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PeaceHealth Undergoes Expansion While Laying Off Employees

The hospital system’s president and chief mission officer, Alan Yordy, continued to see his compensation climb, as did other PeaceHealth execs
May 1, 2014

Rapid growth and big ambitions have not been enough to shield one of the Pacific Northwest’s major hospital networks from layoffs and budget cuts.

With margins tight and expenses climbing, PeaceHealth has launched a plan to boost its core earnings by $130 million during the current fiscal year. It eliminated the equivalent of 500 positions through layoffs and by leaving open positions unfilled, and formed a partnership with The Vancouver Clinic physicians group in an effort to become more attractive to insurance companies.

As earlier stories in this ongoing Lund Report examination of Oregon hospitals have shown, PeaceHealth’s challenges are not unique. This story is the sixth in a series that is digging into the finances of more than 50 hospitals operating in the state. Earlier articles looked at hospitals owned by Providence, Legacy, Tuality, Salem Health, Kaiser Permanente, Asante, Samaritan and St. Charles.  Each story is providing a snapshot of the financial health of Oregon’s hospitals and their parent companies, and is reporting details of how executives are compensated, when available.

The figures underpinning these reviews 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.

  • Executive compensation figures come from the IRS 990 tax forms that all nonprofits are required to file.

  • Additional financial details about hospital chains come from IRS 990 forms and from the systems’ own unaudited reports.

In addition, The Lund Report is reviewing Medicare claims data from the American Hospital Directory and hospital debt information from bond databases. Click on the spreadsheets that accompany each article for a glimpse at the underlying data.

Later, we’ll dig deeper into executive compensation and also ask other questions that build on these initial stories: Do nonprofit hospitals spend enough caring for the poor? How is the Affordable Care Act reshaping hospitals in Oregon? Are these institutions making smart decisions about their money?

Expansion of PeaceHealth

PeaceHealth started more than a century ago with a few idealist nuns, and has since grown to become a major force in Pacific Northwest healthcare. The Catholic nonprofit employees 15,900 people across a three-state network of clinics, labs and hospitals.

Previously based in Bellevue, Wash., PeaceHealth 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, Wash.  

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

System-wide, PeaceHealth reported revenue of $2.1 billion and profit of $95.4 million in fiscal year 2013, which ended June 30 of last year. Documents filed with bond agencies show that those big numbers didn’t insulate the chain from financial pressures. Federal reimbursements for Medicare and Medicaid services have been going down. And, PeaceHealth’s Southwest Washington Medical Center lost an important contract with insurer Kaiser Permanente last year, when Kaiser chose Legacy Salmon Creek as its preferred hospital for roughly 100,000 members. Also, installing a two-part system-wide electronic medical records system is expected to cost $54.5 million during stage 1, scheduled to end this year, and another $277 million from 2014 through 2018.

Even in tight times, however, PeaceHealth’s executives continued to receive raises, according to the most recent available figures, which detail executive compensation during the year that ended June 30, 2012.

Alan Yordy, president and chief mission officer of PeaceHealth, had official base pay of $817,463 during the nonprofit’s 2011-12 fiscal year, but after adding bonuses and other sources of income, his compensation was much higher. According to PeaceHealth tax returns, Yordy received $182,243 in bonus and incentive pay; $243,620 in retirement and deferred compensation; $18,923 in nontaxable benefit; and $9,783 in other forms of compensation. All told, his 2012 compensation reached $1.27 million, up from $1.03 million a year before.

Click the accompanying spreadsheet for details on how other PeaceHealth executives were compensated over the two fiscal years for which the most recent details are available. 

Cottage Grove Community Medical Center

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

The original Cottage Grove Hospital declared bankruptcy in 1998, and the community would have been left without even emergency room access had PeaceHealth not stepped in. The Catholic nonprofit kept minimal services in place while it sought and received an exemption to Medicare and Medicaid rules that usually only allow rural hospital reimbursements for campuses located more than 35 miles from a larger hospital. With those higher reimbursements secured, PeaceHealth reopened more of the hospital, and later expanded it.

Finances, year 2012:

Net loss: $3.2 million, down from a $382,240 net loss in 2011.

Net patient revenue: $26.8 million, down 3 percent.

Reported charity care charges: $1.5 million, down 20.9 percent.

Profit margin: Negative 11.6 percent, compared to negative 1.4 percent a year earlier.

Size and scope, as of 2012:

Available beds:  14.

Inpatient days:  892.

Emergency department visits: 10,723.

Outpatient visits: 36,919.

PeaceHealth Peace Harbor Medical Center

Located in Florence, about 70 miles west of Eugene and Springfield, Peace Harbor is designated as a critical access hospital, a term often applied to smaller facilities with no more than 25 beds, and where average patient stays are no longer than 96 hours. Despite its size, this hospital does offer a full range of general acute-care services.

For two consecutive years, the Oregon Rural Healthcare Quality Network has recognized Peace Harbor Medial Center as a top-performer in three of four categories. It was applauded for minimizing hospital-acquired infections; for its immunizations against pneumonia; and for the quality of its patient discharge instructions. No other Oregon hospital was a top performer in so many categories.

Finances, year 2012:

Profit: $6.5 million up from a $519,312 net loss in 2011.

Net patient revenue: $62.4 million, up 11.9 percent.

Reported charity care charges: $4.4 million, down 28.6 percent.

Profit margin:  9.8 percent, compared to negative 0.9 percent a year earlier.

Size and scope, as of 2012:

Available beds:  21.

