This article has been updated to incorporate additional reporting.
Oregon Health & Science University and Portland-based Legacy Health hospital chain have submitted their long-awaited application for state approval of a proposed merger, launching a new phase of scrutiny for the proposed deal.
Having announced the idea more than a year ago, the public research university and six-hospital nonprofit hospital system on Thursday submitted their application to the state office that reviews large health care transactions for potentially harmful effects on patients and employees. If the deal is approved, Legacy would become part of OHSU, making the combined hospital system a powerhouse in Oregon health care.
OHSU contends Oregonians, particularly those in underserved communities, would benefit from the merger. University leadership claims patients would see shorter wait times for care and improved access to clinical trials and research. OHSU has committed to investing $1 billion in upgrades to buildings and other infrastructure at Legacy.
In a brief interview with The Lund Report, OHSU President Danny Jacobs said, “We call it, ‘right here, right place, right time, better together than either organization separately,’” he said.
Numerous researchers contend that consolidation is driving health care costs up, and many providers believe it is also hurting care quality and access.
Jacobs, however, told The Lund Report that that is not true in all cases. He said that if mergers emphasize integration and balance then costs can go down.
The state’s merger-review website indicates that the filing for the deal will be posted once regulators deem it complete. However, OHSU posted the filing on its website.
Both systems, and particularly Legacy, have been reporting losses. OHSU has committed to making no layoffs in the six months after any merger, but recently laid off about 500 employees.
Jacobs hopes the merger will stabilize finances and minimize the need for layoffs. “We can’t cut our way to success,” he added.
For instance, he indicated that lower bed occupancy rates at Legacy would allow OHSU to essentially farm out lower-intensity care to Legacy, opening up beds for more profitable procedures and surgeries — in keeping with recent leadership priorities intended to increase the university system's profitability.
“We have limited capacity at OHSU, which interferes with our ability to provide the services that only OHSU folks can provide,” Jacobs said.
The unions representing most of the employees of the two health systems —Service Employees International Union, Oregon AFSCME and the Oregon Nurses Association — on Thursday issued a joint statement endorsing the merger.
The deal, in which OHSU will basically absorb Legacy, is more complicated than some mergers and hospital acquisitions in part because OHSU is a public corporation, essentially a government agency, that was granted a measure of independence by the Oregon Legislature in 1995.
