Q4 2016 HOSPITAL UTILIZATION AND FINANCIAL ANALYSIS

March 30, 2017

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© 2017 Apprise Health Insights Q4 2016 HOSPITAL UTILIZATION AND FINANCIAL ANALYSIS

ABOUT THIS REPORT

This report aims to provide a quarterly analysis of the utilization and financial data submitted by Oregon’s hospi- tals to the DATABANK program.

DATABANK is a state-mandated monthly hospital data program administered by Apprise Health Insights in collaboration with the Office for Oregon Health Policy and Research (OHPR). Please note that all DATABANK data are self-reported by the hospital and represent a twelve-month calendar year. Accuracy is the responsibility of the reporting hospitals.

Because this report’s objective is to provide a complex dive into the data, the graphs and methods may change between reports. This forces only the most compelling stories to be exhibited. The determination of which graphs and stories to focus on is evaluated by hospital finance and data experts at Apprise.

Note: Kaiser Sunnyside and Kaiser Westside hospitals are excluded from this analysis due to the lack of financial data available in DATABANK.

LAYOUT INFORMATION

Aggregate vs Median This report uses two statistics to report statewide hospital data: median and aggregate. Aggregate numbers sum up the entire amount for all hospitals into one number, where median only takes the number from the middle of the pack. Aggregate is useful when looking at the industry as a whole, such as the percent of Medicaid charges or the total number of patients visiting Emergency Departments in the state. Median is useful when outliers can be highly-influential on a statistic, such as a large hospital having a significant negative margin dragging down the statistic for the whole state. Apprise tries to conform to the Oregon Health Authority’s Office of Health Analytics on the subject as much as possible: https://www.oregon.gov/oha/analytics/Pages/Hospital-Reporting.aspx

Trend vs Seasonal-Adjusted Each metric in this report contains two graphs: a trend analysis and a seasonal-adjusted graph. The trend anal- ysis is a simple line graph that shows how the metric has changed over time linearly. However, because many of these metrics tend to be affected largely by seasonal influences, the seasonal-adjusted graph shows a comparison of each quarter to the same quarter in the previous two years.

2 Q4 2016 HOSPITAL UTILIZATION AND FINANCIAL ANALYSIS

TABLE OF CONTENTS

Operating Margin...... Page 4

Net Patient Revenue...... Page 4

Payer Mix...... Page 5

Charity Care...... Page 7

Bad Debt...... Page 7

Inpatient Discharges...... Page 8

Total Outpatient Visits...... Page 8

Ambulatory Surgery Visits...... Page 9

Emergency Department Visits...... Page 9

Appendix A: Regions...... Page 10

Appendix B: Hospital Types...... Page 11

Appendix C: Definitions...... Page 12

3 Q4 2016 HOSPITAL UTILIZATION AND FINANCIAL ANALYSIS

OPERATING MARGIN

Median Operating Margin percentage (Figure 1) had been following a fairly consistent trend since Oregon’s Medicaid expansion in 2014. It peaks in Q2 each year, and hits its lowest point in Q4. However, in this Q4 the median margin dropped much lower than expected, down to pre-ACA levels.

When adjusting for seasonal trends, Figure 2 shows that Q4 2016 is only the second Operating Margin decrease in the past three years, and the largest in magnitude. A margin of 2-2.5% was expected based on previous years.

Operating Margin Percent Operating Margin Percent (Median) (Median, Seasonal Adjustment) 6% 5.7% Q1 Q2 Q3 Q4 5.7% 6% 5.7% 5.7% 5% 4.8%

5% 4.8%

4% 3.6% 4% 3.8% 3.8% 3.6% 3.3% 3.3% 3.3% 3% 3.3% 3.1% 3.1% 3% 2.6% 2.6% 2.3% 2% 2.3% 2%

1% 1%

0% 0% -0.1% -0.1% -0.7% -1% -0.7% -1% 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 1 Figure 2

NET PATIENT REVENUE

Aggregate Net Patient Revenue (NPR) continues to increase slowly, although by a much smaller amount in Q4 2016 (Figures 3 & 4).

