Small, Rural Hospitals Struggle with Funding, Recruiting

The Lund Report examined Oregon’s 10 hospital districts: Bay Area Hospital, Blue Mountain Hospital, Coquille Valley Hospital, Curry General Hospital, Harney District Hospital, Lake District Hospital, Lower Umpqua Hospital, Pioneer Memorial Hospital-Heppner, Southern Coos Hospital and Health Center and Wallowa Memorial Hospital

Sometimes traditional business models just don’t go far enough. That’s the case in much of remote rural Oregon, where even nonprofit hospitals – which serve most urban areas of the state – have not been able to make ends meet.

In 10 communities, the public came together with a different approach: Public hospital districts. Bay Area Hospital, Blue Mountain Hospital, Coquille Valley Hospital, Curry General Hospital, Harney District Hospital, Lake District Hospital, Lower Umpqua Hospital, Pioneer Memorial Hospital-Heppner, Southern Coos Hospital and Health Center, Wallowa Memorial Hospital -- all of Oregon’s hospital districts were founded by votes of the people and funded, at least initially, through property tax collections.

Today, these institutions span disparate corners of the state, yet face similar challenges: recruiting and retaining physicians, making financial ends meet and staying current with technology as it evolves.

This is the final in-depth examination of hospitals in an ongoing look at every major hospital in the state. For the fourth year, The Lund Report has been digging into the money and operations of Oregon’s hospitals. In our first nine stories, we examined Providence Health and Services; Kaiser Permanente and Asante; PeaceHealth; three faith-based chains with small Oregon footprints; OHSU and its new affiliates Salem Health and Tuality; Samaritan Health Services; Legacy Health; and St. Charles Health System; and small, independent hospitals across the state.

The figures underpinning these examinations come from multiple sources:

  • Profit, revenue and charity care figures come from audited reports prepared by each hospital and submitted to the Office for Oregon Health Policy & Research, which also provided information about capital projects under way.
  • 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.
  • Hospital performance metrics are tracked by the Oregon Health Authority.
  • Financial details often come from reports to bond regulators, or from assessments by ratings agencies.
  • Additional financial details about these public hospitals come from board meeting minutes, and from the systems’ own unaudited reports.

This week, we are looking at hospitals that are operated by public districts. These stories draw largely from 2014 financial reports that offered the latest financial data available as The Lund Report conducted its analysis of every hospital in the state, a process that began in March. New 2015 figures released at the end of July will be incorporated into a sweeping overview that will look at broad hospital trends. Future stories will also dig into executive compensation and other financial details revealed by this series of hospital snapshots.

Bay Area Hospital

Coos County voters created the Bay Area Health District in 1952, but with two older hospitals already competing to serve community members it took decades to make the Bay Area Hospital a reality. Only as those older hospitals aged and ran into financial difficulties did voters agree to fund a bond measure to construct Bay Area Hospital.

Bay Area opened its doors in 1974 with 150 people on staff, including 25 doctors. The two hospitals it replaced closed their doors simultaneously. Today, Bay Area employs more than 1,000 people, and over 130 doctors. It also prides itself on a history of paying for growth from its profits, without turning to taxpayers for support.

In recent years, that growth has included the 2013 opening of a new four-story $45 million wing, the 2014 dedications of cardiovascular and wound care programs, and the 2015 opening of a consolidated cancer center.

Finances, year 2014:

  • Net income: $5,650,774, up 10.96% from 2013.
  • Net patient revenue: $141,025,814, up 11.29%.
  • Charity care: $3,032,408, down 66.84%.
  • Profit margin: 3.94%, down from 3.96% a year earlier.

Size and scope, 2014:

  • Available beds: 129, the same as last year.
  • Inpatient days: 22,981, up 4.33%.
  • Emergency department visits: 22,211, up 3.59%.
  • Outpatient visits: 80,855, up 18.65%.

