In Depth: Executive Pay, Performance at Oregon’s Rural Catholic Hospitals

Two of Oregon’s largest hospital chains are run by regionally headquartered Catholic nonprofits, Providence and PeaceHealth, which each have clout in the state to match their large footprints. But two much larger Catholic chains often go unnoticed here, as their remote outposts in Pendleton, Roseburg, Baker City and Ontario provide critical services – with a helping of religious faith – in rural areas of the state.

That’s among the details we’re uncovering in this fifth 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.

Our first four stories in this series dug into Legacy Health, the Adventist and Tuality chains, Salem Health and Santiam Hospital, and PeaceHealth. Future stories will look at the state’s remaining major hospitals.

Catholic Health Initiatives

Founded in 1996 when multiple smaller Catholic health systems merged, Colorado-based Catholic Health Initiatives has grown to become one of the nation’s largest healthcare systems. It operates 103 hospitals in 19 states, had system-wide revenue of $15.5 billion in its 2017 fiscal year, which ended June 30. It has also struggled financially, posting an operating loss of $585.2 million in the recent fiscal year – though with investment income included, the company was able to remain profitable. CHI executives blame uncertainty over the Affordable Care Act for much of the nonprofit’s struggles.

Despite its national clout, CHI has a small presence in Oregon, with just two hospitals in the state – St. Anthony in Pendleton, and Mercy Medical in Roseburg.

St. Anthony Hospital

St. Anthony Hospital in Pendleton was founded by the Sisters of St. Francis in 1901 to provide comprehensive healthcare to community members, regardless of their ability to pay. In 1997, St. Anthony joined CHI.

In late 2013, the hospital moved in to a $74 million building, which kept in-patient capacity the same, but gave patients more privacy and boosted the capacity of the emergency department. Last year, St. Anthony opened an outpatient pain clinic out of its day surgery department.

St. Anthony President Harry Geller had reported total compensation of $393,822 in fiscal year 2016, the most recent period available. Not all of that was take home pay. The breakdown: $235,975 was base pay, $39,482 came in bonuses and incentive pay, $36,798 was retirement or deferred compensation, $17,892 came in nontaxable benefits, and $63,675 in other forms of compensation.

Finances, year 2016:

• Total margin: $12,561,609, up 146.2 percent
• Net patient revenue: $69,243,134, up 10.6 percent
• Charity care: $1,219,639, up 47.9 percent

Size and scope, 2016:

• Available beds: 25, unchanged from 2015.
• Inpatient days: 4,597, up 5.3 percent
• Emergency room visits: 12,207, down 6.9 percent
• Outpatient visits: 59,844, down 15.1 percent

Revenue sources:

• Medicaid: 2.7 percent
• Medicare: 24.5 percent
• Commercial insurance: 68.6 percent
• Self-pay: 2.2 percent
• Other: 2 percent

Mercy Medical Center

The Sisters of Mercy raised $12,000 from residents of Roseburg to build and open Mercy Medical Center in 1909. Nearly nine decades later, the hospital joined with other faith-based groups to found CHI. Now, while its formal name remains Mercy Medical, it is in the process of rebranding the network of medical offices it is a part of as CHI Mercy Health.

As Douglas County’s only acute, care hospital, Mercy Medical serves an area of more than 5,000 square miles and a population with often challenging medical needs. This spring, the National Rural Health Association named Mercy one of the top 20 rural hospitals in the nation.

CEO Kelly Morgan received total compensation in fiscal year 2016 of $818,501: $528,254 in base compensation, $101,969 in bonuses and incentive pay, $15,755 in retirement and deferred compensation, $16,517 in nontaxable benefits, and $155,986 in other forms of compensation.

