Oregon State Hospital warns staffing crunch, backlog and federal fines are straining its budget

Interim Oregon State Hospital Superintendent Jim Diegel told a joint Ways and Means Human Services committee on Feb. 11 that the hospital is focused on rebuilding a "culture of safety" after eight months of leadership changes and policy shifts and that staffing costs are the chief budget pressure.

Diegel said the hospital is "for the first time in 4 years" in full compliance with the Joint Commission and the Centers for Medicare & Medicaid Services, an achievement he credited to staff and leadership. He said personnel services accounted for the bulk of the hospital’s spending in the prior biennium and that employee and non‑employee staffing costs rose to about 87.2 percent in the 2025–27 projection.

The superintendent and OHA officials told lawmakers that nurse staffing challenges are driven by unusually high daily call‑out rates, uncapped overtime under union contracts, and more medically complex patients…