Blue Mountain Hospital

John Day-based Blue Mountain Hospital District is small, remote and faces a number of challenges. Financially, it depends on taxpayer support to keep its doors open. Its leaders say recruiting doctors is a challenge. And community members have learned the hard way that even keeping a chief executive on staff can be a problem.

After longtime hospital leader Bob Houser retired in June 2015, the hospital district announced that Randall Mee would take the job. But Mee left after only nine months in mysterious circumstances, with officials only telling local press that they had opted to “move into another direction in regards to the CEO,” and noting that no active lawsuits were underway as Mee departed. Karin White, who had been chief clinical officer, became interim CEO for about a month. Then, in April of this year, the hospital announced it had hired Steve Erixon of Wyoming to serve as interim CEO until a permanent replacement could be found. The search for that new executive continues.

The original Blue Mountain Hospital was built in 1949 in Prairie City. It was replaced with a John Day location in 1960, and by a new structure in the same community in 2003. In addition to running its 25-bed hospital, the hospital district also operates a 40-bed nursing home and care center and two clinics.

In 2014, the district received about 9.4 percent of its financial support from taxes. It currently serves a population of about 7,500 people.

Finances, year 2014:

  • Net loss: $555,899, compared to a net loss of $2,555,149 last year.
  • Net patient revenue: $15,763,116, up 7.34%.
  • Charity care: $278,579, down 58.19%.
  • Profit margin: negative 3.24%, up from negative 15.86% a year earlier.

Size and scope, 2014:

  • Available beds: 16, the same as last year.
  • Inpatient days: 9,017, down 12.86%.
  • Emergency department visits: 3,106, up 12.54%.
  • Outpatient visits: 25,044, up 6.86%.

Coquille Valley Hospital

Southern Coos County’s Coquille Valley Hospital District serves a population base of about 13,000 people, competing with Bay Area Hospital, about 20 miles to the north, out of a building completed in 2012. The current 60,000-square-foot structure replaced an older hospital that was built after the district was founded in 1969.

According to a review conducted for bond regulators, Coquille Valley’s economy revolves around small businesses and self-employed workers, which has historically left its population under-insured. Though officials expect the Affordable Care Act’s expanded insurance offerings to boost coverage – and thus result in more patients able to pay their bills – the hospital still has not seen a significant shift away from self-pay as of 2015.

Indeed, in the era of coordinated care organizations, Coquille Valley has butted heads with Western Oregon Advanced Health, or WOAH, which the hospital says does not authorize or pay for services in a timely manner. Negotiations are underway to settle past balances and agree to a future contract.

Property taxes cover about 3 percent of its hospital and clinic operating expenses.

Finances, year 2014:

  • Net income: $702,344, down 33.44% from 2013.
  • Net patient revenue: $22,767,964, up 13.79%.
  • Charity care: $232,984, down 8.17%.
  • Profit margin: 3.01%, down from 5.19% a year earlier.

Size and scope, 2014:

  • Available beds: 25, the same as last year.
  • Inpatient days: 2,312, down 20.25%.
  • Emergency department visits: 6,167, up 17.89%.
  • Outpatient visits: 23,776, down 6.59%.

Curry General Hospital

The Curry Health Network – the name adopted by the Curry Health District – is recovering from a financial crisis.

In November, a cash crisis forced the public district to put hospital-funded retirement matches on hold and to cease cost of living increases, until it could improve its cash position. Since then, the hospital has made strides to grow cash reserves, which were adequate to cover 18 days of operating expenses as of May, according to an update from CEO Ginny Razo.

“The average and optimal days of cash for hospitals to CHN and located in Oregon is 69,” Razo wrote in a letter to community members. For now, the Curry Health Network is focused on reaching 30 days’ worth of cash.

Despite the challenges around operating cash, construction of a new $32 million Curry General Hospital in Gold Beach is on time and on budget, the hospital says. The project is funded by a $20.9 million loan and a $10 million bond approved by voters. The location of the new hospital has drawn questions from the Oregon Department of Geology and Mineral Industries. DOGAMI says the hospital’s location could be inundated in a tsunami.

