Portland-based Oregon Health & Science University and Legacy Health have signed a nonbinding letter of intent to merge. The combined system would have more than 32,000 employees and 100-plus locations, including 10 hospitals, and more than 3 million patient visits a year.
A deal in which Legacy will become part of OHSU was unanimously approved by the boards of directors of both OHSU and Legacy. OHSU is part of the State of Oregon, established in Oregon law as a public corporation. Legacy is a local, nonprofit health system.
The combined system will be the largest employer in the Portland metro area. The combined organization will focus on amplifying the region’s leadership in patient- and community-focused healthcare, education, research and innovation.
A story on the Oregon Live website noted that Legacy has struggled financially, leading to recent speculation that its leaders might seek a merger or acquisition. “Legacy, which owns and operates seven hospitals in the metro area, lost a catastrophic $172 million in its 2023 fiscal year. That depleted its capital and raised questions about its viability as an independent operation going forward," the story said.
As part of the agreement, OHSU intends to make a capital commitment of approximately $1 billion over 10 years, financed mostly through bond offerings, to support primary- and community-based services that will be part of the combined system. OHSU said that this commitment will better enable the combined organization to expand services, including clinical programs, sites of care, technology solutions, and new care models, while maintaining and growing essential services, including preventive medicine, population and public health.
By joining forces, OHSU and Legacy said they are committed to attracting, engaging and supporting the region’s best health care workforce through investments in the tools, technologies, and education and development initiatives that are essential for the growth of our team members. We will continue to support our valued employees and learners, all of whom play an important role in delivering exceptional care and service.
“Our mission is to provide good health for our people, our patients, our communities, and our world. By combining with OHSU, we will expand our ability to deliver on our mission,” said Kathryn Correia, president and chief executive officer of Legacy Health, in a statement. “In addition to ensuring access to high-quality essential health care for patients, the combined system will continue to be the region’s most exceptional place to work and learn, while supporting research and education for the next generation of health care professionals.”
“OHSU has enjoyed a decades-long relationship with Legacy Health, united by a shared commitment to improving the health and well-being of people in Oregon and beyond,” said Danny Jacobs, M.D., M.P.H., president of OHSU, in a statement. “Now, we have an opportunity to join together and take a decisive next step that will help deliver on our promise to ensure the best access and care for all who need us, today and in the future. We look forward to our next chapter with Legacy and the exciting potential of our combined strengths and vision.”
To address community health care needs and disparities, Legacy will direct its net cash on hand and investments (above outstanding debt) at closing to a new independent foundation. The new foundation will promote physical and mental well-being and address inequity in health care, including social determinants of health and behavioral health.
The organizations are working toward reaching a definitive agreement in the coming months. The transaction is expected to close in 2024 and is subject to regulatory review and customary closing conditions.