The nation's largest nurses organization has criticized the decision of Oregon Attorney General Ellen Rosenblum to approve the proposed merger of two large Catholic hospital systems, which nurses say does not offer safeguards for Oregon patients.

The unification of Providence Health & Services (PH&S) and St. Joseph Health System (SJHS) would affect governance and control of over 50 hospitals and numerous affiliated entities, in seven states—including eight Oregon hospitals, creating one of the largest Catholic hospital systems in the U.S. 

“These systems now have a green light for a merger that will only ensure community benefit expenditures and charity care policies are maintained for 7 years in Oregon. Consultants looking at the impact of the merger in California have suggested 10 years, and nurses know that even that is not enough,” says Malinda Markowitz, an NNU vice president. “Studies have also shown that mergers can raise the cost of care for patients—and we think the people of Oregon deserve better.”

Not every state that has a PH&S and/or a SJHS hospital has a public review process to determine the merger's affect on communities.  The Attorney Generals of California and Oregon do have the option of reviewing and imposing conditions on the merger. While both Attorney Generals received requests from the systems to waive a review of the merger,  California Attorney General Kamala Harris chose to require a thorough investigation with an independent consulting firm creating impact reports for each of the hospitals affected. Rosenblum declined to conduct a review. (By law, Washington’s Attorney General does not have to approve the merger at all.) 

While nurses say they are pleased some conditions were imposed on the transaction in Oregon, the lack of a full investigation leaves the following concerns:

• Negative impacts on cost and accessibility of healthcare services. Though SJHS and PH&S contend that this is a mission-based merger, nurses say it is obvious from the their filings that the primary purpose of the merger is to allow SJHS and PH&S to obtain substantial financial benefits through access to capital, by means of a “single obligated group”—an arrangement that will benefit them financially through increased size and market power, and leveraging combined net assets. Meanwhile, the hospital systems have not specified what will happen with their increased profits—and whether they will benefit patients and communities. According to several studies, including a 2007 Journal of Economics study, mergers cause patient costs to go up.
• Reduced charity care and other community benefits in Oregon. The hospital systems have only described in the vaguest terms that the consolidation would enhance healthcare for underserved populations, including the poor and vulnerable. However, data submitted by PH&S to the Oregon Health Authority shows that its charity care spending as a percent of its operating expenses in 2014 (just 4.4%, below the 5.62% average) declined from PH&S’s 10.4% in 2012 and 11.28% in 2013. The Oregon community benefit requirement would also not be tied to inflation, essentially reducing the amount PH&S Oregon has to provide over time. Given the non-profit status of PH&S, nurses say a decrease of community benefit requirements is of great concern.
• History of poor patient care conditions and nurses’ rights violations at SJHS. Nurses say they are especially concerned about a merger when the California-based St. Joseph Health System has already been the subject of a 2015 report “Falling from Grace: St. Joseph Health RNs Raise Ethical and Patient Care Concerns,” in which NNU cites a number of areas that reflect “priorities of present day corporate management who increasingly value maximized profits at the expense of patients, RNs, taxpayers and SJHS’s own stated principles.”

In particular, SJHS and its hospitals, the report asserts, have:

• Reaped millions in tax subsidies from California taxpayers, while providing among the lowest amount of charity care of any Catholic system;
• Invested patient care and tax subsidized funds into for-profit companies, including hedge funds in the Cayman Islands;
• Launched a system-wide campaign to illegally restrict the rights of its RNs to organize a union to advocate for improved treatment of patients and RNs;
• Been charged with scores of violations of federal law in the past year as a result of their anti-union campaign against their RNs;
• Imposed sweeping cuts in disability, medical leave, and retirement security on thousands of SJH employees, while paying exorbitant executive salaries and benefits.

The full report is available at: SJHFallFromGrace.com

“We are disappointed that Oregon patients were not given the benefit of a full investigation into the merger,” said Markowitz. “As nurses, it’s our job to advocate for our patients, and we know conditions need to be imposed to ensure that this is not just a transaction that benefits two extremely wealthy hospital systems. Nurses are opposed to any and all mergers that don’t guarantee patients and their communities a higher standard of care.”