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Oregon Health & Science University, the hospital system that’s attempting to take over rival Legacy Health to form the largest employer in the Portland metro area, reported a loss of $26 million in the six-month period that ended Dec. 31, hurt in part by generous bonuses paid to nonunion staff.
Chief financial officer Lawrence Furnstahl disclosed the figures last week in a memo to the OHSU board of directors in preparation for the board meeting this Thursday.
Excluding one-time gains and losses, OHSU’s revenue rose 12% in the first half of its fiscal year, but expenses rose more, at 14%, driven by higher wages, benefits and pricier medical supplies.
Among the wage pressures: $15 million in payments to nonunion staff in the form of President’s Recognition Awards. OHSU president Danny Jacobs announced the payments, which weren’t based on individual performance, last September, saying they would cost $12.5 million. Furnstahl’s memo indicates that the program cost increased by $2.5 million, or 20%, over what was expected.
Board policy gives Jacobs the authority to spend up to $15 million on a given item, OHSU spokeswoman Sara Hottman said in an email. “For context, the FY2024 budget for OHSU is $4.9 billion,” she said.
Also driving up expenses was a new contract with the Oregon Nurses Association, ratified in October, and new state legislation requiring minimum staffing ratios, Furnstahl said in the memo. Those items pushed wage and benefit expenses $40 million over budget for the six-month period.
Furnstahl’s memo had more bad news. In a ranking done by Vizient, a health care consulting company, OHSU dropped to 56th place overall in quality and accountability out of 116 academic medical centers, down from 15th the year before. OHSU ranked near the bottom—105th—in terms of safety, Vizient said.
“Several of the metrics within the safety domain are related to very specific conditions where having one or two instances can impact the ratings,” Hottman said in her email. “This comes as OHSU faces unprecedented patient capacity challenges, and continues to see more high-acuity patients after years of deferred care during the pandemic. OHSU is using the feedback from the report to enhance ongoing quality and safety efforts and improve processes. For example, OHSU is relaunching the Surgical Site Infections and Hospital Acquired Conditions steering committees, which were paused in 2020.”
One bright spot: OHSU was No. 1 in equity, Vizient said.
The same day Furnstahl sent his memo to the board, his boss Jacobs sent an email to staff announcing an independent review into how OHSU handled the departure of Daniel Marks, former senior associate dean for research and professor of pediatrics in the school of medicine.
The review comes after The Oregonian reported that Marks had “surreptitiously, and without consent” photographed women students during a class. Marks resigned Nov. 3, 16 months after he used his phone to take the pictures, The Oregonian said.
“I have been asked why we have not communicated broadly about the news as reported,” Jacobs said in his email, obtained by WW. Because of confidentiality policies, “details about personnel issues such as those reported by the press are not shared broadly with the OHSU community. In response to the media reports, however, we can share that the behavior described is unacceptable, does not align with OHSU’s values and does not have a place at OHSU. We will always try to reiterate that, and I have personally reaffirmed many times over the last few years what our institution stands for: Our people.”
A memo sent to the National Institutes of Health confirmed Marks’ violations.
“Daniel Marks, M.D., Ph.D., has resigned from Oregon Health & Science University (OHSU) effective November 3, 2023,” OHSU said in a memo to the NIH, sent because Marks had been doing NIH-funded research. “This resignation comes after the Office of Civil Rights Investigation and Compliance (OCIC) at OHSU concluded that on at least two occasions in July of 2022, he surreptitiously, and without consent, used the camera on his phone to photograph several students (most, if not all, of whom identify as women) during sessions of MD/PHD Journal Club. Dr. Marks was removed from his role with the Journal Club and interactions with the students during the pendency of the investigation.”
Worse yet, Marks received a President’s Recognition Award before he left, the paper said.
The President’s Recognition Awards program was first reported by WW.
Originally, the awards were supposed to go to top executives at OHSU, in addition to lower-level workers. After WW reported on the program, and the Oregon Nurses Association circulated a petition, OHSU said it wouldn’t reward executive vice presidents, who would have been the biggest beneficiaries.
Bonuses for the eight EVPs, one of whom makes more than $1 million a year, were not retracted because of opposition from unions or anyone else, OHSU spokeswoman Sara Hottman said at the time.
“These are not rescinded,” Hottman wrote. “As Dr. Jacobs said when he announced the Presidential Recognition Award, the executive vice presidents’ awards were contingent upon availability of funds after all individual contributors and other UA employees were accounted for. After verifying the pool of qualified UA members, Dr. Jacobs has determined the EVPs are not eligible for these awards.“ (”UA” stands for “unclassified administrative.”)