OHSU & Legacy Health Merger Plans Await State Approval

Over a year after the merger between Oregon Health & Science University (OHSU) and Legacy Health was made public, merger plans were submitted to health officials for regulatory review on Thursday. The process is likely to take several months.

OSU Hospital And Legacy Health Merger Plans

Following their announcement in August last year that OHSU and Legacy intend to join forces, the two Portland health systems have now submitted their definitive merger plans.

Arguing that the merger will give both parties what they need, the duo says the healthcare industry faces tremendous challenges and volatility.

Two of the biggest health systems in Oregon- with 10 hospitals between them, of which 9 are in Portland, the merger would take up most of the market share in the metro area. This may leave federal and state antitrust regulators wary of approving the deal.

The Oregon Health Authority (OHA), Federal Trade Commission, and the state’s attorney general will investigate whether the proposed merger will lead to inflated costs to patients. Launched in 2021,

Oregon’s Health Care Market Oversight program requires that mergers and acquisitions between parties that make at least $10 million in annual revenue must undergo an OHA review process.

At around $5 billion OHSU’s annual operating revenue is bigger than Legacy’s 2024 $2.9 billion, but the reality is that both hospital systems have been losing money since announcing their merger plans in August 2023.

The partially state-funded public OHSU posted an operating loss of $110 million in its most recent fiscal year, while Legacy reported an operating profit of $16 million, thanks to Labcorp buying some of the hospital’s laboratory operations which netted $98.3 million. Without the sale, the operating loss would have been $82 million.

OHSU intends to invest $1 billion in capital improvements at Legacy’s properties and will transfer $350 million to the new Legacy Health Foundation as part of the merger.

Unions React To OHSU Legacy Health Merger

The merger has been endorsed by employees at OSHU and Legacy represented by the Oregon Nurses Association, Service Employees International Union, and Oregon

American Federation of State, County, and Municipal Employees. On Thursday they said in a joint statement that they are confident this acquisition will create a workplace where every employee is valued and supported and lead to substantial improvements in patient care.

On the same day, OHSU indicated that, because of the complexity of the deal, the state’s regulatory review could take six months or longer and expect the deal to be completed by March 30 next year.