Cascade Healthcare will run Prineville’s hospital

By Rachael Scarborough King / The Bulletin
Published: July 31. 2007 5:00AM PST

PRINEVILLE — The membership of Pioneer Memorial Hospital voted Monday night to accept a lease agreement that would hand over responsibility for running the hospital to Cascade Healthcare Community, the parent company of St. Charles Medical Centers in Bend and Redmond.

The deal leaves Pioneer Memorial with ownership of the hospital’s land, buildings and equipment. Cascade Healthcare will be in charge of the day-to-day operations of the hospital, including employing the staff.

Cascade Healthcare has had a management agreement with Pioneer Memorial since 2001, meaning that it employs the hospital’s top administrators. It has a similar arrangement with Mountain View Hospital in Madras.

The company’s monthly rent will be equal to what Pioneer has to pay each month for its long-term debt liability, according to the terms of the lease agreement. That number will fluctuate, but a consultant for the hospital said Monday that the figure is currently a little less than $100,000 per month. Cascade Healthcare also agreed to a minimum $200,000 capital investment in Pioneer Memorial each year. The lease runs for a 23-year term.

Mark Severson, chairman of Pioneer Memorial’s board of directors, said before the meeting Monday that the deal will provide more support for the small, rural facility. Pioneer Memorial has federal designation as a critical access hospital, which means it gets more Medicare dollars, and it will retain that designation under the new agreement.

“Pioneer Memorial Hospital is having a difficult time keeping up with technology and services to our local community because it’s just so expensive to provide that, so we’re looking for a way to keep PMH healthy and keep it providing the great health care it has in the past to the community,” Severson said. “This would create more of a regional health system, which is good for the patient and is good for the community.”

After the vote, Severson said he doesn’t think that patients will notice big changes right away. He said he doesn’t know whether fees will increase, but he thinks they will “stay competitive.”

“I think they’re going to see business as usual at first, and I think as time goes on there will be gradual transitioning, but I firmly believe what we’re doing here is going to improve health care,” he said.

Jim Diegel, CEO and president of Cascade Healthcare, said the level of services should stay the same in Prineville.

“Our intention is to maintain services that are currently in Prineville,” Diegel told the members.

“Some of you may have heard that services in Redmond have been reduced as part of the merger (in 2001) … actually, there are more services that are offered now in Redmond than there were pre-merger.”

The hospital’s membership approved the agreement by a large margin, 51-15. Anyone who pays a $250 fee can become a member of Pioneer Memorial Hospital, and many of the members are hospital staff.

Under the terms of the agreement, the membership will stay in place and continue to elect the hospital board, which will act in an advisory role to Cascade Healthcare’s board.

All of Pioneer Memorial’s staff will be given jobs with Cascade Healthcare with at least their current salaries, according to the lease. Pioneer Memorial Hospital also will retain its current name, unlike when St. Charles Medical Center-Bend acquired the former Central Oregon Community Hospital in Redmond.

“I think in retrospect that was not the right thing to do,” said Diegel, who was the CEO of Central Oregon Community Hospital. “What we learned when we changed the name in Redmond, and that was very painful to those of us in Redmond at the time, when you change the name, you change the identity, you take away the history, you take away the pride.”

Diegel noted that the agreement with Pioneer Memorial is a lease rather than a merger of assets, which leaves more control with the Crook County community.

Thomas Matheson, a doctor at Pioneer Memorial, called the lease the “lesser of evils.”

“I’ve listened to a lot of fears and worries on this. I feel this is the only possible successful alternative,” Matheson said. “This may be a way to live in a time of a lot of changes, and those changes aren’t going away.”

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