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OHSU Board adopts $2 billion operating budget

New budget year begins July 1

The Oregon Health & Science University (OHSU) Board of Directors today adopted a budget of $2.085 billion for the university's operations over the next fiscal year, FY 2013, beginning July 1. The budget projects a 3% rate of revenue growth versus 6% the past two years.

"This budget reflects the reality of a slowing health care economy nationally, with declining growth rates for hospitals, and a greater demand for value," said OHSU President Joe Robertson. "It also reflects that OHSU is in a strong financial position as we enter this new era."

Despite a prolonged economic downturn, over the past 5 years OHSU secured its best financial performance ever, including $250 million in cumulative operating income. OHSU has also created 1,400 jobs since the nadir of the recession, going from 12,529 employees in May 2009 to 13,921 in May 2012. Today, OHSU is Portland's largest employer. Its $2 billion annual budget includes $1.2 billion in hospital revenues and $800 million from the rest of the university, including research, education, outreach programs and the faculty practice plan.

The response to the slowing health care economy is built on OHSU's unique position as the state's only comprehensive academic health center. OHSU will accelerate the application of knowledge to health in order to generate greater value, while partnering to fulfill its missions of education, research, patient care, and community outreach in a more effective and cost efficient way. The Collaborative Life Science Building (CLSB), a shared project with Portland State, Oregon State, and the Oregon University System, is an example of a multi-mission partnership designed to expand programs in an era of scarce resources.

To maintain and build on its track record of financial strength, OHSU is targeting a 5% hospital margin in the upcoming fiscal year, combined with a balanced budget for the rest of the university. The budget projects $60 million in operating income and sufficient cash flow from operations to support $136 million in annual capital expenditures plus continued construction of the CLSB. Key assumptions include a 2.2% increase in overall patient activity, further reductions in Medicaid reimbursement, minimal growth in research revenues and flat enrollment.

The Board also approved the university's Fee Book for the upcoming academic year. This includes tuition increases of 4% in Medicine, 1-3% in Nursing, and 13.5% in Dentistry – the latter of which is consistent with shifting the School of Dentistry to a more sustainable business model as it prepares to move to the Collaborative Life Sciences Building. In 2010-2011, the OHSU School of Dentistry ranked 24th among U.S. dental schools for tuition and fees.

OHSU is projected to close the current fiscal year, FY 2012, with operating income of $72 million against a budgeted figure of $57 million, with a significant portion of the improvement due to a lower than expected Medicaid cut in FY 2012. Other factors for the strong performance include improved hospital throughput, lower length of stay, and success in reducing the expense of services and supplies, achieved through a supply chain initiative that was part of a larger productivity and process redesign effort.

About OHSU

Oregon Health & Science University is the state's only academic health and research university. As Portland's largest employer with nearly 14,000 employees, OHSU's size contributes to its ability to provide many services and community support not found anywhere else in the state. OHSU serves patients from every corner of Oregon and is a conduit for learning for more than 4,300 students and trainees. OHSU is the source of more than 200 community outreach programs that bring health and education services to each county in the state.

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