Net Patient Revenue Net Patient Revenue (Aggregate) (Aggregate, Seasonal Adjustment) $3.0B $2.76B $2.81B Q1 Q2 Q3 Q4 $2.65B $2.84B $3.0B $2.55B $2.77B $2.76B $2.81B $2.84B $2.46B $2.77B $2.76B $2.76B $2.5B $2.63B $2.65B $2.63B $2.57B $2.57B $2.55B $2.46B $2.46B $2.46B $2.36B $2.5B $2.36B

$2.0B $2.0B

$1.5B $1.5B

$1.0B $1.0B

$0.5B $0.5B

$0.0B $0.0B 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 3 Figure 4 4 Q4 2016 HOSPITAL UTILIZATION AND FINANCIAL ANALYSIS

MEDICAID PAYER MIX

When controlling for seasonality, aggregate Medicaid Payer Mix continues to decrease slowly after the initial post-expansion bump (Figures 5 & 6).

Medicaid Payer Mix Medicaid Payer Mix (Aggregate) (Aggregate, Seasonal Adjustment) 23.3% 23.3% Q1 Q2 Q3 Q4 22.5% 22.6% 22.3% 25% 23.3%23.3% 22.9% 23.3% 23.3% 22.4% 23.3% 22.9% 23.3% 22.0% 21.8% 22.5% 22.3% 22.6% 22.0% 22.4% 20% 21.8% 20.5% 20.5% 20%

15% 15%

10% 10%

5% 5%

0% 0% 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 5 Figure 6

MEDICARE PAYER MIX

Aggregate Medicare Payer Mix continues to look fairly stable, although recent quarters have shown a very slight increase compared to similar quarters of previous years (Figures 7 & 8).

Medicare Payer Mix Medicare Payer Mix (Aggregate) (Aggregate, Seasonal Adjustment) 45% 42.8% 42.6% 42.9% 42.7% 43.0% 43.0% 43.1% Q1 Q2 Q3 Q4 43.3% 42.1% 42.5% 42.7% 43.3% 43.0% 42.9% 43.0% 43.1% 40% 41.9% 42.8% 42.6% 41.9% 42.5% 42.7% 42.1% 42.7% 40% 35%

30% 30% 25%

20% 20%

15%

10% 10%

5%

0% 0% 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 7 Figure 8

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COMMERCIAL & OTHER PAYER MIX

Aggregate Commercial & Other Payer Mix is also fairly stable but has shown a very slight uptick after the drop in 2015 (Figures 9 & 10).

Commercial & Other Payer Mix Commercial & Other Payer Mix (Aggregate) (Aggregate, Seasonal Adjustment) 35% 33.4% 33.5% 33.1% 33.2% Q1 Q2 Q3 Q4 32.0% 33.8% 33.1% 35% 33.4% 33.5% 33.8% 32.4% 32.0% 32.3% 32.6% 33.1% 32.6% 33.1% 33.2% 30% 31.5% 31.5% 32.0% 32.0% 32.3% 32.4% 30%

25%

25%

20% 20%

15% 15%

10% 10%

5% 5%

0% 0% 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 9 Figure 10

SELF PAY PAYER MIX

Aggregate Self Pay Payer Mix has increased slightly for the past three quarters when controlling for seasonality (Figures 11 & 12).

Self Pay Payer Mix Self Pay Payer Mix (Aggregate) (Aggregate, Seasonal Adjustment) Q1 Q2 Q3 Q4 3.3% 3.3% 3%

3%

2.3% 2.1% 2.1% 2.3% 2% 2.1% 1.9% 1.8% 2.1% 2% 1.9% 1.9% 1.9% 1.8% 1.9% 1.9% 1.8% 1.8% 1.8% 1.8% 1.7% 1.7% 1.7% 1.7%

1% 1%

0% 0% 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 11 Figure 12

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CHARITY CARE PERCENTAGE

Median Charity Care as a percentage of Total Charges has begun to increase slightly after the post-expandion drop (Figure 13 & 14).

Charity Care Percentage Charity Care Percentage (Median) (Median, Seasonal Adjustment) 2.20% Q1 Q2 Q3 Q4

2.20% 2.0%

2.0%

1.66% 1.49% 1.66% 1.5% 1.37% 1.37% 1.49% 1.5% 1.38% 1.38% 1.37% 1.37% 1.28% 1.28% 1.09% 1.18% 1.18% 1.13% 1.10% 1.13% 1.09% 1.10% 1.0% 1.00% 1.00% 1.0%

0.5% 0.5%

0.0% 0.0% 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 13 Figure 14

BAD DEBT PERCENTAGE

Median Bad Debt continues to remain stable at around 1% of total charges after the expansion drop (Figures 15 & 16).

