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Unions, care groups want appeals court to preserve Oregon health care merger oversight

As consolidation continues, the program has brought large health care transactions into focus. But a challenge over its constitutionality continues
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Mid-Columbia Medical Center in The Dalles was absorbed by California-based Adventist Health in 2023 after a state program put conditions on the deal. A coalition of advocacy groups and labor unions argues in a legal filing that those conditions helped preserve reproductive, gender-affirming and end-of-life care in the state. | PHOTO BY LARVICK MEDIA/COURTESY OF MCMC
January 28, 2025

Federal judges should uphold a state program that reviews major health care transactions in Oregon, said a legal brief filed by labor unions and advocacy organizations Monday.

The filing in the 9th U.S. Circuit Court of Appeals is the latest development as the high-profile program’s future hangs in the balance. It comes even as state officials consider Oregon Health & Science University’s controversial proposal to absorb Legacy Health to create a major new health system powerhouse.

Lawmakers in 2021 approved a new office called Health Care Market Oversight to shield consumers and patients from mergers’ potential harmful effects, including any infringement on abortion access. Following its launch in 2022, a federal judge rejected a lawsuit filed by hospitals to block the program, and now they are appealing.

In the new filing, the coalition of advocates and unions argued that the program is preserving vital access to care, especially for underserved populations. The brief cites examples of how the program has protected Oregonians’ access to end-of-life reproductive and gender-affirming care, while keeping rural health services open and preventing consolidation from driving up prices. 

“HCMO is a vital and effective measure to protect the health of Oregon’s citizens,” the brief said, adding that “in the short period that the program has been operational, it has already demonstrated its impact.”

The coalition includes LGBTQ advocates Basic Rights Oregon, the national health care reform group Community Catalyst, the Oregon Trial Lawyers Association, the Oregon Nurses Association and Local 49 of the Service Employees International Union, as well as Compassion & Choices and End of Life Washington, which advocate for assisted-suicide laws in Oregon and Washington state. 

“Inadequately regulated material change transactions risk undermining the progress Oregon has made in delivering high-quality health care. In the hospital setting, there is a direct correlation between adequate staffing levels and health care quality.”

The hospital association responded to the brief with a statement from Becky Hultberg, its president and CEO.

“We wholeheartedly support improving access to care for all Oregonians,” she said in the statement. “Our concern is the HCMO program excessively empowers the Oregon Health Authority, leading to costly and arbitrary processes that divert resources away from patient care.”

Law has boosted mergers’ public profile

Oregon’s merger-review program is considered the toughest state effort of its kind. Hospitals, health care providers and other companies seeking large transactions must prove to regulators that their proposed transactions will not reduce services, excessively drive up prices or harm patients and workers. 

The new law, which was spearheaded by SEIU, has significantly boosted the profile of such transactions in Oregon as the pace of health care consolidation continues to rapidly transform the industry. The proposed deals can generate hundreds of comments, and opposition by state staff has led to one high-profile merger to be withdrawn.

In their lawsuit against the program, hospitals echoed their earlier concern that the law was unconstitutionally vague, having a chilling effect on commerce.

U.S. District Judge Michael Simon rejected the lawsuit in May of last year, and the hospital association immediately filed a notice of appeal.

In a brief filed in November, the hospital association claimed that determining which transactions were subject to the program “has proven effectively impossible,” giving unduly broad discretion to regulators. 

“Ultimately, when faced with the question, ‘what do I need to do to ensure that my conduct conforms to the law?’ (the) answer is, ‘whatever the agency tells you to do,’” the hospitals’ brief states. 

Care groups, unions stress access

The brief filed by the coalition cites state statistics showing that 65% of rural areas in Oregon are deemed to be experiencing shortages of health care providers. It argues that merging companies often cut access to care, even when they promise otherwise.

Last year, the program placed conditions on St. Charles Health System’s acquisition of Neuromusculoskeletal Center of the Cascades intended to ensure access to rural communities in Central Oregon. The brief claims that prevented St. Charles from using non-compete agreements and limiting surgical privileges, which it further claims would have meant fewer providers. 

“Ultimately, when faced with the question, ‘what do I need to do to ensure that my conduct conforms to the law?’ (the) answer is, ‘whatever the agency tells you to do.’”

Additionally, the brief contends, the program has helped preserve access under Oregon’s first-in-the-nation Death with Dignity Law that allows terminally ill patients to end their lives with the help of prescribed medications. 

Up to 40% of acute care beds In Oregon are controlled by hospitals that have opted out of the law, according to the brief. Many of those include hospitals with religious orientations. The program conditioned Adventist Health System’s acquisition of Mid- Columbia Medical Center in 2023 on continuing to offer “end of life services, including comfort care and lethal medication under Oregon’s Death with Dignity Law.” 

In the same transaction, the program also required Adventist to continue offering reproductive health services, including abortion and birth control, for 10 years as part of its acquisition. Additionally, conditions imposed by the program required the Adventist to continue offer gender-affirming care, including counseling and hormone therapy, at the clinic. 

Worker wages preserved, groups claim

More broadly, the coalition’s brief claims that the program has prevented reductions in staff and wages that can accompany consolidation. 

“Inadequately regulated material change transactions risk undermining the progress Oregon has made in delivering high-quality health care,” the brief states. “In the hospital setting, there is a direct correlation between adequate staffing levels and health care quality.”

The brief pointed to how the program in 2023 required Amazon to keep physicians in charge of medical decision making after purchasing 1Life Healthcare, Inc. 

The brief cited research showing a link between health care consolidation and increased prices for consumers. When PeaceHealth, a Vancouver-based hospital system, purchased Northwest Surgical Specialties last year, the program required it to not charge new fees for services performed by physicians at the clinic.


You can reach Jake Thomas at [email protected] or at @jthomasreports on X.

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