Earlier this month, an obscure company known as Oregon Healthcare Enterprises donated $400,000 to the Oregon Hospital Political Action Committee.
That single donation — one of the largest so far this year in Oregon politics — is the tip of the iceberg of an unusual method of financing political activities. Critics question whether it’s an indirect way for nonprofit hospitals to do something they can’t do directly under federal tax law: give campaign money to favored candidates.
“It’s definitely a way to wash money into the political action committee,” said Rep. Julie Parrish, R-West Linn, who has frequently battled with the hospital association. “It’s about as transparent as mud.”
Oregon Healthcare Enterprises is a for-profit subsidiary of the Oregon Association of Hospitals and Health Systems, one of the most influential political players in the state Capitol. The subsidiary sells data services to the state’s hospitals and to state government itself, largely to help manage the hospital provider tax that pays most of the state's share of the Medicaid health care program for people with low incomes.
Healthcare Enterprises is headed by an eight-member board, seven of whom are hospital executives. Since 2010, the company has funneled about $1.5 million of the $2.2 million raised by the hospital association’s PAC.
In turn, the hospital PAC gave nearly $300,000 to legislative candidates in the last election cycle, with many of the contributions made after the election when it was clear who would be in office.
Philip Schmidt, the association’s associate vice president for public affairs, said the political contributions are a legitimate use of the data service firm’s profits.
“Everything is done in complete compliance with the law,” Schmidt said. “Using the word ‘wash’ gives it a nefarious … angle that just isn’t accurate.”
Oregon Healthcare Enterprises has been a target for controversy since it began receiving money from both the state and the hospitals to manage the growing amounts of money flowing through the provider tax.
Much of it has been focused on how the salary of the hospital association's president, Andy Davidson, has dramatically increased. It went from less than $400,000 in 2008, to more than $1.2 million in 2015, the latest year available.
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The Affordable Care Act allowed Oregon to aggressively expand Medicaid coverage. Now, roughly a quarter of Oregonians get their health coverage through the program at a total cost of more than $9 billion a year, most of it paid for by the federal government.
Willamette Week last year reported that Healthcare Enterprises received nearly $6 million a year to help manage the program. In addition, the firm received an average of $500,000 a year from 2011 to 2017 to manage the provider tax.
Last year, legislators eliminated a proposed $400,000 contract with the company as lawmakers scrambled to find enough money to match with federal funds to avoid cuts to Medicaid.
Rep. Mitch Greenlick, D-Portland, and chairman of the House Committee on Health Care, has fretted that some health care organizations are using that Medicaid money to exert more political influence over elected officials. Last year, he introduced a proposed constitutional amendment that would prohibit “publicly financed entities” from giving more than $500 to candidates or political committees.
The measure never went anywhere. Greenlick said his major focus was on coordinated care organizations, which are private entities setup to treat Medicaid patients. But he said the general principle applies to other government contractors. He noted that hospitals may well be a majority publicly funded when Medicare and Medicaid are included.
“I really believe that enterprises that are tax-funded should not be able to give contributions,” he said.
Schmidt, the hospital association spokesman, said that Healthcare Enterprises — which does business under the brand name Apprise — charges a fair market price for its services and can decide what to do with its profits.
“I think that the board of directors of Apprise wants to do everything above board and be clean as a whistle,” he said. “And that’s what they do. They sell services to the hospitals and distribute their revenues in the way that benefits their customers.”
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In addition to donating to the hospital PAC, the company has also given about $2 million since 2010 to the hospital association’s research and educational foundation, Schmidt said.
Kate Titus of the Oregon chapter of Common Cause, a political watchdog group, said the hospital PAC is able to raise so much money from one firm because Oregon doesn’t limit the size of campaign donations, as do many states.
Courts in Oregon have repeatedly struck down attempts to limit political donations, saying it violates the state constitution’s free-speech protections.
“It is problematic that an entity like this is spending such a large amount of money to influence this process,” said Titus, adding that it’s particularly the case since it’s so unclear where the money is coming from.
