Oregon Health & Science University has been facing a series of mounting challenges in recent months, including its proposed merger with Legacy Health, which is being reviewed by the Oregon Health Authority. If approved, OHSU would control five of the six hospitals in Multnomah County, according to a report issued by OHA last November.
OHSU has also had to contend with the departure of prominent executives such as the interim head of its health unit last month, and Dr. Brian Druker, a world renowned cancer researcher, who resigned in December as CEO of the Knight Cancer Institute. Among the reasons Druker shared with OPB for his decision included low staff morale, a lack of trust in OHSU’s leaders and the organization’s cost-cutting measures, such as its decision to lay off more than 500 employees.
Leading OHSU during this turbulent time is Steve Stadum. The board of directors appointed him as interim president in November, marking his return to the organization which he first worked at more than 25 years ago. Stadum joins us to share his vision for OHSU and how he aims to navigate its internal and external challenges, including threats to federally funded research from the new Trump administration.
Note: The following transcript was transcribed digitally and validated for accuracy, readability and formatting by an OPB volunteer.
Dave Miller: This is Think Out Loud on OPB. I’m Dave Miller. Oregon Health & Science University has been facing a series of mounting challenges in recent months. There is the proposed merger with Legacy Health, which would give the combined system control of five of the six hospitals in Multnomah County. OHSU has also had to contend with the departure of prominent executives, including the interim head of its health unit and the leader of the Knight Cancer Institute. And then there are the challenges at the federal level, including huge questions about funding for Medicaid, Medicare and medical research.
Steve Stadum is the interim president at the helm for all of this. He took over on election day, and he joins us now. It’s great to have you on Think Out Loud.
Steve Stadum: Thank you, Dave. It’s great to be here.
Miller: You spent 17 years at OHSU, starting in 1999 – a period of immense growth and change for the hospital system. Then you went to Fred Hutchinson Cancer Center in Seattle until this past September. Two months of retirement, it seems, and then you’re back. How has OHSU changed in the time you were gone, in those eight years or so?
Stadum: Well, Dave, first of all, I’m so proud to be back and I’m so proud of the institution. Everything it does every day is so great for Oregonians and so important. I think the biggest change since I left is [that] it’s continued to grow a lot and OHSU has become even more, I think, important to Oregonians, particularly rural and underserved patients. There’s more need now, I think. In coming out of the pandemic, I’ve certainly noticed there has been pent-up need for patient care, [a] pent-up demand and frankly more complex cases.
Miller: A number of high-level leaders at OHSU have left recently. Some were forced out, some left on their own accord. The most high profile resignation was Brian Druker, the cancer researcher who led the Knight Cancer Institute. He didn’t leave quietly. [When] he left, he wrote an open letter that included these lines: “I still have more I want to do to advance cancer research and improve patient care. With much reflection, I’ve concluded that at this time, those goals are no longer achievable at OHSU. We have lost sight of what is crucial and forgotten our mission.” What went through your mind when you read that?
Stadum: Well, first of all, Brian is a friend, somebody I worked closely with. I was the COO at the Knight Cancer Institute from 2010 to 2016, and I’ve known Brian for 25 years at least. He is a wonderful scientist and physician. He’s done so many wonderful things and built a great cancer center.
The first thing that went through my mind was I was sad and disappointed that he’d made that decision. I respect the decision, but I understand that he had been frustrated for quite some time before I arrived. I think that my next reaction was, I don’t think we’ve lost our mission or lost our focus on our mission. I think there are 22,000 people every day focused on our mission. I think it was fair to say that we’ve been distracted somewhat, or had been distracted because of the things you alluded to in your opening.
Miller: What do you mean? What do you mean when you say you’ve been distracted and what should have been paid attention to that wasn’t?
Stadum: Well, I just think leadership changes. We had some really bad physician behavior cases, we had layoffs – those are distracting. I don’t think it affected the day-to-day work of OHSU in any way, but I think it was in the media and it bothers people at OHSU. I don’t think they’ve lost focus on the mission, but I think there was a distraction.
Miller: You told the Faculty Senate last week that the previous president’s layoffs of 500 staff, along with other cuts, might have been “handled in a rushed and chaotic manner.” What would you have done differently?