Property taxes cover about 3 percent of the hospital district’s operating expenses.

Finances, year 2014:

  • Net income: $7,882, down 99.32% from 2013.
  • Net patient revenue: $27,371,141, up 6.26%.
  • Charity care: $860,124, down 6.52%.
  • Profit margin: 0.03%, down from 4.47% a year earlier.

Size and scope, 2014:

  • Available beds: 24, the same as last year.
  • Inpatient days: 2,307, up 54.94%.
  • Emergency department visits: 4,500, up 13.69%.
  • Outpatient visits: 51,099, up 7.52%.

Harney District Hospital

Burns-based Harney District Hospital serves a population of fewer than 8,000 people who are spread over more than 10,000 square miles. It is 135 miles away from the next closest hospital.

From 1920 into the 1980s, Harney County’s hospital was privately run, but by the late ‘80s the hospital’s financial future was unclear. In 1990, the hospital district was created to guarantee the institution’s future. In 2008, Harney District Health finished construction of its current hospital building.

That building received some unwanted attention earlier this year, when a standoff between federal officials and militants on a wildlife refuge dragged out for days and put hospital officials on high alert.

Property taxes comprise about 4 percent of the hospital district’s revenue.

Finances, year 2014:

  • Net loss: $280,099, compared to a net loss of $393,018 last year.
  • Net patient revenue: $17,651,564, up 9.37%.
  • Charity care: $440,415, up 69.29%.
  • Profit margin: negative 1.48%, up from negative 2.3% a year earlier.

Size and scope, 2014:

  • Available beds: 25, the same as last year.
  • Inpatient days: 1,525, down 8.79%.
  • Emergency department visits: 3,240, up 12.77%.
  • Outpatient visits: 34,313, up 4.41%.

Lake District Hospital

In an era when many private hospitals are merging into larger organizations to bolster their financial health, Lakeview’s Lake Health District is exploring a different approach to shared resources. It has joined with three other hospital districts, in a joint power intergovernmental agreement, which brings together officials from public districts based in Alturas, Cedarville and Fall River Mills, all across the state line in California, along with Oregon’s Lake District Hospital.

Through this partnership, the districts are exploring the possibility of pooling resources to employ physicians who might serve multiple hospitals within their geographically remote region, and to employ full-time experts to serve all four districts. In addition to serving California and Oregon, the so-called “hospital collaborative” is including the needs of rural Nevada residents within the region in its early explorations.

This look to the future comes more than a century after Lakeview’s first hospital was built in 1913 as Lakeview General Hospital. It changed ownership several times over the following decades, until Lake District Hospital was completed in 1970.

Finances, year 2014:

  • Net income: $1,285,518, down 32.45% from 2013.
  • Net patient revenue: $18,827,010, up 4.77%.
  • Charity care: $340,794, down 18.58%.
  • Profit margin: 6.12%, down from 9.18% a year earlier.

Size and scope, 2014:

  • Available beds: 24, the same as last year.
  • Inpatient days: 9,243, down 9.13%.
  • Emergency department visits: 3,574, up 3.44%.
  • Outpatient visits: 25,484, up 2.07%.

Lower Umpqua Hospital

Lower Umpqua Hospital was opened in 1964 with the help of federal dollars, individual donations, lumber company contributions and tax funds. It has expanded services and undergone remodels several times in the intervening years, as it has continued to serve rural coastal Douglas County.

The most significant recent hospital expansion was completed in 1998, and included the addition of a radiology suite. In 2000, Lower Umpqua Hospital District opened a new medical office building. It implemented an electronic health record system in 2011, and acquired a physicians’ practice in 2013.

In 2014, the hospital opened a walk-in clinic, which has been open seven days a week since 2015.

Finances, year 2014:

  • Net loss: $39,541, compared to net income of $233,881 last year.
  • Net patient revenue: $16,989,314, up 8.34%.
  • Charity care: $878,833, up 59.27%.
  • Profit margin: negative .18%, down from 1.22% a year earlier.

