Big investments are under way at some of Oregon’s smallest hospitals.
The St. Charles Health System chain, whose roots go back nearly a century, operates three hospitals with fewer than 50 beds, in addition to its much larger Bend system. Until recently, some of its facilities were still hampered by construction and design efforts that dated back to the 1950s, 1960s and 1970s.
A massive $177 million capital investment effort is working to change that. Already, work has completed at St. Charles’ Prineville location. More improvements are coming in Bend and Madras, along with multi-million-dollar investments in high-tech medical equipment, and a planned $60 million investment in new medical record keeping technology. Bonds are funding much of this effort.
For the fourth year, The Lund Report is digging into the money and operations of Oregon’s hospitals. In our first seven 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; and Legacy Health. This week we’re digging into St. Charles Health System.
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.
- Additional financial details about hospital chains come from IRS 990 forms and from the systems’ own unaudited reports.
The two final stories in this series will look at small independent hospitals, and at hospitals that are operated by public districts.
St. Charles Health System
St. Charles Health System is a nonprofit network of hospitals and medical clinics serving Central Oregon. Founded by nuns and named for a saint, Bend-based St. Charles severed ties with the Catholic Church in 2010 after a bishop with Eastern Oregon’s Diocese of Baker objected to contraceptive medical procedures the nonprofit’s Bend hospital was offering to women.
In 2013, the former Mountain View Hospital, which had been run by a public hospital district, joined the nonprofit and became the fourth hospital in the chain, and adopted the name St. Charles Medical Center-Madras.
In the most recent year for which figures are available, 2014, St. Charles employed 4,153 people. Its net income after expenses was $54.8 million that year, up from $40.7 million in 2013. The nonprofit ended 2014 with $497.5 million in assets.
Longtime CEO James Diegel retired in December 2014, after eight years at the helm of St. Charles Health System. He was replaced by Joseph Sluka, who had previously served as chief administrative officer and executive vice president of a South Dakota health system.
Under Sluka’s leadership, St. Charles hospitals have seen profits climb – a shift that may be attributable to the Affordable Care Act, which boosted the finances of many rural hospitals by adding thousands of people to the rolls of the insured. The chain is now in the midst of a multi-million dollar capital endeavor across multiple locations, with much of its spending funded by bond issues.
Though most of that spending is concentrated at individual hospitals, a system-wide adoption of the EPIC medical record system is getting under way this year, with implementation of the $60 million IT investment expected to continue into mid- 2018.
St. Charles Medical Center-Bend
St. Charles Medical Center-Bend, opened in 1918 and is the centerpiece of the rest of the St. Charles network. Its $404.4 million in 2014 net patient revenue was more than the revenue of the other three hospitals in the system combined. And a $50.8 million profit last year was more than enough to offset financial losses in Prineville and Madras.
St. Charles-Bend is in the midst of spending tens of millions of dollars on major upgrades and modernization efforts.
A $30 million remodel of its third, fourth and fifth floors started in 2014 and is expected to continue through next year, bringing the first major upgrades to those areas of the hospital since 1975.
That work will still be under way this November, when St. Charles-Bend starts work on a four-story, $66 million patient tower, which will include inpatient, emergency, psychiatric and short-stay services, and which will have room to expand critical care services. In capital reporting documents, hospital officials said the project will be funded by bonds, and that they hope the investments will allow them to provide services within the community, so patients don't have to travel to get care . The tower is expected to be complete in 2018.
This summer, St. Charles-Bend is also investing in costly new medical equipment. A $3.2 million linear accelerator will improve the speed with which the hospital can treat cancer patients. A $1.16 million orthopedic robot will be used in hip and knee procedures.
Finances, year 2014:
- Net income: $50,749,640, up 86.2% from 2013.
- Net patient revenue: $404,401,359, up 5.54%.
- Charity care: $13,387,649, down 50.33%.
- Profit margin: 10.94%, up from 6.54% a year earlier.
Size and scope, 2014:
- * Available beds: 250, down from 261 last year.
- Inpatient days: 60,724, down 1.12%.