Stadum: I don’t know because I wasn’t there. I know that there was a great deal of effort put into figuring out how to meet the budget targets. But I think at the end of the day, it proved harder than people thought to operationalize how to meet those without doing layoffs. So I don’t want to say that I could have done it better. I just think we want to do it better every time. We want to improve.
Miller: As I noted, it’s not just Brian Druker who left. Others have left as well, including Ann Madden Rice, who had been the interim head of OHSU Health for just a month. And these are some of the more high profile names, but as I’ve read, there are sort of mid-level managers who are really crucial just to the operations who’ve left as well. Their names are less likely to end up in reporting. What’s the cumulative effect of these departures?
Stadum: I think that it’s always difficult when there are high profile names in the news who have departed an institution, but our retention rate at every level is actually pretty good. It’s just that recently there’s been leadership change. There’s been a lot of that in healthcare, higher ed institutions all across the country, but our employee retention rate is actually quite high overall, Dave.
Miller: What are the structural issues with OHSU’s finances right now?
Stadum: Like every hospital in Oregon, OHSU has experienced a lot of cost increases that have outpaced revenue recently. There are several reasons for that. One of those is, frankly, coming out of the pandemic, a lot of inflation, labor and supply costs. There have been more complex cases because of just health impacts on people. And the reality is, we have to get our revenue and our costs to line up better going forward. I think that’s facing every health system in the state of Oregon.
Miller: How do you do that?
Stadum: Well, one way we do that is we stick to our mission. Our most important commitment is to our mission. We have a mission by Oregon law, a mission we deeply care about to serve the underserved, to educate future health professionals such as physicians, nurses and so on, and to do amazing research. We’re gonna keep doing that. The challenge is, over time, we have to bend the cost curve as best we can, and continue to see the kind of volumes we’ve been seeing, and generate revenues from our research and all of this generous support we get from philanthropy and from the state. I would say that, over time, we think we can do that, but it’s not gonna be immediate. It will take some time to get back to the pre-pandemic kind of financial trajectory.
Miller: Did the pandemic change something fundamentally going forward, or is it just a period that you still have to work through? And I say you, I mean OHSU, but also other hospitals. I mean, are we going back to the way things were in terms of the finances, the way medical work is performed, and then paid for or reimbursed for?
Stadum: I don’t think we know, Dave. I do think that we all recognize in health care that we’d have to do more with fewer resources, or the pace of growth of resources is going to not keep up as it had in the past. I think we know that. I think healthcare is still figuring out how to best really operationalize, how to make do with the resources of giving the best care possible. I think that’s a national problem as well.
Miller: I want to turn to the proposed merger between OHSU and Legacy Health. First of all, just in the big picture, why is this necessary, in your mind?
Stadum: In my mind, it’s necessary so that we can deal with tremendous wait times in Oregon, particularly in Portland – which is twice the nation’s average – while improving health equity and outcomes for patients. The status quo is not working, Dave. It’s really clear to everybody, I assume to you as well. And what we’re doing here is combining the best academic medicine, capabilities and deep expertise, along with a very good community health system. And bringing the best of those together. We have lots of collaborations already with Legacy and this will just take that to a different level.
Miller: What is your pitch for how the combination of these two systems would affect wait times, just as one of the examples you gave?
Stadum: Yeah, I can give you three or four good examples. Number one, the fact is Legacy, today, has some underutilized capacity in their facilities. We’ve committed to invest in those facilities to bring all those O.R.s and beds online, and available to be used to meet patient need …
Miller: Because you have staff who currently can actually do their work in those spaces? They’re not already full up, themselves?
Stadum: Actually, Legacy does have more challenges than we do in recruiting staff – nursing staff, physicians, and others – and it’s one of our strengths as an academic center. At OHSU, we do a really good job of bringing people onto the team. So it’s a combination of staffing and capacity.
Another reason is that we have a system at OHSU for managing bed capacity, and matching that to nurse and physician staffing, that we call mission control. It actually was developed at GE, but it’s something we’ve deployed and made our own at OHSU. And we can bring that expertise; how to manage transfers, emergency department, occupancy needs for beds, people coming in from rural areas. 50% of our patients come from outside the region.
Those are two examples. A third example is, frankly, just the continuity of care, and being able to get patients in the right location at the right time, and reduce some of the handoffs that clog the system. So, enabling more access and reducing wait times.
