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More than a year after announcing the deal, Oregon Health & Science University filed with the key state regulator to purchase crosstown rival Legacy Health and make it a subsidiary.
OHSU filed documents detailing the purchase with the Health Care Market Oversight program, a unit of the Oregon Health Authority and an entity bound by law to review health care mergers and acquisitions that affect Oregonians. Federal and state justice departments may review it as well.
HCMO’s review, “one of the most rigorous and robust in the nation,” is expected to take six months or more, OHSU said, with the purchase closing in early 2025. If approved, the combination will create the largest employer in the Portland metro area with 32,000 doctors, nurses and other staff, 12 hospitals, 100 other locations, and 3 million patient visits a year.
“The OHSU-Legacy integration gives Oregon what it urgently needs to ensure people get the right care at the right place and at the right time, and to limit cost growth by preserving and improving existing community resources and services,” OHSU president Danny Jacobs said in a statement.
OHSU moved to acquire Legacy after the COVID-19 pandemic, when both institutions were losing money because of rising costs for labor and supplies and a dearth of patients seeking more complex, higher-margin care. By combining, the two hospital systems aim to find economies of scale.
But a document sent to OHSU leaders indicates the deal won’t provide an immediate solution.
“Initially, the new, integrated system is likely to incur short-term operational losses through 2028,” the document, obtained by WW, reads. “Most of these losses are driven by factors independent of the integration proposal, would accrue to our individual health care systems without a combination and are similar to those impacting our peer institutions nationally.”
Major health care unions said they approved of the merger, despite concerns among rank-and-file workers that the deal will lead to layoffs. OHSU will make all staffing decisions “as transparently and with as much notice as possible,” OHSU said in the communiqué to leaders.
In an agreement signed by Jacobs and leaders of five unions obtained by WW, OHSU agreed not lay off any more union workers before the Legacy deal closes and for 12 months afterward. OHSU has been shedding workers for months to cut costs. Employees let go between 12 months and 24 months after the merger will get six months of base pay and six months of COBRA health benefits.
The signatories to the labor agreement are the Oregon Nurses Association, the Pacific Northwest Hospital Medicine Association, the American Federation of State, County and Municipal Employees Council 75, the Oregon Federation of Nurses and Health Professionals, and the Service Employees International Union Local 49.
“We are eager to collaborate with OHSU throughout this process to realize the full potential of this acquisition,” the unions said in a statement. “By prioritizing job security, professional development, and an inclusive workplace, this acquisition is poised to make OHSU the premier healthcare provider and employer in the region.”
Among the issues HCMO will examine in its review of the merger are access to care and cost.
In its public statement, OHSU said costs at the combined hospital system are expected to grow at “roughly the same rate as if Legacy and OHSU remained separate, reflecting national trends in health care. As a public health system, OHSU has no incentive to increase costs beyond what’s necessary for financial stability.”