What Really Happened Between Kotek and FamilyCare about OHSU Bond Measure

Oregon Health & Science University is going home this session with its biggest coup in a decade -- the Oregon Legislature has decided to stretch its borrowing limit to provide the $200 million demand that will help the hospital meet the Knight Challenge to invest $1 billion in cancer research.

The $200 million will be paid out in 25-year bonds that will actually cost the state about $350 million, including interest. The state is anticipated to issue $160 million in general bonds and $40 million in lottery bonds in 2016. This money will be added to the $500 million offered by Nike tycoon Phil Knight and another $500 million from the hospital and private solicitations.

The state money comes with a number of strings, including a guarantee that construction contractors agree to pay prevailing union wages and that 15 percent of the work will be done by women- or minority-owned businesses -- two points that OHSU had intended to do anyway, House Speaker Tina Kotek, D-Portland, told The Lund Report.

The financing package does not include a requirement that OHSU take low-income Medicaid patients, a policy decision Kotek had been trying to craft over the past month.

Kotek had been working on such an amendment up until Wednesday night to resolve a dispute between OHSU and the Portland-area coordinated care organization, FamilyCare, which have been locked in a legal battle over payment rates for the past year. FamilyCare CEO Jeff Heatherington told The Lund Report that OHSU upped the ante in December by starting to turn away his CCO patients. The lawsuit is scheduled for trial in April.

It’s actually an issue that Gov. John Kitzhaber had tried to resolve before the session, according to Heatherington, but the governor’s office refused to shine any daylight on his concerns or developments following those discussions.

An article in Thursday’s Oregonian accused the speaker of delaying the big OHSU financing package as a political favor for a “big Democratic donor” -- Heatherington, who’s given $2,000 to Kotek as well as about $18,000 to other Portland and Oregon Democrats since 2007.

The story leaked to The Oregonian appears to be a successful attempt to embarrass Kotek as well as Heatherington and force her to capitulate to OHSU’s demands.

At the last minute, Kotek withdrew her amendment but was able to keep a budget note directing the Oregon Health Authority to work with CCOs and health systems to make sure Medicaid patients have access and determine the appropriate role for OHSU in delivering  care.

“They want $200 million, and they want to exclude 85,000 patients who are represented by FamilyCare,” said Heatherington, who was clearly angry about being accused of quid pro quo in the state’s largest paper. “You’ve got 85,000 people in Portland who cannot access the best tertiary hospital in the state.”

The Oregonian article failed to disclose that two healthcare players it quoted who criticized Kotek’s amendment -- Martin Taylor of CareOregon and lobbyist Doug Riggs -- do business for FamilyCare’s rival CCO, HealthShare of Oregon.

Because OHSU has a seat on HealthShare’s governing board, it also has more control over the amount of state and federal Medicaid dollars it receives to care for people on the Oregon Health Plan. When reached, Riggs declined to comment for this article and Taylor could not be reached by press time.

“It’s just another indication of bullying tactics by OHSU,” charged Heatherington.

Measuring Clout

The president of OHSU -- Dr. Joe Robertson -- could just as easily be labeled “a big Democratic donor” as Heatherington. Robertson donated about $23,600 to Democratic candidates since 2007, as well as $1,000 to Republicans. His wife, Patricia Fisher, gave an additional $5,100 to finance election campaigns, including $2,500 to the Friends of Chris Dudley, supporting the professional basketball player’s attempt to deny Gov. Kitzhaber a return to office in 2010.

Personal donations from Robertson or Heatherington pale in comparison to the money spent by political action committees. Heatherington and his lobbyist Paul Phillips are among the leaders of the Coalition for a Healthy Oregon, which spent $578,000 in the last legislative election cycle. The political action committee for the Oregon Association of Hospitals and Health Systems, which includes OHSU, spent $246,000 over that same time period.

But the real clout of OHSU stems from personal relationships between Robertson and Senate President Peter Courtney, D-Salem. His former chief of staff, Connie Seeley, left the senate president’s office in 2010 to work for Robertson. Courtney’s spokesman, Robin Maxey, declined to shed any insight into the backroom deals that led to the approval of the OHSU financing without Kotek’s amendment.