Bad Debt Percent Bad Debt Percent (Median) (Median, Seasonal Adjustment) 2.0% 1.90% Q1 Q2 Q3 Q4

1.8% 2.0% 1.90%

1.6% 1.38% 1.4% 1.5% 1.25% 1.38% 1.2% 1.25% 1.06% 1.0% 1.07% 1.08% 0.93% 1.07% 1.06% 1.08% 0.98% 0.94% 0.98% 1.0% 0.94% 0.93% 0.8% 0.83% 0.85% 0.83% 0.85% 0.71% 0.6% 0.71%

0.5% 0.4%

0.2%

0.0% 0.0% 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 15 Figure 16

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TOTAL DISCHARGES

Aggregate Inpatient Discharges remain stable at around 80,000 per quarter with some slight seasonal increases and decreases (Figures 17 & 18).

Total Discharges Total Discharges (Aggregate) (Aggregate, Seasonal Adjustment)

79.5K 81.6K 81.1K 80.3K 81.0K Q1 Q2 Q3 Q4 90K 80K 81.8K 79.6K 80.3K 79.7K 81.6K 81.8K 78.5K 78.8K 79.0K 81.1K 79.5K 80.3K 80.3K 79.6K 79.7K 81.0K 80K 78.5K 78.8K 79.0K 70K

70K 60K 60K 50K 50K 40K 40K

30K 30K

20K 20K

10K 10K

0K 0K 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 17 Figure 18

TOTAL OUTPATIENT VISITS

Aggregate Total Outpatient Visits continue to increase, although the rate of increase decreased significantly in Q4 2016 (Figures 19 & 20).

Total Outpatient Visits Total Outpatient Visits (Aggregate) (Aggregate, Seasonal Adjustment) 3.0M 2.76M 2.82M Q1 Q2 Q3 Q4 2.66M 2.71M 2.85M 2.80M 3.0M 2.72M 2.75M 2.75M 2.82M 2.85M 2.80M 2.69M 2.76M 2.72M 2.71M 2.75M 2.75M 2.5M 2.63M 2.69M 2.66M 2.63M 2.56M 2.56M 2.5M

2.0M 2.0M

1.5M 1.5M

1.0M 1.0M

0.5M 0.5M

0.0M 0.0M 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 19 Figure 20

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AMBULATORY SURGERY VISITS

Aggregate Ambulatory Surgery Visits are increasing after a drop in 2015 (Figures 21 & 22).

Ambulatory Surgery Visits Ambulatory Surgery Visits (Aggregate) (Aggregate, Seasonal Adjustment) 52.3K 53.0K Q1 Q2 Q3 Q4 49.9K 50.6K 50K 48.8K 48.6K 50.8K 52.3K 53.0K 49.9K 50.8K 50.6K 47.2K 48.0K 48.3K 50K 48.0K 48.8K 48.3K 48.6K 46.5K 47.2K 46.5K 45.1K 45.1K 40K

40K

30K 30K

20K 20K

10K 10K

0K 0K 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 21 Figure 22

EMERGENCY DEPARTMENT VISITS

Aggregate Emergency Department Visits are increasing as well, when controlling for the extreme seasonality of these visits (Figures 23 & 24).

Emergency Room Visits Emergency Room Visits (Aggregate) (Aggregate, Seasonal Adjustment) 342.3K 343.4K Q1 Q2 Q3 Q4 350K 333.7K 335.5K 337.3K 323.2K 329.7K 346.8K 346.8K 350K 342.3K 343.4K 337.3K 330.1K 333.7K 329.7K 335.5K 330.1K 300K 314.7K 320.6K 323.2K 320.6K 306.2K 306.2K 314.7K 300K 250K

250K

200K 200K

150K 150K

100K 100K

50K 50K

0K 0K 2014 Q2 2014 Q4 2015 Q2 2015 Q4 2016 Q2 2016 Q4 2014 2015 2016 2014 2015 2016 2014 2015 2016 2014 2015 2016 Figure 23 Figure 24

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APPENDIX A: REGIONS

Central Oregon: Mid-Columbia Medical Center, Providence Hood River Memorial Hospital, St. Charles Bend, St. Charles Madras, St. Charles Prineville, St. Charles Redmond

