A health care worker wheels out a gurney in the emergency room at Salem Hospital on Friday, Aug. 20, 2021. (Amanda Loman/Salem Reporter)

Salem Hospital lost millions in 2021 as the hospital cared for a surge of more seriously ill patients and spent far more on employee overtime and contract workers.

Recently updated Oregon Health Authority data shows the hospital reported operating losses of $2.85 million during the first nine months of 2021.

It’s the first time since at least 2007 the nonprofit hospital hasn’t taken in more than it’s spent providing care.

The data is based on unaudited financial statements and is intended to give state regulators a snapshot of how hospitals are faring financially, so it’s not the most authoritative picture of hospital finances. Still, the data shows how the strains of the pandemic have challenged especially larger Oregon hospitals’ bottom lines.

Legacy Silverton reported losses of $7.78 million over the same period, while Santiam Memorial Hospital posted operating gains of $10.79 million.

Salem Health has about $1 billion in reserves to weather the shortfall with debts of about $500 million. Those reserves allow the hospital to keep operating during lean years and are also what it must draw on for any expansions or capital projects.

James Parr, Salem Health’s chief financial officer, said patients won’t see a reduction in the availability of charity care for uninsured or low-income patients, or changes in the quality of care available.

But as the hospital renegotiates contracts with commercial insurers in coming years, Parr said they’ll seek to maximize reimbursement rates to make up for losses. If the hospital’s rates go up, so do insurers’ costs, which could mean higher premiums for patients.

For much of 2021, Salem Hospital has been beyond full, with more inpatients than the 494 beds it’s licensed for.

That might sound like good news – most businesses see more revenue when they have more customers – but the complications of hospital billing mean that’s often not the case.

Three in four hospital patients are insured through federal programs like Medicare and Medicaid, which have set rates the hospital can’t negotiate that are lower than the actual cost of providing care.

What’s more, the average amount of time people stayed in the hospital increased in 2021, with Covid patients during the delta and omicron surges averaging about eight days.

“The people that are coming are sicker, and they are staying significantly more days,” Parr said.

Every day someone’s in the hospital means paying nurses, doctors and respiratory therapists to care for them, serving them three meals a day and using catheters, masks and other medical devices.

But a longer stay doesn’t mean the hospital gets paid more, Parr said. Hospital reimbursement is usually calculated based on what the patient is being treated for.

“You generally get an amount of money based on the patient’s diagnosis, and that’s what you get. And so the longer someone stays, the less profitable you become as an organization,” Parr said.

Federal aid intended to help shore up hospitals around the U.S. largely ran out in 2020. Parr said Salem Health received about $30 million in federal grants, in addition to some loans which have since been paid back.

Those funds were helpful, but it costs about $2.5 million a day to run the hospital and its associated clinics, he said, so they weren’t a long-term solution.

Parr said he expects the hospital’s financial challenges to persist at least through 2022 as the hospital continues to be over capacity and is still seeing nearly 100 Covid patients daily.

“2022’s going to look a lot worse than 2021,” Parr said.

Staffing shortages in long-term care and skilled nursing facilities, and admissions pauses due to Covid outbreaks also mean patients who no longer need hospital care are more often waiting in a hospital bed until they can be transferred. That adds to the financial squeeze, because insurers typically won’t pay for hospital care if it’s no longer medically needed.

Lisa Wood, Salem Health spokeswoman, said the cost of “boarding” at the hospital is about $80,000 per day.

Staffing costs, meanwhile, have escalated.

State help in the form of contract workers and National Guard deployments during Covid surges have helped, but guard members aren’t clinically trained.

The hospital spent almost $330 million on payroll in the first nine months of 2021, compared with $291 million for the same period in 2020, and $220 million five years ago.

State data shows those costs are up for two reasons – employees are working more total hours to care for a greater number of patients, and the average amount paid per hour worked is also up as the hospital has had to rely more on overtime and costly contract labor. They’ve also sought to retain staff by paying more.

“Staff have been to hell and back in terms of the work they have to do,” Parr said.

The picture at Santiam Hospital is somewhat rosier, but Rachael Seeder, the hospital’s chief financial officer, said despite staying in the black for 2021, Santiam is seeing the challenge of labor shortages and costs rising.

Like other hospitals, they’ve seen patients stay longer and others delay needed care. An expansion of the hospital’s orthopedic clinic in early 2020 has helped offset some losses in other areas, she said.

As a smaller hospital, Santiam hasn’t been able to draw in travel nurses or other contract help, instead relying on paying existing employees overtime when needed to care for patients.

Legacy spokeswoman Kristin Whitney said hospital administrators were not available to discuss the Silverton facility’s finances.

Contact reporter Rachel Alexander: [email protected] or 503-575-1241.

JUST THE FACTS, FOR SALEM – We report on your community with care and depth, fairness and accuracy. Get local news that matters to you. Subscribe to Salem Reporter starting at $5 a month. Click I want to subscribe!