Oregon Health & Science University is entering a make-or-break moment, with leaders outlining a strategy to rein in losses and restore financial stability after one of the steepest deficits in recent memory.
The state’s only academic medical center reported this week that it closed out the 2025 fiscal year deep in the red, posting a $133 million operating loss — more than five times what it had planned. That marks a stark reversal from 2019, when OHSU posted a $176 million operating surplus.
OHSU President Dr. Shereef Elnahal, who presided over his first board meeting Friday since taking the job in August, said shoring up the university’s finances is urgent and mission-critical.
“OHSU is not an organization that makes a profit. … Every additional dollar we bring in is reinvested in people, infrastructure and programs on behalf of Oregonians,” he said. “That’s why it’s so important we change the story and turn our financial performance around.”
Much of the shortfall stemmed from higher-than-expected spending on drugs and supplies, according to university officials. They also cited the impact of Oregon’s expanded financial assistance law for low-income patients, which they said reduced OHSU’s net revenue by $66 million.
Operating support for OHSU’s partner hospitals — Adventist Health Portland and Hillsboro Medical Center — also increased as both facilities reported larger losses. OHSU is contractually obligated to cover those deficits, which together accounted for another $37 million drag on finances.
To stabilize the institution’s future, OHSU leaders say they plan to grow services with sustainable margins, particularly in cancer care, negotiate higher reimbursement rates from insurers and slow hiring, while keeping other costs in check.
But public testimony during Friday’s board meeting underscored the friction between financial discipline and employee needs. Members of AFSCME Local 328, which represents about 8,500 workers at the university, pressed OHSU to settle a contract that guarantees living wages and affordable insurance.
Tabatha Millican, an OHSU employee who serves on the bargaining team for AFSCME Local 328, accused university leaders of stalling progress on health benefit negotiations. She said that while workers were encouraged by Elnahal’s pledge to support living wages, they’ve been frustrated that proposals so far fall short.
“Some jobs start at just $18 per hour,” Milligan said, which falls short of what is a living wage for Portland. “Under the current pay structure, those jobs have no path to a living wage, not even after 15 years.”
Meanwhile, university leaders said OHSU managed to treat more patients with essentially the same-sized workforce — a rare shift for an institution that has historically added staff year after year. Full-time equivalent positions ended the year slightly below where they started — a departure from the university’s typical pattern of adding staff annually.
Dr. Nathan Selden, dean of OHSU’s School of Medicine, said hospital admissions and emergency department visits both increased last year. Patients were also staying in the hospital for shorter periods even though their cases were, on average, more complex. Selden said holding staffing levels steady while caring for more people was a sign of growing efficiency across the health system.
According to financial documents posted this week, OHSU’s cash reserves fell by $250 million in the year ending June 30, and its “days cash on hand” — a key measure of how long it can cover expenses if revenues stop — slid from 170 to 136 days.
