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‘Toxic place’: Texts show outgoing Oregon Health Authority director’s challenges

Behind-the-scenes frustration led to James Schroeder’s abrupt departure in early March
James Schroeder sat for an interview with The Lund Report at his office in downtown Portland on Jan. 11, 2023. | NICK BUDNICK/THE LUND REPORT
March 31, 2023

Gov. Tina Kotek’s pick to lead the Oregon Health Authority called the agency, which oversees health care for 1 in 3 Oregonians, a “toxic place” that resisted positive change as he left his post in early March, according to text messages The Lund Report obtained. 

The messages, other records and interviews shed light on the circumstances that led James Schroeder to resign unexpectedly after just seven weeks on the job. They provide a different view than was presented by him and Kotek at the time. 

“My family is the center of my life and I recognize the demands of this role are not compatible with the focus I want to give to them," he wrote in an email to agency employees on March 3. An agency spokesperson later attributed his departure to "personal issues."

In reality, Schroeder’s concerns over his experiences at the agency led him to request an in-person meeting with Kotek on the afternoon of March 1, records and interviews show.

During the meeting, Schroeder said he was prepared to submit his resignation and cited challenges he’d faced trying to lead the agency.

Though he’d hoped Kotek would express support for his approach and vision for his role, she instead took him up on his offer to resign — to Schroeder’s dismay, records indicate.

“The governor was not interested in working with me to improve things,” Schroeder texted his chief of staff, Yoni Kahn, after the meeting. “She essentially asked me to resign.” He later added, “I have never been fired before.”

Schroeder’s texts, however, exaggerated and oversimplified a more nuanced discussion with the governor, he told The Lund Report on Friday, in his first interview about his departure. He was disappointed by Kotek’s response, and though he’d offered up his resignation, it felt like termination — “even though that was not what happened,” he said.

“It was a respectful conversation,” he said of his meeting with Kotek. “I recognized that what she was looking for was not a match for what I wanted to spend my time doing. We both mutually came to the agreement that it was probably best for me to leave at this point. It wasn’t like we had a disagreement.”

Schroeder said he told her that if he was not aligned with her vision, then he would be more useful to her in another position. “I offered to resign, and she agreed,” he said, adding that they then spoke for about 30 minutes about what he felt the agency needed.

In other text messages, he and his chief of staff reflected on the unexpected outcome. 

“It was probably a bad fit from the start,” Kahn wrote. “We both felt it.”

Schroeder replied: “Indeed … Toxic place.” 

Asked about the texts, and the implication that the governor was not interested in working with Schroeder to improve the agency, Kotek’s office did not provide a response.

An Oregon Health Authority spokesperson, meanwhile, defended the agency’s record, saying its “staff remain focused on improving the health and well-being of Oregonians and accomplishing Governor Kotek’s goals.”

Schroeder, for his part, said the text messages he exchanged with Kahn, a friend, were sent when he was in “an emotional state,” and used “stronger words” than he’d use now.

In any event, the text messages shed some light on how Schroeder, a long-time Oregon health care executive and former physician assistant, went from optimistically discussing his plans with members of the Oregon Health Policy Board in February to suddenly heading for the exit weeks later.

Schroeder’s resignation left the agency without a permanent leader during a crucial legislative session, as it pursues high-stakes policy changes potentially affecting the health care of hundreds of thousands of Oregonians.

His departure, many health care observers said, cast a cloud over the agency that could make it more challenging to find a replacement — notwithstanding the national search Kotek announced on March 3.

Sticking points arose

Details of Schroeder's complaints are not available, as he declined to provide examples. 

However, the newly released records, as well as interviews, point to the sticking points that arose during Schroeder’s tenure. Those include the challenges he felt joining the agency from the private sector, frustration in trying to steer the agency’s bureaucratic culture in a different direction, and a loss of autonomy felt as Kotek’s office took a more hands-on, top-down approach than her predecessor had employed.

Schroeder had never worked in state government, though he’d worked closely with the agency as the CEO of Health Share of Oregon, a regional insurer composed of Portland-area hospital systems and the nonprofit CareOregon to provide state-contracted care with the Oregon Health Plan.

