Adventist Health wants to cut hospital beds in The Dalles to boost reimbursements

THE DALLES — Adventist Health Columbia Gorge in The Dalles has asked the state to let it decommission 24 of its 49 licensed hospital beds as it pursues a special federal designation that could help its bottom line. And now state health officials are asking for the public's thoughts.

The designation as a “critical access hospital” would allow the hospital to collect significantly higher Medicare reimbursement rates under a program intended to ensure access to critical medical services in rural areas.

The application by Adventist Health comes two years after the state approved a sometimes-contentious acquisition of the former Mid-Columbia Medical Center by Adventist, during which Adventist promised to maintain services.

In an Aug. 28 letter to the Oregon Health Authority, a lawyer for Adventist Health said  it has invested millions of dollars and other resources, but in order for it to fulfill its pledge to “strengthen and grow” Adventist Health Columbia Gorge, obtaining the new federal designation may be “the single most significant change the hospital can make to realize this critical improvement.”

A spokesperson for Adventist Health wrote Monday the hospital doesn't expect to lay off any of its employees if the beds are decommissioned. The hospital has 516.3 full-time-equivalents.

Further, she wrote, the hospital's daily census over the last 10 years averaged 17 patients, so the decommissioning of beds is "technical, rather than operational." 

"We expect the shift to improve our ability to ensure a long future continuing to serve the communities of the Columbia Gorge," she wrote.

The lawyer’s letter argued that because Columbia Gorge patients can be moved to other hospitals in the area, services will be maintained. Adventist “does not anticipate its proposed reduction of bed count will cause services materially to be reduced, restricted, or eliminated, thanks partly to transfer agreements with hospitals in Hood River, Ore., and White Salmon, Wash.” 

The agency's merger review office, known as the Health Care Market Oversight program, has announced that it is asking for public input in response to Adventist's application. People can send an email to hcmo.info@oha.oregon.gov, fill out an online public comment form, or leave a voicemail at 503-945-6161. More info can be found on the state's webpage.

The system's bid to convert the hospital in The Dalles mirrors a national trend at a time when rural hospitals are facing major financial challenges. Fueling the situation in part is that some local residents prefer to travel to urban areas for hospital care, meaning rural hospital leaders’ hopes to grow patient revenue don't come to fruition, according the Healthcare Financial Management Association.

Oregon has long had one of the country's lowest number of hospital beds per capita, ranking only below Washington and New Mexico in 2023, according to the KFF foundation. In the past, some analysts associated that distinction with other measures indicating lower spending in Oregon, and considered that a mark of pride — reflecting a local medical culture that avoided waste. But during the pandemic Oregon's low number became a point of concern and critics used it to call for less regulation.

Continued losses

According to a bond filing, the hospital's financial performance has dramatically improved since being absorbed by Adventist Health. 

Still, the facility lost about $5.3 million on an operating basis last year, meaning its operating costs exceeded revenues by that amount.  The system's two other Oregon hospitals, Adventist Portland Medical Center and Adventist Tillamook Medical Center, also lost money on an operating basis last year.

Adventist Health System West is a large health care system that operates 27 hospitals and 440 clinics in California, its largest market, Hawaii and Washington, in addition to Oregon. The California-based system recently issued $425 million in bonds, largely to refinance its debt. It employs about 38,000 people, about 11 percent of whom are represented by a union. Systemwide, it lost $119 million on revenues of $6.9 billion last year, according to the bond documents.

The state’s approval required Adventist to meet a series of conditions, including: investing $100 million in Mid-Columbia over 10 years; that the hospital “will continue … operating substantially all of its facilities, services, and programs…”; and that Adventist would impose “no religious-based restrictions on medical procedures or services, including abortion, fertility services, birth control, sterilization, family planning counseling, gender-affirming services, and end-of-life services.”

(Nick Budnick contributed reporting)

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This story was originally published by The Lund Report, an independent nonprofit health news organization based in Oregon. It is republished with permission. You can reach Mike Francis at Mike@thelundreport.org.