Proposed merger could raise health care costs, threatening patient access, affordability

PORTLAND — OSPIRG, Health Care for All Oregon, Oregon Consumer Justice, and United States of Care submitted comments on Friday to the Oregon Health Authority (OHA) as it reviews the proposed acquisition of Legacy Health System by Oregon Health & Science University (OHSU). The comments urge the OHA to consider the impact the merger might have on the cost of health care and access to affordable care in the region. If the agency chooses to approve the transaction, the organizations recommend a set of conditions to protect Oregonians from the negatives associated with hospital consolidation.

A majority of Oregonians have experienced hardship due to high health care costs in 2024. Rising hospital prices and health care consolidation are key drivers of ing leading  to higher prices for patients and greater health care spending, often with no increase in the quality of care provided and less competition and patient choice.

“Health care simply costs too much for many people in Oregon. As OHA considers this proposal, we encourage it to fully weigh concerns about the impacts on patients,” said Charlie Fisher, state director of OSPIRG. “Health care in the Portland metro area is already heavily consolidated. The lack of market competition due to this consolidation limits consumer choice and raises prices for patients.”

A 2022 RAND Corporation review found that estimated price increases associated with hospital mergers have ranged from 3%-65%. Evidence shows that just two years after a hospital merger, prices on average increased by 1.6% – in areas with heavily consolidated markets, like Portland, prices rose nearly 5.2%.

“Lower market competition, less choice and higher costs are not a recipe for high value health care. If the merger is approved, we strongly urge the agency to impose conditions that will protect consumers,” said Fisher.

Recommendations for OHA

At a minimum, the organizations are urging the OHA to consider the following conditions to any potential merger approval: 

• Maintaining access to facilities and lines of service: OHA should require, as a condition of this transaction, that OHSU receive approval from the agency before moving forward with any material reduction or termination of essential health services to ensure robust access to services is maintained for the community.
• Limit price increases: OHA should look to other states’ transaction review programs that also aim to protect patients. For example, Massachusetts’ attorney general imposed a seven-year price constraint period to ensure that prices remained below the Massachusetts cost growth target.
• Prohibit outpatient facility fees: As a condition of this transaction, OHSU should be prohibited from charging new and existing facility fees on evaluation and management CPT codes and in hospital-owned outpatient locations for 10 years. 
• Prohibit anticompetitive contracting practices: As a condition of this transaction, OHSU should be prohibited from using all-or-nothing contracting, most-favored-nation clauses, anti-incentive clauses, and gag clauses in contracts with employers, health plans, or other providers of health coverage.
• Maintain community benefit programs: Research shows some evidence of consolidated tax-exempt hospitals decreasing their spending on charity care, compared to unmerged hospitals. As a condition of this transaction, OHSU should be required to meet a minimum spending amount for community benefits, equal to or higher than the current level of community benefit provided by Legacy to their community. OHA should consider an emphasis on community benefit spending in the areas identified in the hospital’s most recent community health needs assessments. OHSU should be prohibited from meeting this specific requirement through pouring additional funding into health professions’ training and research, or by reporting Medicaid shortfall, both categories which experts agree are often not connected to community health needs. 
• Support charity care programs: As a condition of this transaction, OHSU should be required to maintain a robust charity care program policy and notify OHA of any changes to this policy.
• Ensure Compliance: OHA should require annual compliance reporting by OHSU for a period of no less than 10 years on OHSU’s adherence to these conditions.