As PeaceHealth profits climb, Catholic chain agrees to pay “little guy” more at two Oregon hospitals

Hospital financial review finds charity care continues to drop, revenue after expenses up 58.4 percent to $114.5 million.

After years of scrutiny for the high salaries it pays top executives – and its more recent pattern of offering large compensation packages to former bigwigs while offering little compensation to rank-and-file workers when their jobs are cut – this week workers at PeaceHealth had cause for celebration. More than 1,000 employees of the Catholic health chain won a victory for “the little guy” when they ratified a contract that will give cooks, cleaners and certified nursing assistants a guaranteed across-the-board wage 8 percent wage increase at hospitals in Eugene and Springfield. Over the next three years of their first union contract, those unionized employees will see their paychecks increase by 21 percent on average.

Of course, the 8 percent single-year pay increase at two of the chain’s 10 hospitals comes after PeaceHealth reported a much larger increase in profits. Revenue after expenses climbed 58.4 percent in 2014 from the year before, to $114.5 million.

As reported earlier by The Lund Report, PeaceHealth has a history of treating its highest-paid employees as though they belong to a special class – even when it terminates their employment. For the highest-ranking workers of PeaceHealth, getting kicked to the curb often includes a bonus – or “separation benefit.” The company spent $22.7 million on these payments in the three-year period from June 2012 through June 2015, as at least a dozen executives left. Employees with less clout report terminations they see as unjust – with benefits cut off immediately and at least two workers reporting they were fired from their PeaceHealth doctors at the same time as they lost their jobs. Click here to read more.

Much of the financial growth at PeaceHealth seems to be because of a continuing drop in uncompensated care, which has been falling for years across the U.S. due to expanded insurance coverage under the Affordable Care Act. PeaceHealth’s small Cottage Grove hospital saw charity care drop 30 percent in 2014; its Peace Harbor Hospital reported a 33.3 percent drop; in Eugene, PeaceHealth hospital charity care fell 27.4 percent, and in Riverbend it was down 15 percent.

That’s among the findings in this our third story look at hospital finances.

For the fourth year, The Lund Report is digging into the money and operations of Oregon’s hospitals. In our first two stories, we examined Providence Health and Services, Kaiser Permanente and Asante. Now we take an in-depth look into 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 also look at every general admitting hospital in the state.

PeaceHealth

PeaceHealth was founded more than a century ago by nuns, and has since grown to become a major force in Pacific Northwest healthcare, with a three-state network of clinics, labs and hospitals. The chain now operates ten hospitals in Oregon, Washington and Alaska.

Previously based in Bellevue, Wash., the nonprofit expanded into the Portland-metro area beginning in 2011, when it acquired Southwest Washington Medical Center and a few months later decided to move its headquarters to Vancouver.

Since then, the chain has continued to grow, largely by inking deals to manage public hospitals in Washington state. Because of its Catholic affiliation, some communities have raised concerns that patients in PeaceHealth-served communities may not have access to certain forms of reproductive and end-of-life care.

The figures show the pace of PeaceHealth’s growth despite those concerns. The nonprofit had 17,776 full-time, part-time and temporary employees in 2014, up substantially from the 12,633 workers it employed the year before. That staffing growth has been matched by a rapid uptick in profits. Revenue less expenses was $114.5 million in 2014, up from $72.3 million the prior year.

PeaceHealth Cottage Grove Community Hospital

With just 14 beds, PeaceHealth Cottage Grove Community Medical Center is the second smallest hospital in Oregon -- only six-bed West Valley Hospital is smaller. Located about 23 miles south of Eugene and Springfield, it offers general services and emergency care, but has no surgery or routine childbirth services.

The original Cottage Grove Hospital declared bankruptcy in 1998, when PeaceHealth stepped in – keeping minimal services in place at first, and then later expanding the hospital.

Finances, year 2014:

Net income: $1,185,824, up 119.55% from 2013.

Net patient revenue: $26,275,868, up 27.91%.

Charity care: $1,193,521, down 29.92%.