Courtney, who has the power to decide if legislation and budgets sink or swim in the Senate, has been OHSU’s most visible champion and defender, winning millions in scholarships for medical students at the university while blocking a measure from Sen. Chip Shields, D-Portland, that would have required OHSU to provide applied behavior analysis for autistic children.

(The hospital, which has explicitly denied coverage for its employees, has agreed voluntarily to begin autism coverage next year, without the legislation.)

Since OHSU balked at Kotek’s amendment, it had little chance to get past Courtney or another big OHSU supporter, alumnus Sen. Fred Girod, R-Stayton, who co-chairs the Capital Construction Committee with Kotek.

Kotek, OHSU Deny Claims Against Them

When reached for comment, Kotek flatly denied that her amendment held up the financing of OHSU’s big bonding measure. Large capital projects are always decided in the last days of a legislative session, and this one was no different, she said. And, the guarantee to treat Medicaid patients was just one of several sideboards desired by the more cautious House legislators.

“They are asking for a lot of money, so we want to make sure the goals are appropriate,” Kotek said. “It’s a perfectly appropriate policy conversation.”

The policy decision in Kotek’s amendment normally would have gone through the House Health Committee, chaired by Rep. Mitch Greenlick, D-Portland. Both Kotek and Heatherington said they missed the filing deadline for Greenlick’s committee but made their intentions known early in the session, not as a last-minute amendment, as reported in The Oregonian.

In a statement from spokesman Tim Kringen, OHSU denied that it’s turned away FamilyCare patients in need of critical care. But, since the hospital doesn’t have a contract with FamilyCare, OHSU screens patients based on medical need.

The Kotek amendment would have allowed OHSU to continue to manage care based on acuity and patient need.

According to OHSU, visits from FamilyCare members increased 27 percent from 2012 to 2013, and those numbers are up an additional 13 percent this year. Some of that increase may be explained by the Medicaid expansion and the transfer of Oregon Health Plan clients to coordinated care organizations. FamilyCare has also expanded into the Medicare Advantage plan market for seniors.

“The number of patients from FamilyCare served at OHSU has been increasing steadily,” according to Kringen’s statement. “OHSU works with community providers to ensure that patients who can be treated in their communities remain in their communities. This further ensures that there is sufficient space at OHSU for patients who require the highly specialized care uniquely provided by OHSU.”

OHSU Money Provides Boost, but Deprives Schools

Kotek told The Lund Report she never intended to block the $200 million financing package, which could not only pave the way for more innovations in cancer treatment but also generate enormous economic benefit. The $1.2 billion in total investment is expected to produce 6,800 temporary jobs during the construction and 860 permanent jobs.

Those figures, from a study by ECONorthwest, include both jobs created directly and indirectly from the investment. The construction is expected to raise $35 million in state tax revenue, while pumping in $5.6 million annually to state coffers once it opens.

In addition to union wages and the inclusion of women and minority contracts, Kotek insisted that OHSU report the county origin of patients who participate in clinical trials, to ensure that such research benefits people across Oregon -- that suggestion, she said, came from House Republicans. Once the cancer center is up and running, OHSU may conduct research trials away from its Portland hospital, such as its Cascades East location in Klamath Falls.

“There’s generally wide support for the concept to find ways to fight cancer,” Kotek said. “That’s a lot of money that we may want to spend elsewhere.”

Rep. Carolyn Tomei, D-Milwaukie, said her constituents asked her to oppose the measure, since the OHSU bonding is expected to eat up most of the state’s borrowing capacity and deprive the state of the chance to fund other projects, such as seismic upgrades for older schools. A major earthquake could bury children in the rubble without these improvements.

“They can raise their money all around the country,” Tomei said. “I can’t go to other states asking for more money for my schools.”

Tomei also took umbrage with the decision to pay for the project out of lottery money, excoriating state budget makers for relying on the failings of gambling addicts to pay for OHSU and the state government. She said 80,000 Oregonians are addicted to state video lottery games.

“We as a state are addicted to lottery games,” Tomei said. “We are addicted to addiction.”

Christopher David Gray can be reached at [email protected].