This article has been updated with additional comment from Oregon Health & Science University.
One of the most influential voices in Oregon health care, former Gov. John Kitzhaber, has gone public with concerns that the proposed takeover of Legacy Health hospitals and clinics by Oregon Health & Science University “raises more questions than answers.”
Saying the merger could increase health care costs for consumers, Kitzhaber, in a new blog post Thursday, urged state leaders to explore alternatives such as adopting programs to help distressed hospitals such as already exist in Washington and California — which could be used to address Legacy’s recent spell of losses.
“Creating a near-monopoly in Portland is not the only solution here,” he wrote, “And it may not be the best.”
Asked for a response, a university spokesperson directed The Lund Report to the university’s online press release portraying the proposed merger as beneficial to the public, adding, “We value Gov. Kitzhaber’s input and look forward to additional engagement with state leaders and community members.”
The move by Kitzhaber is significant in part because of who he is — a longtime patron and ally of Oregon Health & Science University who helped make it what it is today. In 1995, he notes in his blog, he helped OHSU, then a public university, to achieve a level of semi-independence, operating under a board appointed by the governor.
At the time, lawmakers approved the legislation in exchange for various promises, including that the university would commit to follow Oregon’s public records and meetings laws except when it comes to extremely sensitive business secrets of the kind that its non-government competitors need not disclose. As a result of its public agency status, the university continues to receive state funding and lucrative benefits that include special statutory exemptions.
Kitzhaber contended the university has not made a cogent argument in support of the merger.
“There has been no clear articulation of why this transaction will be in the public interest—not only in the interest of Oregon consumers, but also in terms of addressing the larger challenges facing Oregon’s health care system: the escalating cost of premiums and deductibles, the lack of access to behavioral health, and the crisis in primary care,” he wrote. “This is a fair question because OHSU is not just another hospital system in the Portland metro area—it has a public mission.”
The university’s public application to the state to approve the merger was largely composed of aspirational assertions but was light on details to back them up, with key information kept under wraps or undisclosed. The application says both health systems will continue to lose money for years after a merger would be approved, and is not clear on how that trend would be reversed.
According to the university’s spokesperson, the press release summariing the application addresses Kitzhaber's concerns. The university contends the merger, if approved, would “expand access to high-quality, innovative care and leading-edge research. OHSU commits to outcomes that will benefit all people in Oregon, including shorter wait times for primary, specialty and hospital care, increased access to preventive care, clinical trials and innovative research that lead to improved care and outcomes, more virtual care options, and higher quality health care for all, including for people who are medically underserved.”
Kitzhaber acknowledged that Legacy is in “dire financial straits,” but said a bailout by the state may be preferable to a merger that could hurt access and increase costs.
Kitzhaber noted that the university’s promise to invest $1 billion to upgrade Legacy facilities would have to be repaid with increased profits, so “another fair question is how OHSU will raise the $1 billion ... what projected revenue stream will be used to service the debt?”
He added, “Is part of this strategy to extract higher rates from payers and, if so, what will this mean for the cost of premiums and deductibles paid by consumers in the Portland market? The clearest finding in the research on these kinds of hospital mergers is that they increase cost for consumers, without clear improvement in quality, access, or equity.”
