Two of the Portland region’s largest health care systems are merging, a business move that will likely have dramatic impacts on both patients and providers — though it’s not clear yet just what those will be.
Leaders at Oregon Health & Science University and Legacy Health announced late Wednesday that they have signed a non-binding letter of intent. Officials at both institutions declined comment beyond what they released in a joint statement.
The letter of intent is the first step in a complicated business transaction that will lead to Legacy’s hospitals and care centers becoming part of OHSU, a state-affiliated hospital system and medical school.
“OHSU and Legacy have a strong history of collaboration, and because of that, we know that together we can vastly improve and expand access to health care and preventative medicine,” Kathryn Correia, Legacy’s president and chief executive officer, said in a video statement. “This next step will enable us to anchor Oregon and Southwest Washington as a national and global leader in patient and community-focused health care, health and science education and innovative research.”
Like many health care systems, Legacy has struggled financially over the past few years, with both costs and patient needs rising in the age of COVID.
Some organizations, such as the American Hospital Association, have touted the benefits of health care consolidations, though research has shown health care partnerships are not necessarily a boon for patients. A study from the Harvard Medical School in 2020 concluded that “quality of care at hospitals acquired during a recent wave of consolidations has gotten worse or stayed the same,” after reviewing close to 250 such mergers over a four-year period a decade ago.
Legacy Health had already taken some significant steps to deal with its financial struggles, such as requiring staff to take time off three years ago. More recently, Legacy was moving ahead with plans in March to end birth services at Mount Hood Medical Center in Gresham — only to have the Oregon Health Authority reject the plan 12 days later.
The combined system is expected to employ more than 32,000 people, making it the largest single employer in the Portland region. It will include more than 100 locations, including 10 hospitals.
OHSU is no stranger to partnerships. The institution finalized a partnership with Tuality Healthcare in 2016 after signing a joint letter of intent the previous year. OHSU started a similar partnership with Adventist Health in 2017.
The financial details of the merger have not been released.
In their letter of intent, the two organizations wrote that OHSU plans to make a commitment of roughly $1 billion over 10 years, mostly funded through bonds, for capital projects to support “primary- and community-based services that will be part of the combined system.”
The letter also states that Legacy will use its net cash on hand and its investments, above its outstanding debt, to create a new foundation focused on “physical and mental well-being and address inequity in health care, including social determinants of health and behavioral health.”
It’s also not yet clear if Legacy staff will become public employees, like those at OHSU. The unions representing hospital staff say they are watching news of the merger closely.
“Our focus remains on how a merger of this scope may impact health care workers, patients, and the overall quality of care provided,” Felisa Hagins, political director of SEIU Local 49, the union representing workers at four Legacy Health System hospitals, said in a statement. “We look forward to future conversations with OHSU and Legacy Health on how we can work together for the benefit of our members and patients throughout the region.”
The Oregon Nurses Association, a union for nurses and other health care workers in the state, said in a statement that OHSU and Legacy’s announcement comes exactly one week after nurses declared an impasse in ongoing contract negotiations with OHSU.
“While nurses at OHSU have been at the bargaining table looking for management to step up and do what is right for their nurses and their patients, OHSU’s management have been short-changing the nurses in their contract offers while also pledging more than $1 billion over ten years to an acquisition,” ONA said in its statement. “OHSU management should step up with a fair contract for the more than 3,000 nurses at OHSU before undertaking one of the largest health care mergers in Oregon’s history.”
The union said the merger “brings up more questions than answers.”
OHSU and Legacy said they are working toward a definitive agreement, expected in the coming months. The merger is expected to close in 2024, according to the organizations, though it will be subject to a regulatory review.