The Oregon Health Authority convened the community review board as part of a review of OHSU’s purchase of Legacy. A 2022 law gives the agency the power to place conditions on health care mergers and acquisitions, or to disapprove them outright.
The group’s recommendation isn’t binding on state regulators, but it is one factor they will consider in evaluating whether the deal meets the state’s approval criteria.
OHSU has agreed to acquire Legacy’s eight hospitals, $3 billion in assets and $1.4 billion in debt, with a promise to invest an additional $1 billion in upgrades to Legacy’s facilities. If regulators allow the deal to move forward, it would create the largest health system in the state.
The community review board included retired physician Howard Cohen, retired nurse Teresa Goodell, community volunteers Leslie Foren and Latorria Haskin, and retired pharmacist Joe Schnabel. Two prior members resigned, and one was absent for the final vote.
Last week, the group voted unanimously to recommend disapproval of the transaction, citing research that has shown that hospital consolidation is likely to drive up the cost of care. They formalized that recommendation in a memo addressed to OHA this week and took a final vote, which was also unanimous. The transaction, they said, had the potential to harm Oregonians.
“Key concerns included increased commercial prices and health insurance premium costs, which would then be passed along directly to consumers, decreased choices for health care (from two systems to one), and workforce issues,” the group wrote.
The review board said they were concerned about reducing competition in the Portland area, and were unconvinced by OHSU and Legacy’s argument that the deal will improve access. They also said partners have relied too heavily on the creation of a foundation to meet the state’s equity requirements, without providing enough specific plans or metrics to address health equity.
“The CRB did not believe that access to care for underserved areas would increase and stated that the entities could find other ways to achieve these goals without the proposed transaction,” the board members wrote.
Legacy executives told the advisory group that if the state prevents the deal from closing, they will need to seek higher Medicaid reimbursement rates from the state and make additional service cuts to stay financially healthy. The hospital system will also need to look for another buyer in the long run in order to finance necessary capital improvements, executives said.
Earlier this week, Legacy touted its improving financial situation, garnering an “A” rating from the S&P Global Ratings, with a “stable outlook.”
Meanwhile, OHSU’s leadership disputes that prices will increase more if the transaction goes forward than if it does not.
In a March 21 letter to the CRB, Steve Stadum, OHSU’s interim president, said health care costs will continue to rise regardless of the transaction due to inflation, pharmaceutical costs, and wage increases.
“We are grappling with the same pressures every hospital in the nation faces,” Stadum wrote.
The Legacy deal is OHSU’s best chance of “bending the cost curve toward a sustainable rate,” he said, arguing it is a benefit to the public.
OHSU executives say the deal will improve access to care by reducing wait times for appointments, particularly for specialty services, which they say are among the worst in the country.
The state is just over halfway through its 180-day review period for the deal. The review clock is currently on pause to give Legacy and OHSU time to respond to a request for information from the state, according to OHA spokesperson Amy Bacher.
OHA staff are continuing to work on their analysis of how the deal will impact Oregonians and the cost of health care. They will continue to accept public comments while the transaction is under review. A final decision could come sometime in mid-July.
