The Senate on Thursday unanimously passed a measure designed to expand healthcare access in underserved rural areas, by loosening the standards for operating for-profit health clinics.
Senate Bill 485 was the brainchild of the entrepreneurs behind Orchid Health, who have successfully opened rural health clinics in Oakridge and Estacada in the Cascade foothills, but feel hampered by a current law that requires them to get a physician to undersign their clinics -- a doctor who often has no actual role in the clinics’ operations.
The bill would allow Orchid and other businesses to operate for-profit medical offices so long as they serve in rural areas that the Oregon’s Office of Rural Health has calculated have a medical access shortage.
“We can have better outcomes and better results,” said Sen. Floyd Prozanski, D-Eugene, the chief sponsor of SB 485. Prozanski said the Oakridge clinic employs 12 people and serves 1,500 patients, while the Estacada clinic that opened last year already serves 700 patients, the majority of whom have government-sponsored healthcare, which generally pays providers less than private insurance.
Prozanski noted that for years Oakridge, which is in his district, had struggled to keep a doctor’s office. The town has 3,200 people but is 45 miles from the Eugene-Springfield metro area, the nearest city with adequate access to medical care.
For three years, Orchid Health has been successful at solving the rural health conundrum, an achievement founder Oliver Alexander has attributed to the clinic’s ability to free up medical care providers’ time to treat their patients while allowing people with business acumen to manage the business side of the clinic -- with a strict wall of separation between the two and a medical director operating with autonomy, under the guidelines of Office of Rural Health.
Current law only allows physicians to operate clinics in the practice of medicine on a for-profit basis. That limit allows for business growth while not shielding the clinic owners from professional liability, a protection designed to ensure that medicine is not compromised by business decisions.
Orchid Health came to the Legislature with a very similar proposal in 2015, but at the time the bill was spiked by Rep. Mitch Greenlick, D-Portland, the powerful chairman of the House Health Committee.
Greenlick, a retired Oregon Health & Science University academic who focused in the area of medical care organization, has acted as a goalie against the expansion of for-profit medical care, and is currently backing a bill that would bar any more coordinated care organizations from operating Medicaid managed care plans as for-profit entities.
It’s unclear whether the continued pressure from his colleagues to support Orchid Health’s business model will cause him to back down. “They want to create an entrepreneurship out of rural medicine. I think that’s the problem,” Greenlick told The Lund Report in 2015.
Greenlick has argued that for-profit models have shown inherent conflicts of interest that do not align with good patient care.
Sen. Elizabeth Steiner Hayward, D-Beaverton, a family physician, said she understood Greenlick’s skepticism: “I’ve been a little dubious but I’m not dubious anymore. … I think [current law] is outdated and archaic and it’s a barrier to provide innovative care.”
The Oregon Medical Association also had reservations with the original bill but was happy to reach a compromise in early April. OMA lobbyist Courtni Dresser told The Lund Report that she worked to ensure the new exception was narrowly tailored to just certified rural health clinics; operators will have up to one year to get approved by the Office of Rural Health after they open.
Orchid plans to open clinics in two dozen communities, but the current hurdles made their first two clinics burdensome to open, and its leaders were unsure how easy it would be to find physician partners further afield. Alexander testified that they’ve been thwarted in their attempts to add an X-ray machine or dental equipment.
“Our physician-owner is minimally involved and has been unwilling to sign off on the finances we need,” which kept the clinic from setting up dental care and hiring a dental hygienist, Alexander said.“Oakridge has no dental services locally.”
Robert Duehmig of the Office of Rural Health said there are currently 77 certified rural health clinics in Oregon, and a mix of for-profit and nonprofit setups. Orion Falvey of Orchid Health estimated about half were for-profit.
Falvey said nonprofit and for-profit clinics had their tradeoffs. A for-profit clinic attracts investors, while nonprofit clinics are eligible for grants. Communities can receive federal start-up funding for federally qualified health centers, but Falvey told The Lund Report those clinics were barely financially viable in the remote areas that interested Orchid Health. “In my mind, it would be slightly less sustainable,” he said.
Entrepreneurial ownership over doctor ownership had a particular advantage in these marginal communities, because a physician or nurse practitioner could spend all their time practicing medicine, while the business owners took care of the increasingly complicated medical management. “[Country doctors] don’t have the time to stay current with new technology and ideas,” he said.
Reach Chris Gray at [email protected].
