Heidi Hagemeier / The Bulletin

Signs bearing the longtime name of Jefferson County's lone hospital — Mountain View Hospital — came down on Monday.

The 25-bed facility in Madras, built in 1967 and added onto seven times over the decades, became part of the St. Charles Health System on Jan. 1. The signs now say St. Charles Madras.

It's the first change patients will likely notice about the rural hospital's move into the regional system. Other changes are expected take place gradually in the coming years.

Renovations, such as adding a second operating room, are on the table. Down the line is possibly making available tests or services that patients presently travel to get in Redmond or Bend.

What will not change, those involved in the transition say, is the level of services at the hospital.

“To me, it's a win-win for Jefferson County,” said Tom Kirsch, an area farmer who has served on the Mountain View Hospital board of directors since 1979. “We see the same services being continued. That's part of our agreement. In fact, I think it's only going to get better.”

The St. Charles system has pledged to invest at least $10 million over the next four years in the Madras hospital. On the list of needs are a few big-ticket items, such as replacing the more than 40-year-old boiler and a conversion to electronic medical records, which is a requirement of the federal Affordable Care Act.

Other details of the agreement include the transfer of $9.7 million of Mountain View's assets to St. Charles. Madras represents about 3 percent of the health system's overall assets. Also, the agreement offers employment to the hospital's 220 staff. Salaries and benefits might be increasing or decreasing depending on the position.

The addition of the Madras hospital is the latest in the growth of St. Charles, which in just more than a decade has gone from a single hospital to a larger health system that operates every hospital in Central Oregon.

The Central Oregon District Hospital in Redmond joined with the larger St. Charles Bend in 2001.

Prineville's hospital, Pioneer Memorial Hospital, entered into a lease agreement with the system in 2008 in which Pioneer continues to own the land, buildings and other fixed assets. St. Charles runs the hospital, taking on its profits and losses.

Jim Diegel, president and CEO of the St. Charles system, called Madras' inclusion a natural progression that will lead to better care coordination in the region. St. Charles has provided management services for the Madras hospital since 1998 and at times serves the same patients.

“You're still going to see the same caregivers in Madras, you're still going to get that personalized attention that patients have come to expect in Madras,” he said. “But now you've got the strength, the system support, the capital, the technology and other resources of St. Charles Health System available.”

Resources needed

The Madras hospital is a smaller player compared to the system's flagship, St. Charles Bend.

The Jefferson County hospital sees about 1,200 inpatient and outpatient visitors a year, plus 12,000 emergency room visits, said Jeanine Gentry, CEO of St. Charles Madras. By contrast, St. Charles Bend in 2011 handled 7,905 inpatient surgeries, 6,986 outpatient surgeries and 36,239 emergency room visits. Yet the small hospital serves a wide region, including the Warm Springs Indian Reservation, Fossil, Antelope and parts of Wasco County. Its services include critical and intensive care units, a family birthing center, surgery, respiratory care and medical imaging.

As recently as early 2011, the hospital was working toward an expansion and remodel that was expected to take it from roughly 80,000 square feet to 110,000 square feet.

Since then, Kirsch said, it became apparent to the publicly elected Mountain View board of directors that the hospital's financial future wasn't rosy. The board backed away from the building plans and began discussing a possible collaboration with a larger hospital system.

Gentry said Mountain View Hospital ended its last fiscal year $500,000 in the red. More significantly, changes to Medicaid reimbursements due to coming health reforms pose a serious financial challenge. About one-third of the hospital's patients are on Medicaid, Gentry said, and another 10 percent are served by the Indian Health Service plan that reimburses at Medicaid rates.

Kirsch said these factors, along with the continued economic slump and a dip in the number of the financially attractive elective surgeries, made it apparent that the hospital would struggle to keep up.

“We realized we couldn't afford many things on our own,” Gentry said.

“You can hang on to your independence and pride until it will cost you,” Kirsch said. “And we didn't want to do that.”

The same pressures are spurring hospital consolidations throughout the industry, Diegel said. Hospitals are needing larger scales and more resources in order to survive.

Just in Oregon, Ashland Community Hospital is discussing a merger with Medford-based Asante Health System, and PeaceHealth in Eugene announced in August it will merge with Colorado-based Catholic Health Initiatives.

“You can't operate inefficient entities,” Diegel said. “It's especially hard for rural hospitals, because you have all this infrastructure.”

Kirsch said the board discussed partnering with a health system outside Central Oregon, like Providence Health & Services in Portland. It would have posed a competitor to St. Charles, which is presently the lone large health system in the region. But the board felt St. Charles was its first choice, as staff there already knew its interworkings and the system is well-connected in the region. Specialists from Bend and Redmond regularly travel to Madras to offer services.

“They have a stake in our success that nobody else has,” Gentry said. “They're going to see our patients anyway. If we're going to improve health care, we're going to have to do it together.”

Coming next

Currently, St. Charles is acclimating its new employees and finishing up the last details of the asset transfer. Next, Gentry said, comes planning for the future.

Diegel said a key lesson from the Redmond and Prineville experiences was to make the human resources piece of the consolidation happen quickly. Madras staff went through new employee seminars in December.

Next comes developing the priority list for upgrades in Madras. Diegel said he expects that will take roughly six months.

Electronic medical records will come first, as all of St. Charles is switching to a new system in August — Gentry said the conversion alone, which Madras is required to accomplish by 2014, will cost a fraction of the projected $3.5 million because of the consolidation with St. Charles.

A second operating room is also needed, Gentry said. This is particularly important to accommodate for Caesarian sections from the birthing center.

The building, particularly its older sections, have other issues, she added. The boiler, for instance, went out for a time on New Year's Eve. The emergency department rooms weren't built to fit all the modern-day computerized equipment.

In the meantime, the St. Charles system is expected to add a Jefferson County resident to its board of directors. The Madras hospital district board will continue to meet for a time to manage the transfer as it unfolds and file any last necessary reports, Kirsch said. Its tax levy will eventually also be done away with, although he expects it will not be within the year.

“Now begins the work of how we plot all this stuff out,” Diegel said.

Possible changes

Below are a number of St. Charles Madras' needs identified by several people close to the project. The priority and timeline for these projects haven't yet been established:

• Convert from paper to electronic medical records.

• Add a new boiler.

• Add a second operating room.

• Update the emergency department.

• Create a better space for the imaging department.