Aug 18, 2023 - Health

Legacy Health-OHSU merger shakes up health care in Oregon

Illustration of a conference table shaped like a red cross with chairs around it

Illustration: Sarah Grillo/Axios

Two of Portland's largest health care systems, Legacy Health and Oregon Health & Science University, announced plans to merge, raising questions about the future of health care services here.

Why it matters: While many details of the merger remain unknown, it requires regulatory approval under Oregon's year-old oversight program of health care industry mergers. Until then, it's unclear how patients and providers will be impacted.

Catch up quick: Both Legacy and OHSU, which is partially state-funded, have struggled financially coming out of the COVID-19 pandemic. In its 2023 fiscal year, Legacy Health lost $172 million and sold off its lab operations as an effort to get out of the red.

  • Rising costs and workforce shortages contributed to OHSU's multimillion-dollar operating loss last year, but the health care giant rebounded shortly after its board implemented a "break-even budget."

Details: OHSU said it plans to spend $1 billion over the next decade "to support primary and community-based services that will be part of the combined system," according to a press release, but did not offer specific measures it plans to take.

  • Legacy Health will fold its seven-hospital system into OHSU's network of clinics, medical centers, research facilities and hospitals, as well as its medical and dental schools.
  • With a total of 32,000 employees between the two health care organizations, the combined system will become the largest employer in the region, with over 100 locations.

What they're saying: In a statement sent to Axios, the Oregon Nurses Association said while it doesn't "have any faith in Legacy's management" due to its recent attempt to shutter the Family Birth Center at Legacy Mt. Hood, "a merger with a public institution like OHSU [...] is likely to be in the best interests of Legacy's patients and their 13,000 staff members."

  • Last week, the nurses union declared an impasse on its contract negotiations with OHSU, setting up potential for a strike.

The intrigue: What this merger means for competition, physician pricing, negotiating power of coordinated care organizations and the state's insurance plans remains to be seen.

  • "Those are all big things that we have to sort of worry about now," state Rep. Rob Nosse (D-Portland), who chairs a legislative health care committee, told Axios.

What's next: Both organizations will work to reach a definitive agreement within the next few months. After that, regulatory overview — via the Oregon Health Authority, Washington Department of Health and the Federal Trade Commission — will commence, and likely conclude sometime in 2024.

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