He took the job vowing to be a reflective, thoughtful director who effected change by better involving communities and providers in the agency's efforts. In a Jan. 11 interview, he told The Lund Report he would lead by collaborating with other government and industry leaders on behavioral health reforms and on improving patient care for low-income members served by the agency.

“Collaboration is going to be a huge theme for me. I hope to pull together the people that, collectively, we can get to those answers so that we can make it better than what it is today.”

Schroeder told The Lund Report that among other things, he was trying to “reset the relationship” between the agency and the health care contractors it used to deliver services to the more than 1 million low-income people who belong to the Oregon Health Plan.

When he called the agency a “toxic place” in a text, he was referring not to any individual, but to the difficulties he faced in changing its culture, he said.

Schroeder had focused on Oregon Health Plan reforms

On the campaign trail, Kotek, the longtime speaker of the Oregon House, vowed to employ “collaborative and decisive leadership” to make the Oregon Health Authority function more effectively and transparently, including with reforms to the state’s behavioral health system. The agency of about 5,000 employees was a centerpiece of her discussions of needed change, creating an environment where any new director faced pressure to rapidly produce concrete results to fulfill her promises, several observers told The Lund Report.

A decade ago, then-Gov. John Kitzhaber had spearheaded earlier changes to the Oregon Health Plan, intended to improve care and lower costs through a collaborative relationship with the coordinated care organizations, or CCOs.

But since then, CCO leaders and others often  criticized the agency as overly top-down and bureaucratic under its former director, Pat Allen.

Schroeder, meanwhile, came in as a director who — not surprisingly, given his previous job — was sympathetic to the coordinated care organization perspective. He, like Kotek, was skeptical of the agency’s past performance.

His investment in making change was personal. Schroeder had pursued reforms to fund housing with Medicaid dollars while at Health Share, and the Oregon Health Plan pursued similar changes in its request for a federal waiver that was approved last September. 

As one of his first moves as director, to build a more collaborative approach, he disinvited a large number of health authority staff from the regular meetings the agency holds with heads of the coordinated care organizations, trying to make the meetings a smaller, more productive exchange of views.

Later, after a meeting with one coordinated care organization in late February, he and his chief of staff, Kahn, exchanged hopeful messages. Kahn had worked for Schroeder at Health Share and came over to the state at the same time.

“For what it’s worth, we are giving some folks a little more faith than they’ve had in a long time,” Kahn wrote.

“I know,” Schroeder replied. “The external support and faith in what we can do is humbling.”

Tone changed dramatically

On the evening of March 1, after Kotek accepted Schroeder’s resignation, he and his chief of staff, Kahn, shared further concerns about his departure. Among them: how the agency would roll out the federal waiver approval for increased flexibility and new federal funding to make program improvements and build needed housing.

Kahn lamented in a text, “We didn’t deserve this. We came to do good things. And nobody wanted anything to do with it. All these long-term agency folks are toxic.”

Schroeder agreed. “Sad statement for the state,” he wrote.

Kahn added, “I don’t know how it gets better for CCOs and health systems after this … It’s probably just going to be a continuation of pats bullshit,” suggesting that the agency would revert to how it operated under its previous director, Pat Allen

Schroeder wrote that he was worried that things at the agency could get “worse … I think (Kotek) will not utilize the waiver well. Just wants the $z (sic) She may be influenced to do negative things with the CCOs but I don’t think she intends to.”

Robb Cowie, an agency spokesperson, dismissed Schroeder's concerns in an email. Agency officials"continue to work together to find new solutions to the challenges facing Oregon, such as reducing homelessness," he wrote. "Oregon will fully implement the groundbreaking Medicaid waiver according to the terms outlined in our agreement with the federal government. The more than $1.1 billion the federal government will contribute to our state over the next 5 years will enable Oregon to pursue first-in-the-nation programmatic changes to address the upstream factors that people’s health in communities statewide, such as homelessness, food insecurity and climate change."

Asked about his exchange with Kahn, Schroeder said his concern about the waiver was not aimed at Kotek as an individual or at any specific plans she had. Rather, he said he was concerned that without his help in steering the waiver implementation, things could go astray.

He said he respects the governor's vision and expects to be working toward their shared goals in his future health care endeavors, while “absolutely” rooting for Kotek’s success. 

You can reach Nick Budnick at [email protected] or at @NickBudnick on Twitter.