Hospitals in Depth: Adventist, Tuality Rely on Partnerships as they Navigate Politically Confused Times

Tuality Heath’s financial loss was $233,771 in the most recent fiscal year, while Adventist shows improvement after loss.

Editor's note: This story was initially published with 2015 financial data from Adventist's tax filings to the IRS. It has been updated to include more recent 2016 figures from audited reports provided by the health care organization's leaders, which show profits in the most recent year.

A wave of consolidations is reshaping hospital organizations across the U.S. But for the two health systems we are looking at this week, partnerships and affiliations, rather than mergers and acquisitions, are guiding efforts to weather a turbulent era of healthcare policy.

Adventist Health has joined with one consortium to help fund housing and clinics for the poor, and another to support emergency mental health needs – in both cases, saying that these programs will improve its ability to perform its mission. Tuality, meanwhile, has partnered with Oregon Health & Science University to bring more specialists to its Hillsboro campus in an arrangement that OHSU helps will alleviate crowding at the larger hospital.

That’s among the details we’ve found in this second 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.

In our next story, we’ll look at Salem Health, which briefly partnered with OHSU before going its own way, and also nearby Santiam Hospital, which is trying to stay independent despite the industry’s widespread consolidation.

Adventist Health

Affiliated with the Seventh-day Adventist Church, Roseville, California-based Adventist Health-West runs 19 hospitals as well as a network of clinics and other health programs across Hawaii, Washington, California and Oregon – but it is about to get slightly smaller.

Adventist is closing its Walla Walla General Hospital in central Washington this summer, after an effort to transfer its ownership to Providence Health and Services fell apart. The nonprofit had invested more than $68 million into that hospital over several years, but was not able to consistently turn a profit.

System-wide, Adventist has also struggled to turn a profit. In IRS filings, it reported a net loss of $14.997 million in 2015, the most recent year for which those financial figures are available, and a net loss of $20.9 million in 2014. IRS reporting requirements often yield different figures than other accounting standards. In reports audited by Ernst and Young, Adventist West fared drastically better than on its IRS forms, reporting a net profit of $237.6 million in 2015, and of $165.9 million in 2016.

Adventist West CEO Scott Reiner had total compensation in 2015 of $1.7 million: $962,984 in base pay, $298,366 in bonuses, $227,469 in retirement and other deferred compensation, $34,190 in nontaxable benefits, and $264,690 in other forms of reportable compensation. President Bill Wing received $1.5 million in total compensation: $814,628 in base pay, $250,491 in bonuses, $192,782 in retirement and other deferred compensation, $35,618 in nontaxable benefits, and $180,369 in other forms of reportable compensation.

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.

Adventist Medical Center is in financially solid shape on both IRS reports and its audited financial statements. According to tax filings – which are only available through 2015 – it had net income of $7.2 million that year, and net income of $5.2 million in 2014. More recent reporting to state regulators put the hospital’s total margin at $11.4 million in 2016, a 58.8 percent climb. Ernst and Young audits confirm the $7.2 million net income for 2015, and report that the Portland hospital had a $14.7 million net income in 2016.

Adventist is also very busy. In late 2016, it announced it would be one of six health organizations funding a $21.5 million Central City Concern-led effort to address homelessness and health needs side by side. Adventist gave $1.5 million to the program

Last year it opened a new urgent care clinic at its Parkrose Medical Plaza, its third in the Portland area.

Adventist Health, Kaiser Permanente, Legacy Health and Oregon Health & Science University all partnered to open the Unity Center at the start of this year, the first dedicated psychiatric emergency room. When it opened, Adventist transferred its inpatient behavioral health units there.

In May, Adventist announced plans to partner with Northwest Cardiovascular Institute, which would make six NWCI cardiolotigsts already practicing on the Adventist campus into employees of the hospital, along with four other cardiologists, and could add a heart and vascular clinic in McMinnville to the Adventist family. This project is expected to be complete this by end of summer.

And in June, Adventist opened an emotional wellness center to offer intensive outpatient and partial hospitalization programs for people with behavioral and mental health needs.

Joyce Newmyer, president of Adventist’s Pacific Northwest region, had total compensation of $786,517 in 2015, twice what she made the year before – though she only started the job midway through 2014, which likely accounts for the large leap. David Russell is president and CEO of Adventist Health Portland as of August 2016 – Newmyer previously held that role while also managing the entire region. In 2015, while still serving as chief operating officer and senior vice president, Russell’s total compensation was $220,512.

Finances, year 2016:

  • Total margin: $11,352,285, up 58.8%
  • Net patient revenue: $286,705,777, virtually unchanged from 2015.
  • Charity care: $6,452,865, down 27.5%

Size and scope, 2016:

  • Available beds: 248, unchanged from 2015.
  • Inpatient days: 42,140, up 1.7%
  • Emergency room visits: 55,370, up .7%
  • Outpatient visits: 485,920, up 3.4%

Revenue sources:

  • Medicaid: 10.9%
  • Medicare: 25.2%
  • Commercial insurance: 43.6%
  • Self-pay: 2.5%
  • Other: 17.7%

Tuality Healthcare

Founded in 1918, Tuality Healthcare is a nonprofit with a health plan, an education center and a downtown Hillsboro hospital. It employs over 1,600 people. In nearly a century since its founding, it has moved its hospital several times, and expanded the reach of its services across much of Washington County.

Tuality is also the surviving partner to Oregon Heath & Science University in OHSU Partners, an LLC that originally also sought to include Salem Hospital before that organization backed out. Through its OHSU affiliation, Tuality is able to improve the access its patients have to radiation oncology treatment and OHSU specialists, as well as to research and clinical trials.

Hospital officials hope that the OHSU Partners arrangement improves Tuality’s bottom line, though it is too early to see results yet. The Washington County health system has struggled in recent years, reporting to the IRS that it had a system-wide net loss of $233,771 in its October 2015-June 2016 fiscal year, the most recent available. In FY 2014-15, losses were even steeper, $5,279,215. And in calendar year 2016, Tuality Hospital reported a negative total margin.

Tuality CEO and President Manuel Berman received total compensation of $465,879 in the 2015-16 fiscal year: $423,879 in base pay, and $42,000 in deferred compensation.

Finances, year 2016:

  • Total margin: negative $5,418,103, compared to negative $6,263,444 a year earlier.
  • Net patient revenue: $163,842,708, up 4.%
  • Charity care: $5,642,038, up 18.1%

Size and scope, 2016:

  • Available beds: 140, compared to 148 beds in 2015.
  • Inpatient days: 19,437, up 4.9%
  • Emergency room visits: 35,761, down 6.4%
  • Outpatient visits: 227,899, down 6.6%

Revenue sources:

  • Medicaid: 18.5%
  • Medicare: 42.3%
  • Commercial insurance: 38.3%
  • Self-pay: 2.4%

Reach Courtney Sherwood at [email protected].

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