Consolidation plan would cost Eugene, Oregon, its only hospital

Oregon's third-largest city is about to lose its only hospital, illustrating the fallout of pressured health-care systems across the country. 

Operator PeaceHealth announced last week its plan to shutter University District hospital because of underutilization. The hospital in Eugene, which is home to the University of Oregon, loses an average of $2 million a month, PeaceHealth, a nonprofit Catholic health system, said in a press release. The departure will leave roughly 23,000 college students without an emergency room in town. 

Diminishing patient volume puts a squeeze on operating margins, leaving hospitals across the nation unable to pay their bills. Fewer procedures were a factor in the decline in an index tracking the median calendar year-to-date operating margins for more than 1,300 US hospitals, according to a report by consulting firm Kaufman Hall. The index slid to 1.3% in July from 1.4% a month earlier. 

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"It's clear that today's challenging financial environment is here to stay," said Erik Swanson, senior vice president of data and analytics at Kaufman Hall, in a press statement.

Should PeaceHealth receive regulatory approval, it will shutter the hospital's 27 inpatient beds along with emergency and rehabilitation departments. It plans to shift other medical services to Sacred Heart Medical Center at RiverBend, a hospital it operates in Springfield about six miles away. 

While the possible closure creates a challenge for students at the University of Oregon, the school has "a good working relationship" with PeaceHealth, a school spokesperson said in an email. "Ambulance service and the time to reach our students in an emergency will not change, but ambulance travel time to the closest ER from campus will increase by an estimated four to six minutes," the spokesperson added.

Kevyn Paul, an emergency room charge nurse at University District, said the hospital sees students every day. University District's ER sees an average of 90 to 120 patients a day, including many who are homeless and can't visit local urgent cares because they require upfront payment, according to Paul, 60, who's worked as a nurse at the hospital since 1998. 

She added that the RiverBend site and the other hospital in Springfield often experience waits for inpatient beds. 

"With additional staffing and facility improvements," the RiverBend hospital "can accommodate additional volume," a PeaceHealth spokesperson said in an email. "Due to staffing challenges at RiverBend, we have been unable to open all Emergency Department beds. Transferring staff from University District will allow RiverBend to open 12 Emergency Department beds that are currently closed, increasing patient access and improving care."

Scott Palmer, chief of staff at the Oregon Nurses Association, called the system's decision to close University District "absolute madness." 

"It is dumbfounding," he said, adding that the RiverBend facility is across a river in an area at high risk of wildfires and earthquakes, meaning it could be difficult to access in an emergency.

PeaceHealth "engages in ongoing emergency planning" and can airlift seriously ill or injured patients to RiverBend, or send them to another facility about 20 miles south of Eugene, the spokesperson said. 

Palmer's group is calling upon the Oregon Health Authority to deny PeaceHealth's request to close. The health authority said it did not receive "notification of a planned complete closure," adding that PeaceHealth's announcement "indicates they are contemplating changes in service," like a relocation, and each change requires "a separate process."

Vancouver, Washington-based PeaceHealth, lost $222 million from operations for the year ending June 30, according to a recent financial disclosure. Only 26% of its patients had commercial insurance, which reimburses at a higher rate. In March, Fitch Ratings downgraded the system a notch to A-plus, which denotes high credit quality, citing "considerable operating stress." 

PeaceHealth had about $1.67 billion in long-term debt as of June 30, according to the disclosure. That includes about $218 million in outstanding municipal-bond debt, according to data compiled by Bloomberg. Its debt-service ratio declined to 1.47 last year from 2.86 in 2021. As of the end of its fiscal year, PeaceHealth operated 10 medical centers and 139 clinics in Oregon, Washington and Alaska.