St. Charles in Bend and Redmond will share proceeds of more than $7.6 million if the proposed sale of Bend-based Clear One Health Plans Inc. is approved by regulators and Clear One shareholders, according to an analysis by The Bulletin and The Lund Report, a Web-based health care magazine in Portland.
Eugene-based PacificSource Health Plans announced in December it would acquire Bend-based Clear One, offering $26 per share for a deal worth roughly $44.4 million. Clear One, which provides health insurance to 40,000 members in Oregon and Montana, has roughly 140 employees, the majority of whom are in Bend.
The St. Charles hospitals are owned by Cascade Healthcare Community, based in Bend.
Jim Diegel, president and CEO of Cascade Healthcare, cautioned that the deal has yet to be finalized and said it’s still too soon to say how the proceeds would be used.
“CHC has not really had discussions about what we would do with any of the proceeds,” Diegel said. “We haven’t gotten that far yet.”
CHC lost $615,000 in 2008, its first operating loss, on total revenues of $427 million. CHC is due to report its 2009 financials next week.
The proposed acquisition of Clear One is awaiting approval from the Oregon Insurance Division as well as the Oregon Division of Medical Assistance Programs, said Patricia Gibford, president and CEO of Clear One. The sale has already been approved by the federal Centers for Medicare and Medicaid Services, she said.
Following regulatory sign-off, the deal would then be subject to approval from Clear One shareholders. Gibford expects shareholders will approve the deal.
Cheryl Martinis, the spokeswoman for the state Insurance Division, said the department expects to reach a decision this month. If approved, the company’s shareholders would have 60 days to approve the sale, she said.
According to state Insurance Division records, the largest Clear One shareholder is CONet Inc., also known as the Central Oregon Hospital Network, which holds 373,125 shares. CONet is a nonprofit comprising eight Central and Eastern Oregon Hospitals who were original investors in Clear One when it was founded in 1995.
Other CONet member hospitals and how much they would gain from the Clear One sale are Mid-Columbia Medical Center in The Dalles ($1.6 million), Pioneer Memorial Hospital in Prineville ($357,976), Blue Mountain Hospital in John Day ($195,965), Harney District Hospital in Burns ($182,383), Mountain View Hospital in Madras ($17,462) and Lake District Hospital in Lakeview ($12,612).
Cascade Healthcare operates Pioneer Memorial Hospital, but CHC leases the building from Pioneer Memorial, which is the beneficiary of any Clear One sale.
Mountain View Hospital is managed by Cascade Healthcare, but CHC does not own the hospital.
Other notable shareholders who stand to benefit from the sale include a large number of doctors in the region, including one whose proceeds could be as much as $1.9 million.
Harney District Hospital CEO Jim Bishop said his hospital may use the money to purchase a digital mammography machine that the hospital board and the community have been eyeing for some time.
“(The Clear One sale) will help enormously,” Bishop said. “We have new facilities and brand new equipment, except we don’t have a digital mammography machine and that is really important to us, so (the sale) could make the difference between buying it and postponing it for another year.”
Clear One was founded as a privately-held company in 1995, and was originally known as Central Oregon Independent Health Services. It was founded by CONet and a local doctors’ association called the Central Oregon Independent Practice Association.
The company’s original goal was to deliver Oregon Health Plan services, Gibford said.
“That was our first book of business,” she said. “Managed care at the time was primarily being driven outside of Central Oregon, primarily through Portland, and we wanted to drive those decisions on a more local basis.”
In October 2005, Central Oregon Independent Health Services held a public stock offering and in 2007, the company was merged into a new subsidiary, Clear Choice Health Plans Inc. That name was changed to Clear One Health Plans in 2009.
Gibford said Clear One will continue to administer insurance as a wholly owned subsidiary of PacificSource.
“We’re still in business and will still operate out of this office ... and the majority of our employees will stay employed,” Gibford said.