Despite Executive Leadership Shake-Up, PeaceHealth’s Oregon Profits Climb

The four Oregon hospitals managed by this Catholic health network reported combined profits of $97.4 million in 2014.

These are turbulent times for one of the Northwest’s major healthcare chains. Like nearly all U.S. hospitals, PeaceHealth’s four Oregon hospitals are adjusting to the shifts brought about by the Affordable Care Act, which is spurring a new focus on evidence, effectiveness and costs while also vastly boosting the number of patients who now have insurance coverage.

Simultaneously, PeaceHealth’s executive leadership has undergone a major shakeup that is still ongoing. Longtime CEO Alan Yordy, who oversaw the nonprofit’s 2011 move from Bellevue to its new headquarters in Vancouver, Wash., retired earlier this year – and still has not been replaced. Dr. Howard Graman, who had been CEO of the nonprofit’s physicians’ group, left in June. Kevin Walstrom, who had been CFO since 2010, left in May. Beth O’Brien, chief operating officer, is the highest ranking executive on staff as PeaceHealth’s board searches for a new CEO.

But chaos at the top has not harmed PeaceHealth’s bottom line. In fiscal year 2013, before the full health insurance expansion of the ACA went into effect, the entire PeaceHealth system reported net revenue after expenses of $72.3 million - up from $27.3 million the year before. Full-system figures are not yet available for 2014, but PeaceHealth’s four Oregon hospitals reported a combined profit of $97.4 million, up from $39.6 million in 2013.

Much of that gain seems to be because of a sharp drop in uncompensated care, which hospitals across the U.S. have reported as a result of expanded insurance coverage under the ACA. PeaceHealth’s small Cottage Grove hospital has seen uncompensated care drop 20 percent; its Peace Harbor hospital reports a 30.8 percent drop; RiverBend saw a 22.5 percent decline; and University District saw uncompensated fall 23.8 percent last year.

That’s among the findings in this fifth story in our ongoing look at hospital finances.

For the third year, The Lund Report is digging into the money and operations of Oregon’s hospitals. In our first four stories, we examined Providence Health and Services, Legacy Health, Kaiser Permanente, Salem Health, Asante and Samaritan Health. For this story, we’re looking at PeaceHealth.

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.

• 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.

• Executive compensation figures come from the IRS 990 tax forms that all nonprofits are required to file.

• Additional financial details about hospital chains come from IRS 990 forms and from the systems’ own unaudited reports.

Once we’ve completed our look at the facts and figures, The Lund Report will follow up with stories that tackle different questions about the changing challenges hospitals face in the aftermath of the Affordable Care Act.

This review of PeaceHealth’s hospitals draws from the most recent available data. With executive compensation figures, that means we are relying on 2013 tax forms. But 2014 financial figures are incorporated where they are available.

PeaceHealth

PeaceHealth was founded more than a century ago by nuns, and has since grown to become a major force in Pacific Northwest healthcare, with a three-state network of clinics, labs and hospitals. The chain now operates ten hospitals in Oregon, Washington and Alaska.

A Catholic nonprofit, the organization employed 12,633 full-time, part-time and temporary employees in 2013 – down from 13,300 in 2012, which likely reflects cost-cutting cuts and efforts to become more efficient that took place several years ago.

Previously based in Bellevue, Wash., PeaceHealth expanded into the Portland-metro area beginning in 2011, when it acquired Southwest Washington Medical Center and a few months later decided to move its headquarters to Vancouver, Wash.

Since then, the chain has continued to grow, largely by inking deals to manage public hospitals in Washington state. Because of its Catholic affiliation, some communities have raised concerns that patients in PeaceHealth-served communities may not have access to certain forms of reproductive and end-of-life care.

PeaceHealth’s leadership team has gone through a series of major changes since its 2012-13 fiscal year, the most recent year for which executive compensation figures are available.

Alan Yordy, who was still president when Peacehealth last filed taxes with the IRS, saw his total compensation climb 12.8 percent from the hospital’s 2011-12 fiscal year to 2012-13. His total compensation in FY12-13: $1.4 million: $915,765 in base pay, $325,941 in retirement and deferred compensation, $30,700 in nontaxable benefits and $161,824 in other compensation.

O’Brien joined PeaceHealth in 2014, so her compensation figures are not yet available.

CLICK HERE for a full break down of all disclosed executive compensation information for the PeaceHealth network.

PeaceHealth Cottage Grove Community Medical Center

With just 14 beds, PeaceHealth Cottage Grove Community Medical Center is one of the smallest hospitals in Oregon -- only six-bed West Valley Hospital is smaller. Located about 23 miles south of Eugene and Springfield, this hospital offers general services and emergency care, but has no surgery or routine childbirth services.

The original Cottage Grove Hospital declared bankruptcy in 1998, when PeaceHealth stepped in – keeping minimal services in place in order to ultimately expand the hospital.

