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Hospital Financial Review: Reviewing Faith-Based Chains with Small Oregon Footprints

Two major Catholic chains and another affiliated with the Seventh-Day Adventist Church report stable year in Oregon, changes outside the state
June 8, 2016

They’re part of large faith-driven chains with billions of dollars in assets and clout across much of the United States, but the hospitals The Lund Report is examining this week are relatively small players in Oregon.

We’re looking at hospitals owned by very large nonprofits that all have a relatively small footprint in Oregon. Adventist Health operates a large hospital in Portland and a small one at the coast. Catholic Health Initiatives and Trinity are major players elsewhere in the U.S., but run relatively small and rural hospitals in Oregon.

Providence Health and PeaceHealth, which we analyzed in earlier stories, are faith-based as well, but these two nonprofit chains each have a much larger footprint in the Pacific Northwest, and less clout in the rest of the country. Samaritan Health, based in the mid-Willamette Valley, is Christian, but it’s also a local nonprofit with no reach beyond Oregon, and will be examined in a future installment.

Today, we are focused on three faith-based chains based outside the state that each run two hospitals in Oregon: Adventist Health, Catholic Health Initiatives and Trinity Health.

For the fourth year, The Lund Report is digging into the money and operations of Oregon’s hospitals. In our first three stories, we examined Providence Health and Services, Kaiser Permanente and Asante, and PeaceHealth.

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.

Catholic Health Initiatives

Founded in 1996 when four 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, and has assets totaling $23.7 million, making it the nation’s second-largest nonprofit healthcare system. Yet CHI has a small presence in Oregon, with just two hospitals in the state.

Two major ratings agencies have downgraded CHI’s debt ratings this spring.

In April, Standard & Poor’s Rating Services lowered its long-term ratings for CHI's debt to A-, from A, and said the chain's outlook is negative, citing concerns about "persistent and large operating losses"

in May, Moody's Investor Service downgraded CHI's long-term debt to A3, from A2, a move that affects about $7.3 billion of CHI's total $9 billion in debt. Moody's said the downgrade reflected weak operating performance across multiple markets, and that the outlook for the chain was negative.

CHI’s turnaround plan includes job cuts and the sale of assets. At the start of the year, it began a massive layoff of 1,500 people nationwide – about 1.5 percent of its workforce.

It is also selling 52 medical office buildings for $725 million. These buildings are in ten states, including Colorado and Washington, but not Oregon. So far, $324 million of the sales have been completed, with Wisconsin-based medical real estate investment fund Physicians Realty Trust as the buyer.

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, the hospital and medical clinics it is associated with operate under the label 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. In October, it treated many of the victims of the mass shooting at Umpqua Community College.

Finances, year 2014:

  • Net income: $27,745,000, up 25.64% from 2013.
  • Net patient revenue: $184,788,000, up 5.06%.
  • Charity care: $10,114,000, down 27.73%.
  • Profit margin: 13.52%, up from 11.75% a year earlier.
  • Size and scope, 2014:
  • Available beds: 129, down from 141 last year.
  • Inpatient days: 25,477, down 3.72%.
  • Emergency department visits: 39,736, down 4.34%.
  • Outpatient visits: 363,223, up 5.76%.

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. In April, St. Anthony opened an outpatient pain clinic out of its day surgery department.

Finances, year 2014:

  • Net income: $1,731,801, down 87.18% from 2013.
  • Net patient revenue: $58,249,613, up 16.1%.
  • Charity care: $1,879,091, down 32.5%.
  • Profit margin: 3.24%, down from 22.93% a year earlier.
  • Size and scope, 2014:
  • Available beds: 25, the same as last year.
  • Inpatient days: 4,359, down 3.84%.
  • Emergency department visits: 12,745, up 13.39%.
  • Outpatient visits: 70,967, up 3.43%.

Trinity Health

While CHI has been forced to roll back some of its aggressive growth, another national Catholic hospital chain is continuing to expand. Trinity Health – a name adopted in 2014, after previously going by CHE Trinity Health – has 92 hospitals, up from 86 a year ago, and hundreds of health facilities spread across 21 states.

In May, Trinity settled a lawsuit out of Connecticut over whether faith-based institutions have to follow federal pension rules. It agreed to pay $107 million over 10 years toward employee pensions.

