Oregon hospitals reduced their community benefit spending by 8.7% in 2023, marking the first decline in this spending since 2014. According to a new data brief from the Oregon Health Authority (OHA), hospitals spent a total of $2 billion on community benefit activities, $200 million less than the previous year.
“Hospitals are essential partners in helping every person in Oregon access affordable, equitable health care,†said Clare Pierce-Wrobel, Director of OHA’s Health Policy and Analytics Division. “Among the many ways that hospitals contribute to this objective are investing in services and programs that improve the health and well-being of their local community, such as organizing vaccine clinics, supporting local organizations’ health programs, and educating the next generation of health professionals.â€
The decline in spending is largely attributed to two factors: a temporary Medicaid payment boost in 2023 and reduced charity care. Nonprofit hospitals are required to carry out community benefit activities, which help maintain their tax-exempt status. While Oregon has only two for-profit hospitals, or about 3% of the state’s total, nationwide, about 20% of hospitals are for-profit.
A significant portion of Oregon’s community benefit spending continues to go toward unreimbursed care, including charity care and Medicaid unreimbursed costs. In 2023, these expenditures made up 80% of the total community benefit spending, amounting to $1.6 billion. This category of spending has steadily increased since 2019, when it represented 75% of the total.
One key reason for the decline in overall spending is the temporary increase in Medicaid reimbursements for Oregon’s large hospitals during the 2023 calendar year. This boost was not extended into 2024, contributing to a $139 million decrease in spending on community benefit activities.
Hospitals also reduced their direct spending on community benefit activities, such as organizing health screenings, vaccine clinics, health research, and community donations. In 2023, the total for direct spending fell by $40 million to $400 million. The largest portion of this direct spending, $269.4 million, went to educating future health professionals.
Despite the overall decrease, Oregon’s tax-exempt hospitals met or exceeded their minimum community benefit spending targets. According to the OHA, hospitals exceeded their spending floor by 39.8% in 2023, though this was lower than the 58.3% exceeded in 2022.
Oregon was the first state to establish individualized spending floors for each hospital, based on factors such as revenues, expenditures, financial health, and population needs. The OHA’s tracking of whether tax-exempt hospitals meet their unique minimum community benefit spending targets began in 2022, and in 2023, 97.4% of hospitals met or exceeded their floor, an improvement from 92% in 2022.
While the decrease in community benefit spending raises concerns, OHA officials emphasized that hospitals still play a vital role in supporting Oregon’s public health. “Hospitals remain a cornerstone in advancing public health and health equity across the state,†Pierce-Wrobel said.