- Emergency department visits: 34,288, up 19.92%.
- Outpatient visits: 368,173, up 8.88%.
St. Charles Medical Center-Madras
In January 2013, St. Charles took over Jefferson County’s only hospital, tiny 25-bed Mountain View Hospital, which had been operating at a loss. With a new parent nonprofit, the hospital took on a new name, St. Charles Medical Center-Madras.
St. Charles-Madras has continued to report financial losses, but those losses are shrinking – from a net loss of $1.4 million in 2013 to a net loss of $835,941 in 2014. And joining the St. Charles Health System network has provided the Madras hospital with the financial stability to invest in improvements.
The hospital is in the midst of a $16 million renovation that will add 26,000-square-feet, create a new main entrance, a new combined operating room and emergency department and new imaging and lab facilities. The 1967 older hospital building does not meet current standards of care, with a laboratory based in an aging modular building that is too small for equipment and staff, and emergency department rooms separated only by curtains, not to mention a heating and cooling system that has not seen significant upgrades since the ‘60s. The current project, expected to conclude in March 2017, aims to fix those concerns.
Finances, year 2014:
- Net loss: $835,941, compared to a net loss of $1,389,950 last year.
- Net patient revenue: $21,012,882, down 12.64%.
- Charity care: $998,428, down 43.08%.
- Profit margin: negative 3.05%, up from negative 5.41% a year earlier.
Size and scope, 2014:
- Available beds: 24, down from 25 last year.
- Inpatient days: 2,567, down 18.59%.
- Emergency department visits: 12,215, up 10.71%.
- Outpatient visits: 36,807, up 17.58%.
St. Charles Prineville
Two hospitals in the state have long been named Pioneer Memorial. Pioneer Memorial in Heppner is operated by the Morrow County Health District, and will be reviewed in a future story. Pioneer Memorial in Prineville joined the St. Charles family in 2008, under an agreement that keeps a community board in place to govern the hospital’s assets. Today on its website, the St. Charles system shows that its Prineville hospital is in the process of an identity change. It goes by the name St. Charles Prineville in most documents, but references to Pioneer Memorial remain. Until last year, the hospital was located in its original 1950s building. A new 62,000-square-foot, $31 million campus opened last year. The new hospital was designed to reflect the priorities of Affordable Care Act-era healthcare: focused on integrated teams of physicians and other care providers.
Finances, year 2014:
- Net loss: $1,208,359, compared to a net loss of $2,021,844 last year.
- Net patient revenue: $21,919,533, down 17.72%.
- Charity care: $1,115,794, down 46.29%.
- Profit margin: negative 3.73%, up from negative 5.9% a year earlier.
Size and scope, 2014:
- Available beds: 22, down from 25 last year.
- Inpatient days: 2,185, down 8.04%.
- Emergency department visits: 10,901, up 18.62%.
- Outpatient visits: 89,112, up 8.07%.
St. Charles Medical Center-Redmond
Redmond became the first Oregon city to form a public hospital district in 1951, a choice that gave birth to the Central Oregon District Hospital a year later. In 2001, that hospital merged with St. Charles Medical Center in Bend to form the organization now known as St. Charles Health System. (Initially it went by Cascade Health Services.) Since 2003, the hospital has been known as St. Charles Medical Center-Redmond.
In 2006, St. Charles-Redmond opened a $30 million expansion. With that relatively new investment completed, the Redmond hospital is sitting out the health system’s current spending spree, which has focused on locations that had not seen substantial investments since the mid-20th century.
Finances, year 2014:
- Net income: $10,933,801, up 109.63% from 2013.
- Net patient revenue: $56,695,108, down 3.35%.
- Charity care: $2,624,970, down 57.42%.
- Profit margin: 13.34%, up from 7.49% a year earlier.
Size and scope, 2014:
- Available beds: 48, the same as last year.
- Inpatient days: 6,572, up 5.73%.
- Emergency department visits: 19,568, up 14.7%.
- Outpatient visits: 112,964, up 2.61%.
Courtney Sherwood can be reached at [email protected]. Follow her on Twitter at @csherwood.