Eastern Oregon: , CHI St. Anthony Hospital, Good Shepherd Medical Center, , Harney District Hospital, , Pioneer Memorial Hospital-Heppner, St. Alphonsus Medical Center-Baker City, St. Alphonsus Medical Center-Ontario, Wallowa Memorial Hospital

Northwest Oregon: Columbia Memorial Hospital, Providence Newberg Medical Center, Providence Seaside Hospital, Samaritan North Lincoln Hospital, Samaritan Pacific Communities Hospital, Tillamook Regional Medical Center, Willamette Valley Medical Center

Portland Metro Area: Adventist Medical Center, Legacy Emanuel Medical Center, Legacy Good Samaritan Medical Center, Legacy Meridian Park Medical Center, Legacy Mount Hood Medical Center, OHSU, Provi- dence Milwaukie Medical Center, Providence Portland Medical Center, Providence St. Vincent Medical Center, Providence Willamette Falls Medical Center, Shriners Hospital-Portland, Tuality Healthcare

Southern Coast: Bay Area Hospital, Coquille Valley Hospital, , Lower Umpqua Hospi- tal, Southern Coos Hospital & Health Center

Southern Oregon: Asante Ashland Community Hospital, Asante Rogue Regional Medical Center, Asante Three Rivers Medical Center, Mercy Medical Center, Providence Medford Medical Center,

Valley: Good Samaritan Regional Medical Center, Legacy Silverton Medical Center, McKenzie-Willamette Medical Center, PeaceHealth Cottage Grove Community Hospital, PeaceHealth Peace Harbor Hospital, Peace- Health Sacred Heart Medical Center at RiverBend, PeaceHealth Sacred Heart Medical Center University Dis- trict, , Samaritan Albany General Hospital, Samaritan Lebanon Community Hospital, Santiam Memorial Hospital, West Valley Hospital

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APPENDIX B: HOSPITAL TYPES

Urban Rural

DRG Hospitals Type A Hospitals Type B Hospitals

• Adventist Medical Center • Blue Mountain Hospital* • Asante Ashland Community Hospital • Asante Rogue Regional Medical Center • CHI St. Anthony Hospital* • Columbia Memorial Hospital* • Asante Three Rivers Medical Center • Curry General Hospital* • Coquille Valley Hospital* • Bay Area Hospital • Good Shepherd Medical Center* • Legacy Silverton Medical Center • Good Samaritan Regional Medical • Grande Ronde Hospital* • Lower Umpqua Hospital* Center • Harney District Hospital* • Mid-Columbia Medical Center • Legacy Emanuel Medical Center • Lake District Hospital* • PeaceHealth Cottage Grove Community • Legacy Good Samaritan Medical Center • Pioneer Memorial Hospital-Heppner* Hospital* • Legacy Meridian Park Medical Center • St. Alphonsus Medical Center-Baker • PeaceHealth Peace Harbor Medical • Legacy Mount Hood Medical Center City* Center* • McKenzie-Willamette Medical Center • St. Alphonsus Medical Center-Ontario • Providence Hood River Memorial • Mercy Medical Center • Tillamook Regional Medical Center* Hospital* • OHSU Hospital • Wallowa Memorial Hospital* • Providence Newberg Medical Center • PeaceHealth Sacred Heart Medical Cen- • Providence Seaside Hospital* ter at RiverBend • Samaritan Lebanon Community Hos- • PeaceHealth Sacred Heart Medical Cen- pital* ter University District • Samaritan North Lincoln Hospital* • Providence Medford Medical Center • Samaritan Pacific Communities Hospi- • Providence Milwaukie Hospital tal* • Provicence Portland Medical Center • Southern Coos Hospital & Health • Providence St. Vincent Medical Center Center* • Providence Willamette Falls Medical • St. Charles Prineville* Center • St. Charles Madras* • Salem Hospital • St. Charles Redmond • Samaritan Albany General Hospital • West Valley Hospital* • Shriners Hospital-Portland • Sky Lakes Medical Center • St. Charles Bend • Tuality Healthcare • Willamette Valley Medical Center

Type A Hospitals are small and remote and have 50 or fewer beds. Type A hospitals are located more than 30 miles from another acute care, inpatient facility.