With $20.4 billion in assets, Michigan-based Trinity is just slightly smaller than CHI – and in Oregon, its footprint is similar to the larger nonprofit. Each operates two hospitals in the state.

Trinity’s Oregon facilities are run through its St. Alphonsus Health Systems subsidiary, based in Boise, which 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.

Finances, year 2014:

  • Net loss: $1,027,205, compared to a net loss of $653,287 last year.
  • Net patient revenue: $31,341,047, up 4.23%.
  • Charity care: $1,033,940, down 28.79%.
  • Profit margin: negative 3.2%, down from negative 2.11% a year earlier.
  • Size and scope, 2014:
  • Available beds: 25, the same as last year.
  • Inpatient days: 8,976, down 23.95%.
  • Emergency department visits: 7,252, up 6.77%.
  • Outpatient visits: 26,235, up .35%.

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.

Finances, year 2014:

  • Net loss: $60,930, compared to a net loss of $1,669,303 last year.
  • Net patient revenue: $56,831,208, up .79%.
  • Charity care: $5,512,586, down 2.26%.
  • Profit margin: negative .1%, up from negative 2.76% a year earlier.
  • Size and scope, 2014:
  • Available beds: 49, the same as last year.
  • Inpatient days: 7,166, up 2.86%.
  • Emergency department visits: 16,360, down 13.2%.
  • Outpatient visits: 65,822, down 16.25%.

Adventist Health

Affiliated with the Seventh-day Adventist Church, Roseville, California-based Adventist Health runs 19 hospitals as well as a network of clinics and other health programs across Hawaii, Washington, California and Oregon.

The Adventist network expanded in 2015 when it took over Lodi Health in California. In May, it announced it was moving forward with plans to build a new 250,000-square-foot corporate campus in Roseville, California. The nonprofit has assets of $1.6 billion.

Adventist Medical Center

Adventist Medical Center serves east Portland, an area where low- and moderate-income households are moving as gentrification spreads in the central city.

That demographic shift may one reason that Adventist is one of the only hospitals in Oregon to see charity care spending climb in 2014. With the Affordable Care Act drastically expanding access to health care, most hospitals reported a dramatic drop in charity care spending in their 2014 data, the most recent full-year available. But Adventist in Portland saw a 4.1 percent climb – though with more patients able to pay their bills, overall uncompensated care did drop.

Like many hospitals across the state, Adventist Medical Center acts as a hub within a network of clinics and health facilities. It is currently looking for new sites to expand its outpatient care offering in the Portland metro area, and has hired a Texas consultant to aid in that search.

Finances, year 2014:

  • Net income: $5,464,342, up 97.54% from 2013.
  • Net patient revenue: $303,711,223, up 9.27%.
  • Charity care: $18,847,471, up 4.11%.
  • Profit margin: 1.55%, up from .86% a year earlier.
  • Size and scope, 2014:
  • Available beds: 248, the same as last year.
  • Inpatient days: 44,894, up 1.75%.
  • Emergency department visits: 53,001, up 6.26%.
  • Outpatient visits: 480,573, up 5.28%.

Tillamook Regional Medical Center

Tillamook County residents built their community hospital at a cost of $1.2 million in 1950. In 1973, the county signed an agreement to have Adventist operate the site under an agreement that continues through 2045. In 2013, Adventist opened Tillamook Medical Plaza immediately east of the hospital.

Officials at Tillamook Regional Medical Center in May launched an effort to better understand cancer treatment and diagnosis within the community. Beginning with a survey of local residents, they aim to ultimately develop a comprehensive plan for better supporting cancer patients and survivors.

Finances, year 2014:

  • Net income: $1,459,095, up 117.6% from 2013.
  • Net patient revenue: $62,591,143, up 16.75%.
  • Charity care: $3,246,625, down 49.39%.
  • Profit margin: 2.31%, up from 1.2% a year earlier.
  • Size and scope, 2014:
  • Available beds: 25, the same as last year.
  • Inpatient days: 2,908, up .45%.
  • Emergency department visits: 9,359, up 3.72%.
  • Outpatient visits: 67,244, up 27.21%.

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