “The state of Oregon and the federal government continue to implement policies that adversely impact access to care and the cost of care.

“Despite these challenges, we are proud of our ability to continue providing exceptional patient care throughout Central Oregon.”