Size and scope, 2014:

  • Available beds: 16, the same as last year.
  • Inpatient days: 1,362, down 11.1%.
  • Emergency department visits: 3,334, down 4.11%.
  • Outpatient visits: 17,656, up 18.16%.

Pioneer Memorial Hospital-Heppner

Operated by the Morrow County Health District, Heppner’s hospital is one of two in Oregon to bear the name Pioneer Memorial. (The other, in Prineville, is part of the St. Charles Health system, and was examined in an earlier story in this series.) 

Pioneer Memorial Hospital-Heppner opened in 1950, and was previously operated by Morrow County itself. In 1994, local voters handed control over to a newly created health district. In addition to the hospital, the district operates rural health clinics, countywide home health and hospice services, and emergency services throughout the community.

Finances, year 2014:

  • Net income: $319,127, down 52.71% from 2013.
  • Net patient revenue: $7,221,126, up 6.92%.
  • Charity care: $128,587, up 30.37%.
  • Profit margin: 3.5%, down from 7.68% a year earlier.

Size and scope, 2014:

  • Available beds: 21, the same as last year.
  • Inpatient days: 2,332, down 5.13%.
  • Emergency department visits: 781
  • Outpatient visits: 14,780, down 5.28%.

Southern Coos Hospital and Health Center

Bandon-based Southern Coos Hospital and Health Center is temporarily without a leader, after the Southern Coos Health District board fired CEO Charles Johnston at a meeting at the end of July. A board member told the Coos Bay World newspaper that the health district had lost confidence in Johnson, three and a half years after he was hired, saying the former leader had exhibited “poor decision making.” Johnson’s predecessor, Jim Wathen, was also fired. The hospital has not yet announced who will act as interim CEO while it seeks a permanent hire.

Southern Coos Health District was founded in 1955 by a public vote, and its first hospital opened in 1960. Today’s Southern Coos Hospital & Health Center opened in 1999. The hospital serves southern Coos County and northern Curry County, where about 10,000 people live.

In December, the health district signed an agreement with Western Oregon Advanced Health, the coordinated care organization, after officials expressed concern earlier in the year about reimbursements and referrals from Western Oregon Advanced Health.

Finances, year 2014:

  • Net income: $2,185,199, up 514.96% from 2013.
  • Net patient revenue: $13,553,039, up 3.92%.
  • Charity care: $154,783, down 37.92%.
  • Profit margin: 13.13%, up from 2.47% a year earlier.

Size and scope, 2014:

  • Available beds: 19, the same as last year.
  • Inpatient days: 1,281, up 23.41%.
  • Emergency department visits: 3,845, up 9.76%.
  • Outpatient visits: 16,127, up 18.78%.

Wallowa Memorial Hospital

Wallowa County Health Care District serves about 3,150 square miles in Oregon along the Washington and Idaho borders, an area inhabited by 7,000 people. The next nearest hospital is in LaGrande, nearly two hours by car on mountainous roads.

Enterprise’s first hospital opened in 1918 in a former high school building. Wallowa Memorial Hospital opened in a new location in 1950, with a construction price tag of $250,000. In 1992, a public vote created the Wallowa County Health Care District. Already, local leaders were urging upgrades or a massive remodel. In 2007, the health district opened its new $23 million hospital.

Wallowa Memorial Hospital’s most recent capital investment, in an electronic medical records system, went live earlier this summer.

Finances, year 2014:

  • Net income: $656,538, up 312.% from 2013.
  • Net patient revenue: $16,110,853, down 3.22%.
  • Charity care: $224,609, down 24.36%.
  • Profit margin: 3.91%, up from .91% a year earlier.

Size and scope, 2014:

  • Available beds: 25, the same as last year.
  • Inpatient days: 2,370, down 62.99%.
  • Emergency department visits: 2,281, up 6.69%.
  • Outpatient visits: 18,212, up 6.97%.


Courtney Sherwood can be reached at [email protected]. Follow her on Twitter at @csherwood.

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