State Approves Expansion of Major Central Oregon Health System

State regulators gave the green light yesterday to St. Charles Health System’s proposed acquisition of a chain of doctor-owned neurosurgery centers.

It comes after the nonprofit health system, which runs four Central Oregon hospitals, tried and failed to fast-track the approval process by arguing the chain, known as The Center, was in dire financial straits.

Now, regulators at the Oregon Health Authority have finished their review of the deal and decided to allow it—with conditions “designed to mitigate OHA’s concerns regarding health care costs and access in Oregon,” according to the Oct. 24 report describing their rationale.

A spokeswoman for the nonprofit said that although the decision was overall “good news,” it would appeal the decision to impose conditions. “The integration of The Center and St. Charles is of extreme importance to preserve essential care in our community,” Alandra Johnson said.

The Health Care Market Oversight Program, the regulator created by the Oregon Legislature in 2022 to review major health care mergers and acquisitions, is being closely watched in the run-up to its biggest decision yet: whether to approve the blockbuster merger of Legacy Health and Oregon Health & Science University. This decision offers some insight into HCMO’s thinking as it weighs that much bigger deal.

The program’s report notes that the deal would create a “vertically integrated system,” which tends to lead to higher prices without improving care. So, HCMO is restricting St. Charles from engaging in certain common anti-competitive tactics in the health care industry, like requiring the newly acquired doctors to use St. Charles’ facilities.

Another tactic: imposing hospital “facility fees” on top of doctors’ typical charges. HCMO is banning St. Charles from charging new facility fees for 10 years.

That’s contentious. “We are not...in full alignment with all the conditions outlined in the approval,” Johnson says. “Specifically, one provision lasts for a period of 10 years, which is twice as long as any other condition.”