Tim Hermann was named chief administrative officer at Cottage Grove in September 2014, so his compensation figures are not yet available.

He followed Mary Ann McMurren, who was the hospital’s administrator for four years before she became vice president of post-acute services for PeaceHealth’s Oregon West Network.

McMurren’s total compensation in FY12-13 was $178,681: $160,402 in base pay, $15,212 in retirement and deferred compensation, $2,072 in nontaxable benefits and $995 in other forms of remuneration.

Finances, year 2014:

Profit: $1.2 million, up from a net loss of $6.1 million in 2013.

Net patient revenue: $26.3 million, up 27.9 percent.

Reported charity care charges: $1.2 million, down 29.9 percent.

Profit margin: 4.3 percent, compared to negative 26.6 percent the prior year.

Size and scope, as of 2014:

Available beds: 14.

Inpatient days: 1,305.

Emergency department visits: 11,907.

Outpatient visits: 37,445.

PeaceHealth Peace Harbor Medical Center

Located in Florence, about 70 miles west of Eugene and Springfield, Peace Harbor is designated as a critical access hospital, a term often applied to smaller facilities with no more than 25 beds, and where average patient stays are no longer than 96 hours. Despite its size, this hospital does offer a full range of general acute-care services.

A planned $5.4 million expansion, which began this summer, is expected to more than double the size of the hospital’s emergency department when it is complete later this year.

Rick Yecny is chief administrative officer of PeaceHealth Peace Harbor. In 2012-13, his total compensation was $245,429: $216,390 in base pay, $25,130 in retirement and deferred compensation, $1,760 in nontaxable benefits and $2,141 in other forms of compensation.

Finances, year 2014:

Profit: $2.2 million, down 3.5 percent from 2013.

Net patient revenue: $64.3 million, up 9.6 percent.

Reported charity care charges: $4.9 million, down 33.3 percent.

Profit margin: 3.2 percent, compared to 3.6 percent the prior year.

Size and scope, as of 2014:

Available beds: 21.

Inpatient days: 3,579.

Emergency department visits: 8,064.

Outpatient visits: 99,389.

PeaceHealth Sacred Heart Medical Center at RiverBend

Opened in 2008 and located less than 10 miles from an older hospital with virtually the same name, Sacred Heart Medical Center at RiverBend quickly came to house many general hospital services that were moved from its nearby sister, PeaceHealth Sacred Heart Medical Center University District.

Earlier this year, the RiverBend hospital moved its urgent care clinic to a new space at Gateway Marketplace in Springfield, in an effort to improve access and lessen the confusion of patients, some of whom mixed up urgent care with the hospital's emergency department.

Rand O’Leary is chief administrative officer of both hospitals that bear the PeaceHealth Sacred Medical Center name. He joined the nonprofit in 2014, after working at a Michigan hospital, and his executive compensation at PeaceHealth is not available.

Prior to O’Leary’s appointment, John Hill – who left PeaceHealth in May 2015 – oversaw the Sacred Heart hospitals as senior vice president and CEO of the nonprofit chain’s Oregon West Network. Hill’s 2012-13 total compensation was $395,691. He received $282,046 in base pay, $85,000 in bonuses and incentives, $15,930 in nontaxable benefits and $12,715 in other forms of compensation.

Finances, year 2014:

Profit: $95.5 million, up 132.9 percent from 2013.

Net patient revenue: $555.5 million, up 4.6 percent.

Reported charity care charges: $42.7 million, down 15 percent.

Profit margin:16.7 percent, compared to 7.5 percent the prior year.

Size and scope, as of 2014:

Available beds: 347.

Inpatient days: 108,520.

Emergency department visits: 49,601.

Outpatient visits: 104,250.

PeaceHealth Sacred Heart Medical Center University District

Once PeaceHealth’s major Eugene-Springfield-area hospital, Sacred Heart Medical Center University District is now dwarfed by the newer RiverBend hospital, although the older location continues to maintain its Oregon designation as an acute-care hospital. While the newer hospital has become more profitable and sees more patients, University District continues to host more outpatient visits than its nearby sibling.

Both PeaceHealth Sacred Heart hospitals are jointly managed. See the RiverBend hospital, above, for executive compensation details.

Finances, year 2014:

Net loss: $1.5 million, compared to a profit of $2.4 million in 2013.

Net patient revenue: $90.7 million, up 1.7 percent.

Reported charity care charges: $7.8 million, down 27.4 percent.

Profit margin: Negative 1.6 percent, compared to positive 2.6 percent the prior year.

Size and scope, as of 2014:

Available beds: 93.

Inpatient days: 24,415.

Emergency department visits: 26,272.

Outpatient visits: 110,362.

Courtney Sherwood is on Twitter at @csherwood. She can be emailed at [email protected].

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