Oregon Health Authority rejects fast-track process for St. Charles Health System acquisition of The Center

BEND, Ore. (KTVZ) -- The Oregon Health Authority has rejected a request by St. Charles Health System to fast-track its planned acquisition of The Center Orthopedic and Neurosurgical Care & Research, Willamette Week reported Thursday.

The Center and St. Charles Health System announced last month they signed "a letter of intent to explore expanding their relationship to preserve and strengthen access to orthopedic, neurosurgical, physical medicine and rehabilitation medicine in Central Oregon. " 

St. Charles noted at the time, "A transaction of this nature will be subject to review by the Oregon Health Authority under its Health Care Market Oversight program. However, given the urgency of the current situation and the threat to patients, The Center and St. Charles intend to seek an emergency exemption from the Health Care Market Oversight review process, in the hopes of expediting the integration plans and the parties’ ability to more immediately stabilize care in the community."

OHA, however, said St. Charles hadn’t provided “concrete statements” that existing staff would be brought on at competitive salaries, Willamette Week reported. Also, regulators reviewed The Center’s financials and, in an Aug. 2 letter, concluded they showed a degree of financial stability and did “not indicate an immediate threat of insolvency.”

Asked about the Willamette Week article referring to the planned deal as an acquisition, St. Charles spokeswoman Alandra Johnson said Friday, "The details of the transaction are not yet finalized, but the intent is for St. Charles to employ the majority of The Center physicians, providers and staff," which totals about 200. "We would also likely purchase much of the equipment."

OHA’s action precludes a fast-track approval only. A regular approval is still in the offing, though Johnson said the timeline for the deal is "unclear."

"Many of the details have to be worked out as part of the due diligence process with the intent of The Center providers and staff to join the St. Charles team," she told NewsChannel 21. "As we move through the process, additional details will be made available regarding specifics. At this time, we anticipate that clinic locations will remain the same as they are today. " 

St. Charles President and CEO Steve Gordon said in a statement provided Friday to NewsChannel 21: "This news is disappointing and concerning, given the gravity of the situation, as we attempted to convey in our application. We will continue to work constructively with OHA to follow their established processes for review. At the same time, I believe this action raises serious questions regarding the HCMO Program itself and whether some sort of legislative reevaluation is merited."

Still, Willamette Week said the St. Charles action indicates that OHA’s Health Care Market Oversight office may take a hard look at mergers as industry consolidation gathers pace.

Among the deals it is expected to consider soon is Oregon Health & Science University’s blockbuster acquisition of Legacy Health. OHSU and Legacy have yet to apply for approval from the health authority.