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From a recent wave of financial reports, a remarkable statistic stands out: In 2015, hospitals in Oregon reported spending just over $10 billion on their operations. A decade later, those expenses had more than doubled—to $22 billion.
Hospital revenue has been rising nearly apace (though not, hospitals say, enough), siphoning ever more money from insurance premiums and government budgets.
In other words, everyday Oregonians are funding these ballooning budgets, which account for a huge proportion of health care spending in the state. And while out-of-control health care cost inflation is not a problem unique to Oregon, a fight is brewing here over whether local factors are making it worse.
What is not in great dispute is where hospitals are deploying most of this money. Particularly in an aging state, more people are seeking medical care, and surging medical supply and pharmaceutical costs are a major factor too. But an Oregon Health Authority analysis released this month said the biggest cost driver of all was rising payroll expenses—the cost of salary and wages to hospital employees. Those have gone up an average of 8% per year in the past decade—more than double the overall rate of inflation.
Why can’t hospitals do a better job keeping their costs down? “The answer to that quite simply is a state regulatory environment and labor landscape that makes that very hard,” Hospital Association of Oregon Chief Executive Becky Hultberg tells WW.
Her association detailed its position on the matter in a report released this week. Hospital expenses, it says, are rising so steeply in large part because Oregon has some of the highest wages in the nation for health care professionals—a fact Hultberg attributes to a labor shortage in particular fields, as well as a high overall unionization rate in the region.
“You can argue it’s a good thing that we’re paying our workers really well,” she says. “But there has to be revenue then to cover those costs.”
The problem, she says, is that there is not. Oregon has a higher rate of Medicare and Medicaid enrollment than the U.S. average, but the hospital association says these massive government programs do not pay enough to cover costs. Meanwhile, it reports payments delays and denials from the other key payer, commercial insurance companies.
On top of all of this, the hospital group traces its financial woes to a state regulatory landscape it describes as uncommonly baroque. A few sample complaints: Regulators drag out merger approvals; the state facility licensing system is unwieldy; and a law mandating hospital staffing levels is poorly and unjustly administered.
There are reasons to be skeptical here. Past studies of hospital prices show that Oregon’s, in aggregate, come in around the national average. “If the argument is that regulatory burden is what drives higher prices, and Oregon has an unusually burdensome regulatory environment, then you would expect to see our prices be significantly more than other states,” says Hayden Rooke-Ley, a Portland-based researcher with the Brown University School of Public Health.
He adds that hospital expenses ultimately reflect a combination of factors.
“Insofar as there are unnecessary cost drivers being driven by an overly burdensome regulatory environment, then I think we should all be working together to figure out how to minimize those,” he says. “But we also know that hospital prices are often associated with private sector bargaining dynamics and vary considerably across geographies, even under the same regulatory environment.”
Another close observer, Art Suchorzewski of FamilyCare Health, points out a tension in the hospital association narrative. The idea that more people are going to hospitals suggests we are getting sicker, which suggests we are not exactly getting great value out of all of this extra money.
“On the one hand, we’re spending a lot more on health care,” he says. “But on the other hand, their document says that we’re getting sicker and we’re using more hospital services.”
Unions, meanwhile, have their own reason to be wary of hospital complaints.
“It’s a familiar story: six-figure executives cry poverty while the CEOs and others in the C-suite earn millions of dollars each year,” says AFSCME Oregon spokesperson David Kresiman in a statement. “That’s a cost that should be examined.”
He adds that Oregonians “are proud and relieved at the high number of better paying union jobs in health care. That’s something everyone can get behind. That means lower turnover, better care, and workers who can afford to live in the communities they serve.”
Still, there is little doubt Oregon hospitals have been struggling lately to stay in the black. The hospital association wants the state to strengthen Medicaid payments—a tall order with major federal spending reductions looming. And it wants lawmakers to reduce unnecessary bureaucracy and “hold insurers accountable.”
Meanwhile, hospitals insist they are cutting costs as much as possible. “We continue to focus on, ‘Where is there waste in our service delivery?” says Melissa Damm, the Providence Health & Services chief financial officer who oversees a division that includes Oregon. By phone, she tells WW that Providence Oregon lost more than $300 million on its operations in 2025, but that in the first two quarters of 2026, the system was close to breaking even.
And this week, Oregon Health & Science University, the state’s flagship hospital, noted a “dramatic financial turnaround.” After two years of losses, OHSU had budgeted to lose $45 million in its operations in the fiscal year that just ended. But preliminary results actually show it with a positive margin of $181 million.
In a statement, OHSU President Shereef Elnahal said the medical center achieved this feat not through cutting, but investing in its people. Indeed, data submitted to the state suggests OHSU costs continued to increase significantly. But OHSU says, it figured out a way—largely through high patient volume and complexity of care—to raise revenue even more.