Finances, year 2016:

• Total margin: $36,779,355, up 23.1 percent
• Net patient revenue: $219,193,055, up 4.2 percent
• Charity care: $3,186,953, up 385 percent

Size and scope, 2016:

• Available beds: 129, unchanged from 2015.
• Inpatient days: 28,531, up .2 percent
• Emergency room visits: 42,528, up 2.3 percent
• Outpatient visits: 394,858, up 2.8 percent

Revenue sources:

• Medicaid: 14.4 percent
• Medicare: 37.6 percent
• Commercial insurance: 39.8 percent
• Self-pay: .9 percent
• Other: 7.3 percent

Trinity Health

St. Alphonsus Health is a small four-hospital Catholic health nonprofit owned by the much larger Trinity Health, which operates 93 hospitals in 22 states. In its 2017 fiscal year, Trinity reported revenue of $17.6 billion, and operating income of $266 million.

St. Alphonsus Health Systems, based in Boise, has operations in both Oregon and Idaho. St. Alphonsus-Baker City and St. Alphonsus-Ontario were both previously owned by Catholic Health Initiatives. In 2010, CHI handed both hospitals and one in Idaho to the control of Trinity Health.

St. Alphonsus Medical Center, Baker City

The institution now known as St. Alphonsus Medical Center-Baker City has deep roots in its eastern Oregon hometown. It was founded as St. Elizabeth Hospital in 1897 with three nuns operating out of a building they had previously used for other purposes. Over the years, St. Elizabeth moved several times before expanding to its current location in 1970. The hospital was renamed St. Alphonsus Medical Center-Baker City when it became part of Trinity Health subsidiary St. Alphonsus Health Systems.

Former CEO Ray Gibbons retired last year, and was replaced by Phil Harrop at the start of 2017. The most recent executive pay figures available for the Baker City hospital are for the 2014-2015 fiscal year, when Gibbons received total compensation of $368,079: $216,249 in base pay, $70,705 in bonuses and incentive pay, $14,164 in retirement and deferred compensation, $16,155 in nontaxable benefits, and $50,806 in other compensation.

Finances, year 2016:

• Total margin: negative $1,155,038, compared to negative $949,587 a year earlier.
• Net patient revenue: $30,358,785, up 4.5 percent
• Charity care: $679,979, up 6.2 percent

Size and scope, 2016:

• Available beds: 25, unchanged from 2015.
• Inpatient days: 2,854, down 9.3 percent
• Emergency room visits: 7,262, down 1.3 percent
• Outpatient visits: 25,762, down 1.6 percent

Revenue sources:

• Medicaid: 23.9 percent
• Medicare: 40 percent
• Commercial insurance: 34.2 percent
• Self-pay: 2.8 percent
• Other: negative 0.9 percent

St. Alphonsus Medical Center, Ontario

Ontario’s hospital started as a tent operated by six nuns in 1912, and for nearly a century it went by the name Holy Rosary Medical Center. It was renamed St. Alphonsus Medical Center-Ontario when it became part of Trinity Health subsidiary St. Alphonsus Health Systems. The hospital serves a four-county region on the west end of Treasure Valley in southwestern Idaho and eastern Oregon.

Karl Keeler, who is CEO of both the Ontario hospital and St. Alphonsus' Nampa, Idaho, medical center, received total compensation of $526,582 in the 2014-2015 fiscal year -- the most recent period available. The breakdown: $316,893 in base compensation, $108,996 in bonuses and incentive pay, $14,251 in retirement and deferred compensation, $25,287 in nontaxable benefits, and $61,155 in other forms of compensation.

Former key employees of the hospital also continued to receive hefty compensation after departing, with former CEO Richard Palagi, who left in 2013, receiving $452,115 in total compensation, and Paul Vachek, former vice president of finance and operations, getting $100,979.

Finances, year 2016:

• Total margin: $3,283,079, down 27.8 percent
• Net patient revenue: $67,830,826, up 4.9 percent
• Charity care: $3,599,459, up 42.6 percent

Size and scope, 2016:

• Available beds: 49, unchanged from 2015.
• Inpatient days: 6,243, down 10.6 percent
• Emergency room visits: 12,929, down 5 percent
• Outpatient visits: 74,775, up 1.3 percent

Revenue sources:

• Medicaid: 18.8 percent
• Medicare: 30.7 percent
• Commercial insurance: 42 percent
• Self-pay: 6.1 percent
• Other: 2.3 percent.

Reach Courtney Sherwood at [email protected]