For the third time in the past year, state health officials’ efforts to recruit and hire a new leader for the troubled Oregon State Hospital have fizzled, meaning a temporary fill-in superintendent will continue into next summer.
But considering how things looked earlier this year, the extension of retired executive Jim Diegel as interim superintendent might just have a “stabilizing” effect on operations at the state’s largest psychiatric facility, according to Dr. Debra Pinals. Pinals is a clinical psychiatrist and administrative expert that has been providing continuing oversight of the state hospital in connection with longrunning civil rights litigation.
The state has faced a crush of court orders, new fines and related legal battles in connection with its behavioral health system. On Monday, U.S. District Judge Adrienne Nelson ordered the Oregon Health Authority to pay more than $160,000 in fines for violations in June and July.
In June, Nelson had decreed that the state faces $500-a-day fines for each criminal patient who waits more than a week to be transferred from jail. She also promoted Pinals from her previous outside expert position to be a full-fledged court monitor — essentially making her Nelson’s appointed watchdog after the Oregon Health Authority was found in contempt of court for delaying treatment of criminal defendants at the Oregon State Hospital.
In her first public report since being promoted, Pinals found things may be looking up. For one things, there is the relative continuity offered by Diegel.
The hospital hasn’t had a permanent superintendent since Dolly Matteucci resigned in March 2024. She was followed by Dr. Sara Walker, who was also the hospital’s chief medical officer. Walker was asked to resign in April amid reports of patient safety concerns, including a fatality. Gov. Tina Kotek ordered the Oregon Health Authority to install new leadership. The agency replaced Walker temporarily with one of its own managers — causing Pinals to complain of a “significant vacuum" in leadership at the facility.
Diegel, a former executive with St. Charles Health System, was named to an interim position in June. The job was only supposed to last a few months, but his contract has been extended to June 2026..
Adding to the turmoil at the hospital was the resignation in July of Dr. Ryan Bell, the chief of psychiatry at the hospital who filled in as chief medical officer after Walker was removed. Bell resigned both positions in July saying he could not support leadership strategies and plans.
The Oregon Health Authority confirmed that it will resume recruitment for the superintendent’s position and the chief medical officer position starting next year. They will also be recruiting to replace the top leaders of psychiatry and nursing, since both positions are not filled by a permanent hire.
Fines mount
The fines issued on Monday are only the beginning of what the Oregon Health Authority estimates could cost up to $7 million a year. The state has notified the court it intends to appeal the fines, which are levied on a month by month basis.
The state did win some concessions from the court to exclude some days from being fined, including days when jails failed to transfer patients to the hospital despite a vacancy there.
In her report, Pinals estimated that it could take six months to a year for the hospital to reach compliance with the seven-day maximum waiting period. Currently, patients wait an average of 10 days before being admitted.
The money from the fines will be held in an account intended to benefit patients of the hospital, possibly in housing or diversion programs. Pinals will oversee its spending.
The goal of that spending will be to support alternative residential treatment options and open up space at the hospital.
State wants residential facilities to focus on criminal defendants
Lacking the capacity to admit criminal patients on a timely basis is expected to continue to cost the state tens of thousands of dollars, or more, each month. State health officials now hope to reduce that amount by using the capacity at local treatment facilities currently used by a variety of patients based on provider assessments of need.
Early this year, the state health authority started requiring residential treatment facilities in Oregon to prioritize acceptance of all patients that have been discharged from the state hospital — almost all of them criminal defendants.
But the Oregon Council for Behavioral Health, along with six residential treatment providers, have gone to court to block the state’s move, saying the influx of criminal patients will force out other, needier patients and add to the stress on facilities not designed for this purpose — while contributing to the stress on workers who’d been trained for different work. The case is pending before the Oregon Court of Appeals.
State officials maintain that since 2022, more than 600 beds have been added to residential treatment facilities across the state in part to help to treat patients the state hospital is unable to accommodate. The state expects another 46 to come online in the coming year.
Meanwhile, Oregon counties and local service providers are balking at a similar move by state health officials to divert county-level mental health spending to go to provide treatment and services to criminal defendants who are experiencing mental illness.
County officials complain that the state’s proposed changes would lead to cutting services for vulnerable people and increase the costs passed onto local governments. They’ve refused to sign new agreements that would mandate the changes. In response, the Oregon Health Authority has agreed to extend negotiations through the end of this year.
