I was disappointed to read that PeaceHealth will close Sacred Heart University District Hospital (UD) in the coming months. I can’t tell you how many of you have told me, “I was born there!” While it would be easier to simply write it off as another example of corporate hardheartedness, the reasons behind the closure are a mix of divestment and forces beyond PeaceHealth’s control. These include the choice to put revenue producing activities at RiverBend (RB), the need to make seismic improvements, and spiraling labor costs.
Planning to Fail. Let’s take a whack at the low-hanging fruit of corporate greed first. When a corporate entity wants to restructure, one infamous way to do it is to spin off all the money-losing activities in a single entity. Here, that meant keeping money-losing departments at University District, while moving moneymakers at RiverBend. Specifically, PH moved outpatient surgical procedures to RB (moneymakers), while keeping inpatient medicine, emergency, and psychiatric care (money losers) at UD. UD stopped doing outpatient surgeries at the end of 2008 and the financial trend has been in the wrong direction ever since. This is similar to their recent decisions to cease providing pediatric cardiology, optometry, and sleep medicine services in the local area.
What corporation doesn’t want to get rid of money losers? But PH is a nonprofit - a charitable entity. It is supposed to balance those money losers with moneymakers to provide benefits to the community, not just the bottom line. For this very reason, I expect that the Oregon Health Authority may take a dim view of the closure.
Infrastructure Improvements. A hospital must stay open after a major earthquake. We’re taking steps to make this kind of critical infrastructure more robust. However, retrofitting an existing building - and especially a big one like a hospital - to survive a 9.0 or greater Cascadia Subduction Zone quake is a very, very expensive proposition. Even a nonprofit has to have a sufficient annual operating margin to service the capital debt necessary to fund the renovations. UD’s operating margin was -57% in 2022, according to the Oregon Health Authority. As we would say in the Air Force, no bucks, no Buck Rogers. UD had an adequate margin to do this before the refocus toward RB in the late aughts, but it certainly doesn’t now.
Labor Costs. Looking at the data, I was struck by how little had changed for UD overall, except for operating expenses. Those shot up over the last few years for one very simple reason - labor costs. When the pandemic hit, we all worried about hospital ‘beds’ - the usual term for capacity in a hospital. But the cost of a ‘hospital bed’ is mostly the cost of staffing it with physicians, nurses, respiratory therapists, environmental health workers, and all the other people who’s collective efforts keep sick people alive. Pre-pandemic, we were already short nurses, the most critical factor in hospital capacity. Burned out on inpatient care during the pandemic, many nurses have sought greener pastures in non-hospital based work. Those that have stayed command significantly higher wages than before. (And they deserve every penny!)
Non-Factors. Much of the speculation about the closure has revolved around factors that have not proven important. Contrary to expectations that care for those unable to pay was driving the closure, the UD’s rates of bad debt and uncompensated care were down significantly in 2022 from 2021. PH itself said that excess capacity and underutilized bed was a primary motivator, but their census figures are generally in line with historical trends. Patient revenue is actually up about 15% from pre-pandemic levels. It’s just that costs are up over 40% over the same period of time.
The Future of UD. The last article I read did not mention whether the Oregon Health Authority (OHA) had approved the closure or not. As Legacy in Portland found out while it tried to close an obstetrics unit, OHA can and does use its authority to prevent closures when it has to do so to protect the public. However, should OHA take action to prevent the closure, it will do nothing to stop escalating costs and staff shortages or make seismic retrofitting financially viable. Unlike the Legacy situation, UD doesn’t just have a single department losing money, but rather the whole facility. I expect that PH will be allowed to close UD, albeit with some agreements with OHA to mitigate the impact.
One Happy Coda. As I wrote this, Lane Community College announced an agreement with PH to fund an additional 20 nurse training positions and to restart the respiratory therapy program. I’m glad to see that they’re taking some action to attack the roots of the labor shortage that is driving UD’s closure.
The Future of This Newsletter. Happily, I have a new job. The job involves a lot of writing, leaving me less motivated to do research and writing on this column after hours. Never fear! I’ll continue to write, albeit less regularly.
I've been an RN for 44 years. I worked at PH for 20 years. The pay was never an issue for me. It was the working conditions. I would have taken a pay cut if it meant better work conditions. (I realize not all think like me) And even then, I'd still be there today, in a heart beat, if my old job was available.
PeaceHealth has a beautiful mission statement, but I am perplexed as to how, over and over again, they seem to make decisions that appear counter to it. Ie, they seemed to value appearances- or the latest medical craze. over efficiency and genuine patient-centered care. RIverbend is beautiful, but, from a staff RNs viewpoint, inefficient in design. They'd asked for our input on the design but did not follow our suggestions. Peace Health has amazing, compassionate and skilled employees-the best, IMHO -but the leaders just don't seem to get it. I realize they have to have $$ to stay afloat, but then why so many decisions that put appearances over care? (Why do they treat the hospitalists, their backbone, the way they do? ) Why did - and do- the CEOs keep getting huge increases in salary? I realize that this is just how it's done in our country. But still...
The pandemic was a huge blow. Initially, when I was not allowed to wear a mask at work (yes, you read correctly), I took a short leave of absence, as I was concerned about bringing a virus home to my family that, as yet, so little was known about, and I felt they were not taking it seriously enough. ...Then they went the opposite extreme. Closing not just to visitors, but to many other valuable and potentially life saving health services, as they waited for the surge... which never came to us. Nurses were being paid to do jobs such as take temperatures at the front entrance, (as if that was going to screen out those with the virus?) as there was little to no work for them on the units.
Then, 9 months after the vaccine came out - long after we on the front lines noted that it was not a sterilizing vaccine, (and even, by then, the CDC had admitted this) -they came out with their mandate. It did not matter if you had already had covid or had worked throughout the pandemic- exposed multiple times- and never had symptoms or tested positive. It did not matter if you had a medical issue that made you high risk for a reaction. It did not matter if you believed MRNA technology could be unsafe and they were not able to answer your concerns about it. (They just ignored my questions- and yes, I asked respectfully.) You were out.
Many staff members relented at that time and took the shots, but it hurt morale, which was already low by then. Some went to other nearby hospitals, where their exemptions (medical or religious) were honored . Others, like me, sat out, unpaid, and waited for them to call me back if/when they were ready.
They called in the National Guard to help take our place. (?!?) And started paying through the nose for travel nurses. This, in turn, motivated some staff to quit and become travel nurses.. the inequity in pay was drastic. Their labor costs sky-rocketed.
Hindsight is always best. I also realize that many will not agree with my assessment. It's much more complicated than I've written here. It all just makes me sad... As usual, the least among us in our community will suffer the most. The indigent, the psychiatric patients, the elderly, the children. This will have a ripple effect for our community. I pray for all the new nurse grads. May they carry on with skill and compassion. But may we, in the community, also all take a long hard look at the current state of health care in our country.... we can and must do better.
I was Chief of Staff and attended board meetings during the decision to build Riverbend. Your article doesn't mention the detrimental role of City government in that process. The approved zoning to allow PH to build on a prepared site near Costco was rescinded in the midst of the process. Remodeling the University Hospital was $100,000,000 more expensive than building Riverbend. Freeway access was poor at University site. Growth projections suggested that population would be added to the North.
PH tried to make the best, tough decision and continues to be criticised for it
Lee Michels,M.D.