In a move that could help address Oregon’s dire shortage of behavioral health beds, PeaceHealth is proposing to build a 96-bed free-standing psychiatric care facility in Springfield for adults and adolescents.
The tally of behavioral beds in Oregon has not kept pace with the state's population or needs. Inpatient psychiatric care is labor-intensive and very expensive to provide. Insurance reimbursement rates, especially from government-funded Medicaid and Medicare programs, often don’t cover full costs.
But Alicia Beymer, PeaceHealth’s chief administrative officer, told The Lund Report she is optimistic that the Oregon Health Authority will soon significantly increase reimbursement rates paid for members of the Oregon Health Plan after Gov. Tina Kotek helped spark a review of whether they were sufficient..
“We appreciate their efforts,” she said, adding that the proposed psychiatric facility, to be called Timber Springs Behavioral Health Hospital, will “help meet a significant community need to expand mental health resources.”
The project requires approval by the state after a review of whether it is needed. The facility would deepen the ties between PeaceHealth, a Catholic nonprofit health system, to privately-held for-profit LifePoint Health, a Tennessee-based venture that owns or operates acute-care hospitals, rehabilitation centers and behavioral health centers around the country, mostly in the South and Midwest. LifePoint is owned by Apollo Global Management, a private equity giant that seeks to maximize returns for investors.
Beymer said PeaceHealth and LifePoint are still working out the details of how they would build and operate the facility.
It’s intended to treat patients with a broad range of behavioral health conditions, including major depression, anxiety disorders, bipolar disorder, post-traumatic stress disorder, psychosis, schizophrenia and co-occurring alcohol or substance use disorders, among others, according to PeaceHealth.
Important for Eugene
The project also bears significance for Eugene, where PeaceHealth recently shut down its University District hospital and emergency room, leaving only a 35-bed inpatient psychiatric unit behind.
That unit would be folded into the new hospital planned for International Way, near PeaceHealth’s flagship RiverBend hospital campus.
According to Beymer, the new facility would take pressure off staff at the Riverbend emergency department and also open up beds at the hospital. It would adjoin a proposed 28-bed county crisis stabilization center, where patients in crisis could stay for about 24 hours before moving on to more permanent care.
This, Beymer said, would improve the quality of care and also would increase the number of beds for adolescents and the elderly.
“Especially as we look at adolescent care, we know that there's a need for additional inpatient adolescent beds,” she said. “We're boarding at least four kids a week for days on end, up to a week until they can get into a bed up in Portland.”
The departure of the Eugene psychiatric unit would vacate the University District facility. PeaceHealth has not said what it will do with the five-acre property, which lies one block from the University of Oregon campus.
The new behavioral health facility would have about 200 employees, according to PeaceHealth. That’s about double the staffing of the current University District psychiatric facility.
Few details released
PeaceHealth isn’t disclosing financials for the proposed hospital, nor is it saying whether employees at the new facility would work for PeaceHealth, or for LifePoint. That’s potentially significant because many PeaceHealth employees, including nurses and service workers, are unionized, while those at a LifePoint-run facility might not be.
Beymer said she expects the new facility would serve a range of patients, including those covered by the Oregon Health Plan, Oregon’s version of Medicaid.
“It most certainly will include hopefully all (insurers), including Medicaid,” Alicia Beymer, chief administrative officer at RiverBend, told The Lund Report.
Commercial health insurers typically often reimburse psychiatric care at higher rates, so facilities are eager for such patients.
Private equity connection
The new unit would be PeaceHealth’s second facility with LifePoint. Beymer said LifePoint has been working with the health system since 2020. The duo last year won state approval of a certificate of need to build a 42-bed standalone LifePoint-run rehabilitation unit at the RiverBend campus, to replace the 27-bed rehabilitation unit at University District.
Many advocates lauded the plan, saying Oregon needs more rehabilitation beds. But the Service Employees International Union, which represents many PeaceHealth food service, cleaning and other workers, objected. The union said there was no guarantee LifePoint would hire PeaceHealth workers, or that LifePoint would offer comparable pay and benefits to those offered by PeaceHealth. SEIU said LifePoint and PeaceHealth had not demonstrated they would be able to staff the facility with enough competent workers.
The state approved that application, saying the evidence showed that additional beds and the new facility were warranted.
Construction has not started on that project. A January 2026 opening is expected, said PeaceHealth spokesman Jim Murez, with an estimated 120 employees.
Labor union concerned
SEIU Local 49 has similar concerns about the new proposal as it did with the rehabilitation facility approved earlier.
“Our primary concern is how this new (psychiatric) hospital will impact the health care workers who have long been on the front lines, the patients they care for, and the overall quality of care provided,” said Ebony Price, assistant director of healthcare for the union local, in a statement.
Getting the nod from state regulators, with what’s called the certificate of need program, is not automatic.
Giant for-profit behavioral health provider Universal Health Services spent years trying to win a certificate of need for a proposed 100-bed psychiatric hospital in Wilsonville. Opponents said the site was too remote from the Portland metropolitan center where the need for psychiatric beds was greatest, and that the Wilsonville facility would siphon away the wealthiest patients who were on commercial health insurance plans. The state approved a scaled-down 60-bed facility on condition that it help metro-area general hospitals whose emergency rooms were swamped with walk-in psychiatric cases. But Universal Health then scrapped the proposal.
PeaceHealth said it hoped to open the new psychiatric facility in 2027. Until then, the University District facility will remain in operation, Murez said.
Money struggles haunt system
The proposal comes as Vancouver-based PeaceHealth continues to dig itself out of the financial hole it fell into during the COVID-19 pandemic.
In the fiscal year that ended June 30, PeaceHealth reported a $67 million loss on operating revenues of $3.5 billion. That was an improvement from a $240 million loss the previous year.
However, PeaceHealth has an investment portfolio of about $1.4 billion. Income and growth from that portfolio, which are reported separately from operating results, helped prop up the system. Taking investment results into account, PeaceHealth had an $86 million profit in the most recent fiscal year, following a $108 million loss the previous fiscal year.
I like the Lund Report's continuing investigations into Oregon's changing health care ownership structure.
When you're dealing with private equity, you can't talk about "mission" or "need" or "policy." You have to talk about the money.
Lots of the money comes from the public - from Medicare and Medicaid payments, layoffs and new unemployment applications to higher health costs for patients and higher social costs for declining standards of care.
With an out-and-out acquisition by private equity, there's added debt to the institution acquired.
With joint ventures, the added "value" provided by the the private equity partner often ends up in ruthless cost cutting.
But it's hard to find out how the money will affect the public until it's too late.
I appreciated the last section and the financial information for Peace Health - that's not easy to get!