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Hospital Financial Review: OHSU adds hospital clout through partnerships in Salem, Hillsboro

OHSU, with $2.4 billion annual operating budget, inks deals to combine budgets with Salem Health, Tuality Healthcare
June 15, 2016

Networks are the name of the game at Oregon’s largest medical institution. Oregon Health & Science University has always had a long reach across the state, thanks to relationships it has developed with other hospitals. Now it’s cementing its role, and its clout, with the new OHSU Partners subsidiary.

This subsidiary is at the heart of arrangements to bring Salem Health and Tuality Healthcare into the OHSU family. Both smaller institutions will remain independent on paper, and will control their assets at the local level. But they’ll also merge finances and operational decision-making into the larger institution.

For the fourth 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, Kaiser Permanente and Asante, PeaceHealth, three faith based chains with small Oregon footprints.

The figures underpinning these examinations come from multiple sources:

  • Hospital-specific profit, revenue and charity care figures come from audited financial 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.
  • Additional financial details about hospital chains come from IRS 990 forms and from the systems’ own unaudited reports.

At a later date, we also intend to report on the executive compensation, including bonuses, paid to hospital executives throughout Oregon. Over the coming weeks, we will look at every general admitting hospital in the state.

Oregon Health & Science University

OHSU is a state-chartered public corporation, which operates a medical, nursing, dental and pharmacy school, a network of clinics, multiple research centers and a major hospital. Its annual operating budget is about $2.4 billion, and it employs roughly 15,098 people.

Today’s OHSU can trace its earliest origins to a medical school founded at Salem’s Willamette University back in 1867. Its progenitors also include a Portland-based University of Oregon medical school founded in 1887, two separate dental programs started in the late 1890s, and a number of other hospitals and clinics established over more than a century. In 1974, the descendants of these programs were combined into the single University of Oregon Health Sciences Center, which was renamed Oregon Health Sciences University in 1981.

OHSU got its current name, Oregon Health & Science University, in 2001, when it merged with the Oregon Graduate Institute of Science and Technology.

OHSU is a major medical school and research institution, with a 166-acre campus atop Portland’s Marquam Hill connected by aerial tram to its Center for Health and Healing on the city’s South Waterfront. But its reach can be felt across the state. OHSU has campuses in Ashland, Klamath Falls, La Grande and Monmouth.

As of 2015, OHSU is also newly tied to two additional hospitals networks, based in Salem and Hillsboro. Through subsidiary OHSU Partners, the Portland-based intuition is tying its financial fate to Salem Health (parent company of Salem Hospital and West Valley Hospital) and Tuality Healthcare, which operates two hospitals in Washington County.

OHSU Hospital

OHSU Hospital, Oregon Health & Science University’s main inpatient facility, is the state’s only academic medical center, and is one of the busiest hospitals in Oregon. With 551 beds, OHSU draws patients from across the state and beyond, many of whom travel to Portland for the expert care its specialists provide.

OHSU reported the most revenue of any Oregon hospital, by far, reflecting its role as an academic research institution that provides a disproportionate share of the state’s complex, high-cost treatments.

Finances, year 2014:

  • Net income: $116,349,256, up 33.41% from 2013.
  • Net patient revenue: $1,294,299,461, up 9.08%.
  • Charity care: $69,710,175, down 20.69%.
  • Profit margin: 8.52%, up from 7.02% a year earlier.

Size and scope, 2014:

  • Available beds: 551, up from 529 the prior year
  • Inpatient days: 162,281, down .41%.
  • Emergency department visits: 37,145, up 2.02%.
  • Outpatient visits: 858,241, up 2.77%.

Salem Health

Salem Health operates Salem Hospital, West Valley Hospital, a rehab center, and the Willamette Health Partners network of clinics. Salem Health ended its 2013-14 fiscal year with $625 million in net assets, up from $565.96 million a year earlier. Its revenue after expenses was $39.5 million in FY13-14, up from $35.3 million the prior year.

Though still independent as of the most recent financial reports, Salem Health has agreed to join OHSU in a partnership that will keep each institution separate on paper, while merging their finances.

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.

Finances, year 2014:

  • Net income: $58,487,750, down 4.69% from 2013.
  • Net patient revenue: $584,345,439, up 9.88%.
  • Charity care: $30,423,762, down 45.93%.
  • Profit margin: 9.16%, down from 10.34% a year earlier.

Size and scope, 2014:

  • Available beds: 390, the same as the prior year.
  • Inpatient days: 105,047, up 6.95%.
  • Emergency department visits: 94,294, up 1.03%.
  • Outpatient visits: 334,923, down .47%.

Salem Health 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.

Finances, year 2014:

  • Net income: $1,917,861, up 94.21% from 2013.
  • Net patient revenue: $22,541,103, up 10.16%.
  • Charity care: $1,359,292, down 37.97%.
  • Profit margin: 8.43%, up from 4.72% a year earlier.

Size and scope, 2014:

  • Available beds: 6, the same as the prior year.
  • Inpatient days: 571, up 6.53%.
  • Emergency department visits: 12,725, up 5.39%.
  • Outpatient visits: 78,543, up 11.75%.

Tuality Healthcare

Founded in 1918, Tuality Healthcare is a nonprofit with a health plan, an education center and two hospitals, located in Forest Grove and Hillsboro. It employs 1,400 people over all. Though Tuality’s two hospitals have different names, buildings and locations, they report their financial results as a single entity.

Though still independent as of the most recent financial reports, Tuality – like Salem Health – has agreed to join OHSU in a partnership that will keep each institution separate on paper, while merging their finances.

Finances, year 2014:

  • Net income: $1,947,600, up 67.1% from 2013.
  • Net patient revenue: $159,179,200, up 6.5%.
  • Charity care: $9,795,033, down 19.71%.
  • Profit margin: 1.11%, up from .71% a year earlier.

Size and scope, 2014:

  • Available beds: 148, the same as last year.
  • Inpatient days: 19,844, down 5.03%.
  • Emergency department visits: 38,273, down 2.%.
  • Outpatient visits: 255,289, up 1.09%.

Courtney Sherwood can be reached at [email protected]. Follow her on Twitter at @csherwood.