Type B Hospitals are small and rural and have 50 or fewer beds. Type B Hospitals are located 30 miles or less from another acute care facility

*Designates a CAH facility (more information in Appendix C: Definitions)

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APPENDIX C: DEFINITIONS

Bad Debt: Bad debt is the unpaid obligation for care, based on a hospital’s full established rates, for patients who are unwilling to pay their bill. Unlike charity care, bad debt arises in situations where the patient has either not requsted financial assistance or does not qualify for financial assistance. In these cases the hospital will generate a bill for services providec. For uninsured patients, the amount of bad debt can pertain to all or any portion of the bill that is not paid. For patients with insurance, certain amounts that are the pa- tient’s responsibility—such as deductibles and coinsurance—are expsed as bad debt if not paid.

Charity Care: The dollar amount of free care, based on a hospital’s full established rates, provided to patients who are determined by the hospital to be unable to pay their bill. The determination of a patient’s ability to pay is based on the hospital’s charity care policy. Hospitals will typically determine a patient’s inability to pay by examining a variety of factors such as individual and family income, assets, employment status, or availability of alternative sources of funds. Determination of charity care status is made prior to admis- sion if the patient has requested and applied for financial assistance. Charity care status may be granted at a later date depending on the circumstances of the admission, such as an emergency admission, no request for financial assistance prior to admission, or lack of information about the patient’s financial status at the time of admission. Financial assistance provided by the hospital may pertain to all or a portion of the patient’s bill.

Critical Access Hospitals (CAHs): A designation given to certain rural hospitals by the Centers for Medicare and Medicaid Services. Created by Congress in the 1997 Balanced Budget Act, the CAH designation is designed to reduce the financial vulnerability of rural hospitals and improve access to healthcare in those areas. A CAH must have no more than 25 inpatient beds, maintain an annual aver- age length of stay of less than 96 hours, offer 24/7 emergency care, and be located at least 35 miles away from another hospital.

Emergency Department Visits: The total number of patients seen in the emergency department who are not later admitted as inpa- tients.

Net Nonoperating Gains: Amount of income or loss after expenses which result from the hospital’s peripheral or incidental transac- tions and from other events stemming from the environment that may be largely beyond the control of the reporting entity and its management. An example would be sale of investments in marketable securities.

Net Patient Revenue: The revenue the reporting entity generates from patient care.

Operating Margin Percent: Measure of profitability from the reporting entity’s operations.

Other Operating Revenue: Revenue derived from the reporting entity’s operations other than direct patient care. Examples are revenue generated from operation of the cafeteria and gift shop.

Outpatient Surgeries: A planned operation for which the patient is not expected to be admitted to the hospital.

Outpatient Visits: Total number of outpatient visits reported during the reporting period. This includes emergency room visits, ambu- latory surgery visits, observation visits, home health visits, and all other visits.

Payer Mix: The amount of total charges that were attributable to one of four payer categories: Medicaid, Medicare, commercial, and self pay.

Reporting Entity: A hospital and any additional consolidated entities that are included in the Income Statement at the front of the audited financial statement. The only exceptions are foundations that the hospital does not want included in its financial reporting.

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APPENDIX C: DEFINITIONS (CONT.)

Tax Subsidies: Tax revenues from cities, counties or special hospital districts, which assess levies to subsidize the reporting entity.

Total Charges: Amount billed for services at full established rates.

Total Contractuals: The amount of total charges that have been negotiated away by payers. This is the difference between what the hospital bills for and what it expects to receive as revenue.

Total Discharges: The termination of the granting of lodging in the hospital and the formal release of the patient (includes patients admitted and discharged the same day). When a mother and her newborn are discharged at the same time, they count as one discharge. When the baby stays beyond the mother’s discharge (boarder baby), it counts as one discharge for the mother and one discharge for the boarder baby.

Total Margin Percent: Measure of profitability from all sources of the reporting entity’s income.

Total Operating Expenses: All expenses incurred from the reporting entity. Examples are salaries and benefits, purchased services, professional fees, supplies, interest expense, depreciation, and amortization and rent and utilities.

Total Operating Revenue: All revenue derived from the reporting entity’s operations directly related to patient care. Includes net pa- tient revenue and other operating revenue.

Uncompensated Care: The total amount of health care services, based on full established rates, provided to patients who are either unable or unwilling to pay. Uncompensated care includes both charity care and bad debt.

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