Miller: One of the big issues that opponents to this merger have brought up is the basic question of competition. The merged system, as I noted at the beginning, would control five out of six hospitals in Multnomah County and seven out of 13 in the larger tri-county region. How would that be good for patients, that level of control that one healthcare entity has over healthcare in this entire region?
Stadum: Well, first of all … I’ve been asked this question, so I’m glad you asked it. A lot of the patients are outpatient as well. If you look at total patients in the region, the combined system would be about the same, depending on how you consider our affiliate relationships with Hillsboro and Adventist, about the same as Kaiser and Providence. But really, this is a different kind of transaction completely. First of all, OHSU is the public health care institution in the state. Unlike Providence, Legacy or Kaiser, our only interest is serving Oregonians. We don’t take funds and move them out of the state, and we only use the money to reinvest in our facilities and our providers.
Really, the second most important reason is our mission, our commitment and our experiences. We serve the underserved and Legacy does too. 72% of the patients of Legacy and OHSU don’t have commercial insurance. They are covered by government insurance, which is not negotiable. We’re not acquiring and enhancing our bed capacity in order to leverage rates; we’re doing this to meet patient needs.
Miller: When you said that the total number of patients you’d be seeing is roughly equivalent to Kaiser, for example, as you noted, that’s if you include outpatient patients. What if you’re just looking at inpatient?
Stadum: Well, I don’t have any reason to question your figures. But again, we’re serving primarily people on either Medicaid, Medicare, who are self-insured or need financial assistance, which OHSU leads the way in. So I think what people ask about it a lot has to do with driving rates up and, as I say, almost three-quarters of the people we serve, the rates are set by either the government or we provide financial assistance. And then with regard to the commercial market, our intention is to be paid a fair amount for what we do – our complex cases and the patients we serve. We’re not trying to gouge the commercial market, but we need to be paid fairly for what we do.
Miller: I want to turn to the national picture. Just days into the new administration, the National Institutes of Health canceled a series of meetings to review medical research grants awarded to universities and institutions. OHSU is by far the largest recipient in Oregon of these kinds of federal grants for medical research. Last year, the system got over $277 million from NIH. Can you give us a sense for the scope of the federally-funded research at OHSU that could now be in jeopardy?
Stadum: Well, as you said, we are the largest recipient of federal funding for research in the state and particularly from the National Institutes of Health. But we receive funding from the Department of Defense, Energy Department, a lot of different sources. Our scientific research ranges from basic lab science to clinical trials, which can be life saving trials for people who the standard of care does not help their condition. And sometimes we also do a lot of outcomes-based research and statistics-based research. All of that research is critically important for Oregonians, advancing knowledge and helping the next generation of care, treatment and discovery.
For example, your program has covered some of the great research we do, which we appreciate. And I would love to talk more about that. We care about federal funding research because it’s so important to advancing our mission. We’ve experienced either cuts in the federal budget or the possibility of that before. It’s not anything new. I’d say the scale of and pace of the executive orders and pronouncements has been unprecedented. But right now, for the most part, it’s business as usual. I mean, we’re doing all the research that we have been funded to do and we’re continuing that.
Miller: Have you gotten clarity from the National Science Foundation, or NIH, or other federal agencies about specific programs or research areas at OHSU that may lose funding?
Stadum: We haven’t gotten that clarity, Dave. I don’t want to speculate because things have changed a lot and they’re continuing to change. We’re continuing to pay attention, close attention, but we haven’t really gotten clarity.
Miller: Let’s say somebody got a five-year grant from NIH and they’re in year two of it. My understanding is that you don’t get all the money up front, that you get it maybe on an annual basis. Is some of that money, that future money from a grant that’s already been approved in jeopardy?
Stadum: Well, again, I don’t want to speculate. I used to practice law, but I turned my license in about 20 years ago. So they’re smarter people than me that will determine this. But at this point, we’re continuing on the basis that we have that funding and we’re planning to continue forward. There are situations where in government shutdowns and things, there have been interruptions in funding – usually those are restored. But whether or not, if there was a cut in a particular funding program or research program, that would apply immediately or at the end of a grant cycle, I don’t know at this point.
Miller: You sound very sober, measured and careful right now, but are there researchers at OHSU right now who are terrified?
Stadum: I think the research community, as well as all OHSU members are paying attention. I know from hearing from some and talking with people that I work most closely with, that there is concern. This is a very unusual situation to say the least. But at this point, we’re continuing to do what we’re doing. And we’re informing the community as soon as we know anything. We’ve told folks that as we know more, we’ll share more, but right now it’s fluid and uncertain.
