Setting a course: Silverton Health board examines hospital’s options

June 2014 Posted in Business, News

By Kristine Thomas 

Gayle Goschie understands the decision being pondered by the Silverton Health Board of Directors is one that can affect everyone in the community.

“It’s one most community members care about the outcome,” said Goschie, who is the board’s chair. “It’s a big issue and it’s not one the board is taking lightly. We are really taking our time to make the right decision.”

The Silverton Health Board of Directors is considering what role Providence Health will play in Silverton Health’s future.

There are currently three options on the table, Goschie said. The options are: Silverton Health remains independent and continues to have Providence provide services such as purchasing agreements and accounting and billing services; Silverton Health enters into a management agreement with Providence, or the board agrees to have Providence acquire Silverton Health.

The board would like to make a decision by the end of the calendar year, Goschie said, adding the board is not receiving pressure from either Providence or the administration on how to proceed.

The board members are Goschie, Dave Buck, Beth Davisson, Dr. Elizabeth Blount, Darcy Ruef, Robert Engle, Dr. M. Frank Golden, Gary Simon, John Zielinski, Mike Dickman and Jane Jones. Dr. Brooke Renard attends the board meetings as the medical staff president but cannot vote.

On Tuesday, May 27, Goschie, Buck, Ruef and Engle meet with the hospital’s medical staff to share what the board is considering and to receive input. About 50 people attended the meeting, including Blount, Renard and Golden as members of the medical community.

Goschie said considering the future of Silverton Hospital, founded in 1918, and the Silverton Health system is an important task board members take seriously, adding each board member has strong ties to the community and understands what Silverton Health means to community members.

“We could have made decisions behind closed doors. We did not do that, and we are not going to do that,” Goschie said. “This may be the most important work that I am personally going to be involved in as a volunteer.”

Several people who attended the meeting said it was a frank discussion and there were varying opinions on the options.

“What people want to know is what is best for the community and how does the hospital continue to serve the community,” said Rita Baiocco Kester, the hospital’s public relations and communications director.

One rumor that has been circulating throughout the community, in Salem and with hospital staff is that Providence has already acquired the hospital.

Both Goschie and Baiocco Kester said no decision has been made.

“The board has formed an exploratory committee so they can talk to as many people as possible and get feedback. They want to get everyone’s opinions and find out their concerns,” Baiocco Kester said. “It is not a done deal.”

Goschie emphasized the board has not determined what it will do.

“We are taking the time to hear from people and to investigate things ourselves,” she said. “This is a really important time for the hospital and it’s going to take a number of months to pull all the information together to make a decision.”

Among the many questions the board will need to answer is, if acquired, would the hospital be secular or religious?

According to the Providence website, “Providence Health & Services is a not-for-profit Catholic health care ministry committed to providing for the needs of the communities it serves – especially for those who are poor and vulnerable. Providence Health & Services continues a tradition of caring that the Sisters of Providence began more than 155 years ago.”

Providence affiliated with Swedish Health Services in 2012. Now the system includes 32 hospitals, 350 physician clinics, plus other health and educational services. It employs more than 64,000 people in Oregon, Alaska, California, Montana and Washington. It is headquartered in Renton, Wash.

Baiocco Kester explained Silverton Health has had a working relationship with Providence for 20 years. About 18 months ago, she said, the hospital entered into memorandum of understanding to work closely for better efficiency of services.

Silverton Health CEO/President Rick Cagen joined Silverton Health in October of 2010.  He was promoted to president/ CEO in 2011 when Bill Winter retired.  Previously he served as the CEO and administrator of Shriners Hospital for Children in Portland beginning in 2008. Prior to that, he held leadership positions for six years at Providence Health & Services in Oregon.

Cagen has told the board he believes it is best to enter into a management agreement with Providence, and then for Silverton Health to be acquired.

He said health care reform has had an impact on how the hospital is reimbursed from federal, state and private insurance. Cagen said a few months ago the hospital was reimbursed for 50.5 percent of its charges – now that rate is 49 percent.

“That may not sound like a lot, but with an annual revenue of $200 million, that is a decrease of $2 million,” he said. “Financially, we have responded and reduced our expenses 3 to 4 percent.”

Cagen said he’s not blaming all the hospital’s problems on the health care reform.

“We, like all hospitals, have made decisions in the past that have had a negative impact on our bottom line,” he said. He did not elaborate.

Cagen emphasized the board ultimately will make the decision on the hospital’s future.

He and his administrative team have provided the board with information and data. Cagen has made the recommendation that the board enter into a management agreement for a period of time and “eventual acquisition is the way to go.”

“From a data and financial standpoint, we are struggling financially,” Cagen said. “We have large capital projects we need to do and we don’t have the cash to fund those projects. If we want to continue to grow and provide quality service to our community, we must partner. The benefit would be financial stability to our organization.

“We want to continue to provide care for our communities,” he said. “A larger organization will allow us to continue to be successful and continue to provide services.”

Dr. Rodney Orr, a member of the Silverton medical community for 36 years, is concerned. He said he worries about the hospital losing local control if it is acquired.

“What we have is special,” he said. “The community donates its time and its money to the hospital. The patients feel like it is their hospital. When we have problems, we have the ability to change or fix things.”

He encourages the board to carefully examine the data and both past and projected financial reports, and possibly even bring in an independent consultant to review them. Orr would like to know if there are other options to keep the hospital independent. He encourages the board to ask, “Whose hospital is it?”

Goschie said the board wants to determine what is best for the hospital in the next 5, 10 or 20 years.

“We may find after we have done our research it’s best to remain independent, or we may realize that going into a management agreement is in the best interest,” she said.

“The advantage of a management agreement is that it gives us some time and some insight of how a more formal agreement is going to function.”

Goschie said the reason to take the investigative steps now is because Silverton Health is “not in dire straits. We have made amazing progress as far taking a community hospital in a very difficult time in health care and being able to continue to keep it on even keel.”

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