A deal that would spin off Providence’s home health and hospice services into a joint venture backed by private equity is being reviewed by state officials under Oregon’s mergers and acquisitions law.
An official with the Oregon Health Authority confirmed that the transaction requires review by the Health Care Market Oversight (HCMO) program in a letter to a Washington D.C. attorney representing Compassus, Providence’s partner in the deal.
Providence St. Vincent Medical Center, in Portland, Ore., Aug. 2, 2023.
Kristyna Wentz-Graff / OPB
The program gives state regulators the power to impose conditions on mergers and acquisitions. They can also decline to approve deals they determine are anti-competitive, or that are harmful to consumers or health outcomes for the state.
Providence is the 5th largest nonprofit health care provider in the country. Compassus is a private equity-backed provider of home-care services in more than 30 states.
The state review of the deal is a win for opponents, including the Oregon Nurses’ Association and some staff and patients of Providence’s current program, who argue the joint venture will lead to cost-cutting, higher workloads for staff, and service cuts for patients.
Providence and Compassus had originally intended to close the deal before the end of the year, according to licensing records obtained by the Oregon Nurses’ Association and posted on the HCMO website.
The state’s review will likely disrupt that timeline. HCMO requires at least 30 days and up to 180 days to complete its review.
Earlier this month, the general counsel for the nurses’ union Thomas Doyle wrote to state regulators to complain that Providence had yet to submit a required notice of the joint venture to the HCMO program, even though Providence had started an internal reorganization and written in a Nov. 8 letter to licensing officials that the deal would close Dec. 29.
“There is a compelling case that the proposed transaction requires HCMO approval and that
Providence is seeking to sidestep that approval process or to create a sense of urgency by filing at the last minute for approval,” Doyle wrote.
Providence spokesman Gary Walker said the nonprofit had filed the required paperwork. According to state regulators, attorneys representing Compasses requested an evaluation of whether the transaction required review on Nov. 21.
“We fully intend to work closely with OHA and comply with all requirements in the review process,” Walker said.
Officials in the oversight program are posting public comments received on the proposed joint venture online.
The dozens of comments submitted to date all oppose the transaction. Many of them are written by employees of Providence’s home health and hospice teams.
In one such comment, Nurse Gina Nelson wrote that she works with older adults and children who need home care in rural communities, as part of the Providence Benedictine Home Health team, based in Mt. Angel.
She voiced concerns that the joint venture will lay off staff, particularly experienced nurses like herself who command higher wages, and will limit the time home care workers can spend with their patients.
“Say no to this,” wrote Nelson. “Oregon is unique, we care for our people and big money needs to stay out of healthcare.”
Responding to the public comments to date, Walker said Compassus shares Providence’s values and commitment to patients.
“While it is accurate that Compassus is partially supported by private equity funding, it’s important to note that it is primarily owned by other faith-based health systems and has developed similar joint ventures with Ascension Health and Bon Secours Mercy Health, to name a few,” Walker wrote.
The licensing records Providence has filed show that Compassus has a complex ownership structure. Its two largest stakeholders are St. Louis-based Ascension Health Alliance and investors in a private equity fund, Towerbrook V.
In a 2018 press release, Towerbrook Capital Partners, the firm managing the fund, said investors in Towerbrook V include “public pension funds, sovereign wealth funds, financial institutions, endowments and family offices across the US, Europe and Asia.”
Providence announced in October it planned to hand over management of its home health and hospice operations to Compassus, while retaining a 50% stake in the new joint venture, called Providence at Home with Compassus.
The deal includes locations in Oregon, Washington, California, Alaska, and Texas.
In the two years since the HCMO program launched, the state has reviewed or started reviewing 43 health care transactions. Regulators have yet to attempt to block any of them, though they have imposed conditions on some deals. A controversial proposed merger between Medicare provider Care Oregon and California SCAN group was voluntarily withdrawn following public opposition last year.
