OHSU's 2004 Budget Responds to Economic Challenges

05/13/03    Portland, Ore.

Education and health care services will be reduced or cut; work force reductions are expected

The Oregon Health & Science University Board of Directors has passed the university's almost $1.2 billion fiscal year 2004 budget. The new budget represents a universitywide effort to reduce expenses and increase revenue.

OHSU currently faces the same financial challenges being felt by families, institutions, businesses and states across the nation. OHSU is not immune to Oregon's severe economic climate, decreased state support and cuts in Medicaid reimbursements. In the past, OHSU has been able to maintain its public programs. However, it can no longer absorb cuts of this magnitude. OHSU's budget for fiscal year 2004 includes several strategic initiatives designed to offset these significant financial challenges:

Additional reductions will occur in faculty, management and support staff positions. These 130 to 200 position reductions will affect about 100 to 150 employees. In February 2003, about 135 OHSU employees were affected by a work force reduction.

OHSU will provide uncompensated care to fewer patients. Currently, 41 percent of OHSU Hospital patients are uninsured or Medicaid. This is twice the statewide average.

Unless other revenue sources are identified, the Oregon Poison Center will close by July 1. The hospital dental clinic that provides dental services to inpatients will be closed. Selected county health care services contracts may be terminated.

Students in all of the schools will experience tuition increases: School of Nursing by 17 percent; School of Dentistry by 20 percent; School of Medicine by 5 percent in addition to a 20 percent increase last year; and OGI School of Science & Engineering by 6 percent.

The OHSU Office of Rural Health will reduce by 56 the number of site visits staff make to hospitals and clinics across Oregon to provide them with technical assistance. Some rural health clinics may close. Cuts in the four Area Health Education Centers (AHEC) will result in significant erosion of support for student rotations in rural areas and cuts in EMT training and K-12 programs.

The Child Development and Rehabilitation Center will have to eliminate a child psychiatrist and a social worker that together serve more than 600 children with disabilities and mental health needs; and will close its Eugene-based birth defects program that serves 300 patients a year.

Several key assumptions were used to meet OHSU's fiscal year 2004 budget goals. These assumptions include no further erosion in CareOregon and the Oregon Health Plan financing, no additional reductions in government funding and Medicaid reimbursements, and an improved economic and investment environment. Depending on the long-term validity of those assumptions, the budget may be revised at a future date to include further cuts.

There is no single cause for the financial challenges OHSU is facing:

The combination of cuts in state general fund support and reductions in Medicaid reimbursements is expected to decrease OHSU's funding by anywhere from $20.8 million to $36.5 million in fiscal year 2004.

Market conditions and interest rates continue to be lower than expected due to the weak national and state economies. Like everyone else, OHSU has experienced a significant negative impact on its investments, endowments, gifts and OHSU Foundation net income.

OHSU is committed to continuing excellence in its healing, teaching, discovery and community service missions. OHSU patients will continue to receive the highest quality of care. Doing so requires careful management of our resources. Every effort will be made to ensure that cuts do not impact health care services available only through OHSU.

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