Skip to main content

Hospitals Spent $65 Billion on Medical Services, Construction, IT Services

The details come from the independent contractor reports filed with the IRS.
January 20, 2017

Oregon hospitals spent $33.3 billion on independent contractors during 2014, according to a detailed analysis by The Lund Report. Providence Health & Services, which had contracts with Salem Health and PeaceHealth and Oregon Health & Science University, spent $152 million at those institutions, while OHSU emerged as having the highest number of contracts at other hospitals. These details were disclosed in the IRS 990 filings reported to the Oregon Justice Department.

In 2013, Oregon hospitals reported spending $32 billion on medical services, construction and IT services. And, only a smattering of hospitals – 10 in all -- have filed their 990s for 2015, and listed expenditures totaling more than $119 million.

What kind of services typically fall into the independent contractor category? Everything from IT consulting to laboratory services, new construction, medical services and pharmaceutical support.

Every nonprofit hospital is required to list the five highest paid independent contractors who earned more than $100,000 and describe those services in their annual income tax filing.

Of all the hospitals in Oregon, only one – Salem Health – did not report any independent contractor expenditures during 2014. However, during the previous year, it spent slightly more than $10 million, with Phoenix Health Systems in Houston garnering the largest amount, $3.1 million, followed by Epic Systems Corp., and Owens and Minor, receiving $4.1 million for consulting services.

Meanwhile, all of Kaiser Permanente’s expenditures were for medical services outside Oregon. Kaiser Foundation Hospitals in Pasadena received the highest amount in 2014, $15 million and The Permanente Medical Group was paid $10 million that year.

Providence and OHSU Stand Out

Both Providence Health & Services and Oregon Health & Science University were the top spenders compared to other hospital systems. .

Providence reported spending $346,994,517 at its own hospitals in 2014, and also had contracts with Salem Health ($63 million), OHSU ($52 million), PeaceHealth ($37 million) and PacifiCare Behavioral Health ($33 million) during the same year.

In 2013, Providence paid $32 million to Oregon Emergency Physicians, $20 million to Andersen Construction and $9 million to The Oregon Clinic.

In both those years, Providence also spent $2.7 million on billing and patient services at Silverton Hospital. Providence had hoped to lure Silverton Health into its network, but Legacy Health ended up on top. The following year Silverton chose Legacy Health.

Oregon Health & Science University is not required to file income tax reports with the Justice Department. But, when digging into the other hospital filings, it emerged as having the most contracts for medical services around the state including PeaceHealth (neonatal services), Mid-Columbia Medical Center (specialty clinic providers), two of the Legacy Health hospitals – Emanuel and Good Samaritan as well as the entire Providence system. All told, OHSU brought in $64 million during 2013 and 2014.

Other Top Expenditures

At the four Legacy hospitals in Oregon – Emanuel, Good Samaritan, Mount Hood and Meridian Park, along with its corporate office, the system spent $43 million in 2013 on independent contractors, and $51 million the following year.

The expenditures for information systems at Legacy Health consumed the largest portion of those dollars, $31.2 million in both years with contracts to Epic Systems, CDW Government and Microsoft Licensing, among others.

Also:

  • Baugh Skansa was paid $17 million for construction projects at Legacy Emanuel, Meridian Park and Mount Hood. Also, Legacy Emanuel paid $16 million to Trauma Specialists LLP in both years, while Renal Care Group NW earned $1.9 million from Legacy Good Samaritan, Mt. Hood and Meridian Park.
  • Oregon Anesthesiology Services garnered close to $6 million by providing services to Portland Adventist Medical Center, Salem Hospital and Legacy Mt. Hood.
  • Salem Health spent $1.4 million on services from PeaceHealth Laboratories in 2014, while Providence Health & Services and Silverton Health also used its services, slightly more than $37 million.
  • Oregon Emergency Physicians took home $32 million from Providence Health & Services in 2013, and The Oregon Clinic received $9 million. Neither group earned any revenue during 2014 from Providence. Instead Salem Hospital appeared to be the big winner that year, at $63 million.
  • The Corvallis Clinic was paid $3.2 million by Samaritan Health Services in 2013, but nothing showed up in the 2014 filings, while Legacy Laboratory Services brought home $2.7 million the following year.
  • A Chicago-based firm hired by PeaceHealth, Huron Consulting Service, was paid $25.3 million to boost its revenue and decrease costs. PeaceHealth also paid NurseFinders LLC $15 million for staffing services, and another $4.2 million to Cogent Healthcare of Washington for hospitalist and intensivist services.
  • MRI services took a toll at St. Charles Health System which wrote checks totaling $38 million to Cascade Medical Imaging and another $21 million on construction projects.
  • Cardiac services absorbed $12 million at Asante Health with those dollars going to Southern Oregon Cardiology LLC and CVISO Management LLC.

Construction Projects Underway

Grande Ronde Hospital in LaGrande spent $7 million on its new construction project in 2014. Last year the hospital announced that two strategic projects had been completed, the GRH Elgin Clinic interim facility and the GRH Regional Medical Plaza.

Slightly over $6 million was spent by Good Shepherd Medical Center in Hermiston to accommodate its education and wellness department with Pendleton’s McCormack Construction Company and PKA Architects of Portland in charge of the expansion.

Sellen Construction of Seattle built a new hospital for St. Anthony in Pendleton garnering $48 million in construction costs during 2013 and 2014. In total, the complex cost $74 million.

To look at the detailed reports of independent contractor expenditures from 2013 through 2015, click here.

Diane can be reached at [email protected]

Comments