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OHSU adjusts to challenging environment

Oregon Health & Science University (OHSU) has earned $35.7 million in operating income through the first seven months of the fiscal year, but there are challenges looming that led to a recent hiring freeze and other measures to slow spending, according to a report at the quarterly OHSU Board of Directors meeting today.

Key challenges include federal sequestration and a declining outlook for National Institutes of Health research funding, national health care reform and downward pressure on payment rates for patient care, and increasing costs of the PERS pension program. The estimated impact of sequestration alone is $30-$35 million on an annual basis, including a 2 percent cut to Medicare (about $7 million) and 8+ percent cut to NIH and other federal programs ($23 million to $28 million).

“By acting firmly now, with a hiring freeze and reductions in discretionary spending, we can ensure that OHSU continues its record of strong financial performance and secures the resources required to sustain and advance our missions,” said Lawrence Furnstahl, OHSU’s chief financial officer.

Operating income through seven months is $5 million ahead of budget, but this is less than would normally be expected given that patient activity is running 5 percent above budget. “This is the leading edge of what we’ve been expecting, which is the impact of healthcare spending slowing nationally,” said Furnstahl.

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