CEOs envision future of asset transfer at public forums

by: Photo by Holly M. Gill - James Diegel, CEO of St. Charles Health Systems, addresses attendees at a public forum last week. Mountain View Hospital board members Janelle Orcutt (chairman), Tom Kirsch and Rich Candland (seated) also spoke.

Under the ownership of St. Charles Health System, Mountain View Hospital would likely keep its obstetrics department and see an expanded surgery department, but have fewer office services.
   Those were among the projections by Mountain View Hospital's CEO Jeanie Gentry, and St. Charles Health System's CEO Jim Diegel last week, during two public forums on a possible asset transfer from MVH to SCHS.
   The asset transfer, currently under negotiation, is a result of the Mountain View Hospital Board of Directors' belief that it would be difficult, if not impossible, for the hospital to weather federal and state funding changes on its own.
   "I felt this day would come someday; I just didn't know when," said board member Tom Kirsch, who feels that the best way to address the coming changes is on a regional basis. "The day has come when we can't do it alone."
   A reorganization of the way Oregon pays for Medicaid, as well as reductions in federal payments for Medicare and Indian Health Service patients, and the loss of two doctors and a surgeon have resulted in a reduction in revenue for the hospital.
   From July 1, 2011, through June 30, the hospital had a net operating revenue of $24,827,791.08, but total operating expenses of $25,262,392.33 -- for a loss of $434,601.25. Combined with other revenue and expenses, including some one-time costs from the building project, the hospital found itself in the red for a total of about $3,162,836.65.
   Patient days have dropped 8 percent -- from 3,915 last year, to 3,587 this year. Surgery, imaging and lab tests, and clinic visits were also down from last year.
   At the same time, the hospital's capital needs are increasing, according to Gentry. By 2014, the hospital will be required to have electronic health records in place, which would cost the district $3.5 million on its own -- compared to $500,000 to $800,000 in cooperation with St. Charles.
   The hospital district was taking bids on a $22.4 million construction project at the beginning of the year, but halted the project when the cost of the project escalated and the hospital had difficulty qualifying for loans -- including from U.S. Housing and Urban Development.
   Despite the cancellation of the project, the district still needs more emergency, operating, imaging and laboratory space, in addition to equipment, and updated infrastructure -- such as a replacement for the boiler system that dates back to 1967.
   Gentry, who is the hospital's CEO, but is employed by St. Charles, said that the board initiated the contact with St. Charles.
   "The board has the authority and the responsibility to ensure the health care needs of the community are met," she said.
   Because Mountain View is a public hospital, it can't merge with St. Charles, but can instead transfer its assets to St. Charles, as the Redmond hospital did in 2001.
   Redmond, which was also a taxing district, stopped collecting taxes, but retained its district status for several years, according to Diegel, who was the hospital's CEO at that time.
   If the hospital takes the asset transfer route, both Diegel and Gentry anticipate that it could take place by the end of the year. The hospital district would transfer its land, buildings and cash to St Charles.
   In return, Gentry said, St. Charles would take over the operations, and take care of the community's medical needs.
   Janelle Orcutt, chairman of the board, said that the hospital has had a long relationship with St. Charles. "Our No. 1 concern is to keep the best quality health care in this community," she said. "We know them and trust them."
   In 2008, when St. Charles Health System began leasing and operating Pioneer Memorial Hospital in Prineville, Mountain View Hospital became the only independent hospital remaining in Central Oregon.
   St. Charles, which has about 3,200 employees and net revenue of about $560 million at the three hospitals, is a tax-exempt, not-for-profit corporation. The system employs about 75 physicans, and has another 250 with credentials.
   Assuming the Madras hospital "isn't really a big transaction for the dollar amount," said Diegel, "but it's an incredibly big transaction because it involves a community."
   "Change is happening in a way that is really new to St. Charles and Mountain View Hospital," he said. "We share many of the common values inculcated here in Central Oregon."
   If the asset transfer is finalized, Diegel said that the emphasis would be on stabilizing the medical staff at Mountain View, keeping the obstetrics department, enhancing general surgery, and bringing in additional services, such as chemotherapy and out-patient dialysis.
   "All employees of Mountain View become employees of St. Charles," he said. "There may be some role changes -- jobs may look a little different."
   "We're not contemplating any layoffs," Diegel said, although staffing may be adjusted. "People just have to trust that we'll do things right, with good intentions."
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