Marion County is a particularly competitive marketplace for Oregon Hospitals. In the state capital, Salem Health is a major player. Twelve miles away, Santiam seeks to compete. Legacy Silverton Hospital, profiled earlier by The Lund Report, is also part of the market. Yet in 2016, all three competitors repeated higher profits than the year before – despite higher charity care expenses that reflect growing number of patients unable to pay their full bills.
That’s among the details we’ve found in this third story in The Lund Report’s fifth-annual in-depth look at all of Oregon’s hospitals.
The figures underpinning these examinations come from multiple sources:
- Profit, revenue and charity care figures come from audited reports prepared by each hospital and submitted to the Office for Oregon Health Policy & Research, which also provided information about capital projects under way.
- The size and reach of each hospital, as summarized through available beds, and inpatient, outpatient and emergency room figures, are reported by hospitals to the state-mandated Databank program.
- Hospital performance metrics are tracked by the Oregon Health Authority.
- Executive pay and additional financial details about hospital chains come from IRS 990 forms and from the systems’ own unaudited reports.
- We are looking at bond-rating documents, third-party assessments, and other sources as we dig into these hospitals as well.
In our next story, we’ll look at PeaceHealth, a regional Catholic nonprofit that has seen extensive executive turnover over the past year. Our first two stories in this series dug into Legacy Health, and the Adventist and Tuality chains.
Salem Health
Salem Health operates Salem Hospital, West Valley Hospital, a rehab center, and the Willamette Health Partners network of clinics. A year ago, it embarked on an effort to integrate with OHSU through a partnership that would have kept each institution separate on paper, while merging their finances. But that OHSU Partners-led project fell apart, and now each entity is again going its own way.
That failed relationship led to changes in Salem Health’s management and organization. Longtime CEO Norm Gruber left to become president of OHSU Parners, then retired as the partnership began to unravel. Gruber was replaced by Cheryl Nester Wolfe as CEO of Salem Health, the nonprofit that includes the hospital.
Salem Health also changed its fiscal calendar, which previously ran from Oct. 1 through Sept. 30 of each year. As a result, its most recent IRS tax filing only covers a partial year, from Oct. 1, 2015, through June 30, 2016. In that period, the nonprofit reported less expenses of $57.7 million, with net assets at the end of that partial year at $711.9 million.
In his last year on the job, former CEO Gruber received total compensation of $1,284,175, a 5.7 percent increase from the prior year – though not all of that was in the form of take-home pay. He received $809,664 in base compensation, $201,092 in bonuses and incentive pay, $219,875 in retirement and deferred compensation, $27,290 in nontaxable benefits, and $16,258 in other compensation.
During the same period, Gruber’s replacement, Nester Wolfe, received total compensation of $605,350 for her first partial year as CEO: $488,829 in base compensation, $187,200 in bonuses and incentive pay, $51,779 in retirement and deferred compensation, $32,126 in nontaxable benefits, and $7,341 in other compensation.
Salem Hospital
With roots that trace back to the 1896 founding of Salem General Hospital, today’s Salem Hospital is one of the older healthcare institutions in Oregon. Today it operates a level-two trauma center that serves populations from Marion, Polk and Yamhill counties.
In 2016, Salem Hospital spent about $3.6 million to replace its 1.5 Tesla small-bore MRI with a new 3 Tesla wide-bore MRI, a total that includes building upgrades to improve shielding and expand the usable MRI area. The upgrade aimed to improve image quality, especially with neurological exams, and to allow up to 65 additional scans per year, compared to what was possible with the older device.
Finances, year 2016:
- Total margin: $58,893,002, up 12.4%
- Net patient revenue: $671,549,844, up 5.2%
- Charity care: $21,902,753, up 4.5%
Size and scope, 2016:
- Available beds: 413, compared to 390 beds in 2015.
- Inpatient days: 111,905, up 2%
- Emergency room visits: 110,999, up 5.1%
- Outpatient visits: 403,733, up 4.8%
Revenue sources:
- Medicaid: 13.6%
- Medicare: 35.9%
- Commercial insurance: 45.5%
- Self-pay: 3.5%
- Other: 1.5%
West Valley Hospital
With just six staffed beds, The Dalles-based West Valley is the smallest hospital in the state, but is busier than larger institutions that serve some rural communities. As a critical access hospital it offers an emergency department, rehab center, and access to a handful of specialists.
In 2016, West Valley spent $3.1 million to upgrade two hot-water boilers with two dual-steam fuel boilers, and to make other infrastructure improvements to its facility. The upgrades were necessary to comply with state regulations that require it to have both natural gas and diesel fuel boilers.
Finances, year 2016:
- Total margin: $2,995,131, down 27.5%
- Net patient revenue: $26,342,635, up .7%
- Charity care: $857,104, down 5.7%
Size and scope, 2016:
- Available beds: 6, unchanged from 2015.
- Inpatient days: 310, down 39.6%
- Emergency room visits: 14,795, up 5.7%
- Outpatient visits: 68,142, up 4.1%
Revenue sources:
- Medicaid: 17.2%
- Medicare: 37%
- Commercial insurance: 49.4%
- Self-pay: 6.6%
Santiam Hospital
Santiam opened its doors in 1953 after raising funds from more than 3,000 community members and businesses. In 2012, its west tower debuted, doubling the hospital’s size and housed the surgery center, family birth center and intensive-care unit. In 2013, the hospital changed its name, from Santiam Memorial Hospital to Santiam Hospital.
The hospital exists in a particularly competitive marketplace, a short drive from both Salem Hospital and Legacy Silverton Hospital (profiled earlier in this series). The three institutions collaborate on community health efforts, even as they compete for market share within the region.
The most recent full-year IRS tax information and executive compensation figures for Santiam Memorial are from the 2015 calendar year, though more recent hospital performance figures are available from the state. In 2015, Santiam CEO Terry Fletchall received total compensation of $433,452: $231,124 in base compensation, $1,100 in bonuses and incentive pay, $71,443 in retirement and deferred compensation, $12,500 in nontaxable benefits, and $16,121 in other forms of compensation.
Finances, year 2016:
- Total margin: $1,624,276, up 27.1%
- Net patient revenue: $46,540,887, up 13.7%
- Charity care: $660,439, up 70.8%
Size and scope, 2016:
- Available beds: 40, unchanged from 2015.
- Inpatient days: 3,232, down 4.9%
- Emergency room visits: 12,867, up 4.5%
- Outpatient visits: 43,544, up 7%
Revenue sources:
- Medicaid: 16.7%
- Medicare: 29.5%
- Commercial insurance: 50.9%
- Self-pay: 7.5%
Reach Courtney Sherwood at [email protected].