Inpatient days:  3,265.

Emergency department visits: 8,237.

Outpatient visits: 96,853.

PeaceHealth Sacred Heart Medical Center at RiverBend

Opened in 2008 and located less than 10 miles from the older University District hospital of the same name, Sacred Heart Medical Center at RiverBend quickly came to house many general hospital services that were moved from its nearby sister. As a tertiary referral center, RiverBend is Oregon’s only level-two trauma center south of Portland.

Finances, year 2012:

Profit: $30.7 million, up 15.3 percent from 2011.

Net patient revenue: $552.5 million, up 6.4 percent.

Reported charity care charges: $44.6 million, down 8.2 percent.

Profit margin:  5.4 percent, compared to 5.1 percent a year earlier.

Size and scope, as of 2012:

Available beds:  347.

Inpatient days:  96,593.

Emergency department visits: 44,385.

Outpatient visits: 97,885.

PeaceHealth Sacred Heart Medical Center, University District

Once PeaceHealth’s major Eugene-Springfield-area hospital, Sacred Heart Medical Center University District is now dwarfed by the newer RiverBend hospital. RiverBend reported more than five times the net patient revenue of University District in 2012, but the older location continues to maintain its Oregon designation as an acute-care hospital.

PeaceHealth has applied to the state of Oregon for a certificate of need to move inpatient services from older buildings on the University District campus to a refurbished tower. If the application is approved, PeaceHealth intends to spend about $48 million to complete the tower, likely to be funded via bond debt. The state has until April 2015 to rule on the application.

Finances, year 2012:

Net loss: $1.98 million, compared to a $9.7 million net loss in 2011.

Net patient revenue: $99.9 million, up 16.3 percent.

Reported charity care charges: $9.3 million, down 10 percent.

Profit margin: Negative 1.9 percent, compared to negative 10.9 percent a year earlier.

Size and scope, as of 2012:

Available beds:  93.

Inpatient days: 19,575.

Emergency department visits: 23,948.

Outpatient visits: 108,930.

Courtney can be reached at [email protected].


Submitted by Robin Cash on Sat, 05/03/2014 - 14:23 Permalink

In March, 2014, Dr. John Egar, a primary care physician who sees a thousand patients, wrote three letters to the editor of The Siuslaw News, Florence, Oregon, regarding health care delivery issues and costs.   
He was then fired "without cause" by PeaceHouse Medical group on On April 24th.

Here are Dr. Egar’s actual Letters:

2014 March 26  Price Transparency in Health Care

A patient asks their doctor, “What's it going to cost?” The doctor is likely to be stumped. Ask a dentist, a mechanic, or a travel agent before buying? No problem. But health-care costs are kept hidden from the physician---who shouldbe guiding patients through a maze of potentially bankrupting expenses.

There are some resources available for drug prices on the web, but our clinic uses a web-filtering service that blocks those sites from the doctor's view. Years ago, at a metropolitan clinic and hospital, I offered to write software that computed prices of prescriptions, but the administration told me they would never install nor allow physicians to use such software.

Apart from drug prices, most patients don't realize that some imaging tests and procedures done nearby, along the I-5 corridor, may cost 1/10th the price. In 2012, Massachusetts enacted a law that requires clinics and hospitals to provide advance price quotes within 2 days of a request.

So, ask your local hospital executive: Should doctors and patients be allowed to know the costs up front? Is someone else better positioned to regulate costs assigned to the patient?

2014 March 19  Talk to My Call Center

Is the quality of medical service something a community can defend?

When you donate money to your local hospital or clinic, understand that your next phone call to schedule an appointment may be to a distant call center.

And, if you can get through to a person, that person will not know you, or Florence, or current disruptions on campus, or walk-in clinic wait times, or your doctor's up-to-the-minute schedule openings. They won't have a prioritized list of patients to call if a slot opens up. They won't be available to schedule follow-up appointments, while the regular assistant is rooming another patient. Team coordination between doctor and scheduler will be lacking. In sum, quality will suffer.

But as a patient of mine put it, “It's a business decision.”

What's missing from that viewpoint is the understanding that the local clinic and hospital can be the only provider for a service that many cannot live without. Thus, the community suffers from a cheapest-solution business mentality. Similar changes may be occurring at clinics across the country, but is that the manner of service we want to support? 


2014 March 5  On Deductibles and Expendables

If the Sisters of St Joseph of Peace were distributing health care in Florence, would they serve the wealthy and platinum card holders first?

High deductible health plans (HDHPs) often present an imposing hurdle at the start of the year to those who can least afford it. In contrast, those who don't sweat a thousand-dollar check may go to the front of the line, early in the year, and still like their low-cost insurance.

In this town, wealthy and poor and just-getting-by sit in the same clinic waiting room. But the financial bite is much more painful for that third group with high-deductible insurance. So, they will often neglect or postpone symptoms, tests, and even treatments due to out-of-pocket costs.

I recognize the motive to reduce any cost-unconscious entitlement mentality, but the standard micro-economic principles for consumer behavior don't apply to health care. Precious few enjoy excessive testing and treatment.

Some workers and employers may insist HDHPs are the only plans they can afford, but the plans are regressive, costing the fortunate less than the unfortunate.

Would the Sisters want a system that so rewards wealth and where sick workers are told to go home until they've saved $6000 or more for their out-of-pocket limit?

Is that the best we can do for our neighbors and descendants?

    Please feel free to share and sign the Egar Retaliation Petition linkbelow.