Profit margin: 4.26%, up from negative 26.63% a year earlier.

Size and scope, 2014:

Available beds: 14, the same as last year.

Inpatient days: 1,305, up 37.8%.

Emergency department visits: 11,907, up 13.38%.

Outpatient visits: 37,445, up 6.22%.

PeaceHealth Peace Harbor Hospital

Designated a critical access hospital in recognition of its small size and limited resources, Florence-based PeaceHealth Peace Harbor is in the coastal community of Florence, about 70 miles of Springfield and Eugene. Its remote location and small size have made recruiting physicians a challenge for Peace Harbor, with Chief Administrative Officer Rick Yecny saying that modern healthcare demands create financial challenges for rural hospitals like his.

Phase one of a $5.4 million expansion debuted in March, allowing the hospital to open part of its new 5,000-square-foot emergency room, funded through a $5 million campaign that the local Siuslaw News newspaper described as the largest fundraising effort in the history of Florence. Construction is expected to continue into September.

Finances, year 2014:

Net income: $2,182,596, down 3.49% from 2013.

Net patient revenue: $64,338,227, up 9.6%.

Charity care: $3,239,878, down 33.26%.

Profit margin: 3.2%, down from 3.63% a year earlier.

Size and scope, 2014:

Available beds: 21, the same as last year.

Inpatient days: 3,579, up 5.86%.

Emergency department visits: 8,064, up 6.54%.

Outpatient visits: 99,389, up 13.24%.

PeaceHealth Sacred Heart-Riverbend

Opened in 2008, Sacred Heart Medical Center at Riverbend is less than 10 miles from its Eugene-based sister hospital, PeaceHealth Sacred Medical Center University District. The newer

location, in Springfield, has come to house many general hospital services that were previously in Eugene.

More recently, the Riverbend hospital has been developing community programs that go beyond its physical campus. Last year, it moved its urgent care clinic to Springfield’s Gateway Marketplace, in an effort to improve access and lessen the confusion of patients, some of whom mixed up urgent care with the emergency department. This year, Riverbend broke ground on a four-building, 52-room Alzheimer's care center, scheduled to open in early 2017.

Doctors at Riverbend, as well as the University District hospital, recently raised alarms about staffing levels, saying in February that physician hospitalist levels have dropped significantly in the past year, and that a nursing shortage could be putting patients at risk.

Finances, year 2014:

Net income: $95,485,043, up 132.92% from 2013.

Net patient revenue: $555,540,286, up 4.64%.

Charity care: $36,294,425, down 14.98%.

Profit margin: 16.69%, up from 7.45% a year earlier.

Size and scope, 2014:

Available beds: 347, the same as last year.

Inpatient days: 108,520, up 7.86%.

Emergency department visits: 49,601, up 7.57%.

Outpatient visits: 104,250, up 8.49%.

PeaceHealth Sacred Heart-University District

Thought it was once PeaceHealth’s major Eugene-Springfield-area hospital, in the eight years since its Springfield-based sister medical center has opened, Sacred Heart-University District is now considered a specialty hospital, though it maintains its acute-care designation.

While the newer hospital has become more profitable and sees more patients, University District continues to host more outpatient visits than its nearby sibling.

As at the Riverbend location, doctors at University District have raised alarms about staffing levels, saying PeaceHealth has too few hospitalist physicians and nurses on staff in the Eugene-Springfield area.

Finances, year 2014:

Net loss: $1,469,414, compared to net income of $2,416,819 last year.

Net patient revenue: $90,685,009, up 1.68%.

Charity care: $7,553,177, down 27.37%.

Profit margin: negative 1.55%, down from 2.6% a year earlier.

Size and scope, 2014:

Available beds: 93, the same as last year.

Inpatient days: 21,415, up 11.03%.

Emergency department visits: 26,272, up 8.99%.

Outpatient visits: 110,362, up 5.23%.


Courtney Sherwood covers money, data and public records for The Lund Report. Reach her at [email protected], or follow her on Twitter at @csherwood.

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