Miller: In another executive act that’s gotten a lot of attention, President Trump signed an order banning the use of federal funds for gender-affirming treatments for children and teenagers under the age of 19. The AP has reported that hospitals in Colorado, Virginia and Washington D.C. have already paused their gender affirming care for minors to ensure continued federal funding. Children’s Hospital Los Angeles announced two days ago that they’re pausing the initiation of hormonal therapy “for gender-affirming care for patients under the age of 19.”
Has this order had any effect on gender-affirming care at OHSU? And I’m thinking in particular about hormone therapy or surgery for older teens.
Stadum: I wanna say first, Dave, that the executive order on gender-affirming care is very scary for patients and their families. You spoke a few minutes ago about the impact of executive orders on researchers. I think it’s probably even more scary for people in that situation. We are continuing to provide this care and, as always, support patients, families and also the providers, the clinicians. That’s where we are today.
Miller: There has been no change in the care offered at OHSU?
Stadum: No change.
Miller: Why are you different from these other hospitals, who are seemingly and very publicly putting out statements saying that we’re pausing and we’re afraid of federal funding? Why are you not afraid of losing federal funding?
Stadum: Because we’re not at that point yet. I don’t know that we’ll get there. We’re still at a point where that executive order is under review. It’s being challenged, as I understand it. And there’s a lot of uncertainty. I just don’t want to speculate on how that might turn out. What I want to emphasize is, we’re continuing to do the things we’ve always been doing and we’re not going to speculate on what’s gonna happen.
Miller: This may be another realm of speculation, but there has been a lot of talk about the possibility of potentially serious cuts to Medicaid and maybe Medicare. As you noted earlier, you rely, to a great extent, on funding for treatment that doesn’t come from private insurers. I mean, we’re talking largely then about the federal government – or the Oregon Health Plan, some state money, but really this is federally driven.
What kinds of federal healthcare insurance cuts are you talking about at OHSU right now, or thinking about, or planning for?
Stadum: Right now, we’re paying attention to what’s being said. We haven’t seen specific figures, other than I think I read somewhere there was speculation that the Trump administration wanted to reduce Medicaid over a 10-year period. Again, there’s been nothing more specific than that that I’m aware of. The rate increases for Medicaid have been flattening somewhat, and I wouldn’t expect Medicaid rates to go up dramatically.
In terms of cuts, again, I just don’t know, Dave. I don’t know what to predict. I think that what the state has to do is come together and make sure that we are all, as OHSU is, committed to continue to serve all of the underserved patients we serve – rural folks and people in the Portland area.
Miller: How big an impact would, let’s say significant cuts to Medicaid, have on the care you’re able to provide and the financial stability of OHSU? I mean, how serious is this if cuts were to happen?
Stadum: Well, it depends on the depth of the cuts, but any institution, whether it’s the state and their tax revenues, or a healthcare system, or the Trailblazers and their sponsorship revenue, has to deal with revenue impacts. So we will look at that [and] obviously we’ll respond. We’re going to carry out our mission to the best of our ability with whatever resources and capabilities we have. We partner really well with the communities we serve. I’ve been talking to a lot of folks in the community, federally-qualified health centers, people that are really out there helping people all around Portland. We partner really well with rural hospitals and we partner really well with Legacy, and for that matter, with Kaiser and Providence.
And part of what needs to happen in the health system, no matter what happens with the funding at the federal level, is to continue to do that because healthcare is complex and we have a lot of stresses on patients right now. So I think partnering is the solution at whatever level of funding. But we will carry out our mission no matter what and I’m really proud of OHSU. When the Great Recession happened, we continue to do that. We’ve done this before, we’ll keep doing it. OHSU is the system in Oregon, we are here. Our mission is to serve all Oregonians – and we’ll keep doing that.
Miller: I mentioned that you are the interim president of OHSU. Are you interested in putting your hat in the ring to have this be permanent?
Stadum: I am not a candidate, Dave. I plan to resume my retirement plan. I have grandkids and other things that I’m planning to do, but I’ve committed to be here until a successor or permanent president is recruited and on board.
Miller: Steve Stadum, thanks very much.
Stadum: Thank you very much.
Miller: Steve Stadum is the interim president of Oregon Health and Science University.
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