SPRINGFIELD — PeaceHealth has just spent more than $560 million building a new hospital and campus near the McKenzie River here.
In the lobby of the new Sacred Heart Medical Center, a fireplace made of river rock soars three stories upward. Patient rooms offer wide views of the McKenzie River and the Coburg Hills. The latest infrastructure fills the walls and new medical machines hum everywhere. The square footage equals 23 football fields.
While health care costs nationally continue to rise, Sacred Heart officials say the expenditure for the new RiverBend campus will not result in higher local costs for patients.
“We’re not going to see a spike in prices because of this building,” says Andrea Ash, a PeaceHealth spokeswoman. “Since we’ve been saving for so long, we won’t see a big need to raise prices.”
To fund the project, Sacred Heart used $360 million in tax-exempt funding, which will be paid off over 30 years. The rest came from about $200 million in cash reserves and $40 million in private donations.
So far, the numbers bear out the promise from Sacred Heart that patients will not bear the cost. PeaceHealth does have an annual fee increase for patients, which goes into effect each July. But the rate boost this year was the same as in previous years.
At Sacred Heart, about six percent of each patient’s hospital bill goes for capital expenditures. That percentage will not change.
Not everyone is convinced that this is the end of the cost story.
“Eventually, somebody has to pay the freight,” says Joel Miller of the National Coalition on Health Care. The Washington, D.C.-based group lobbies for more affordability. “Usually, who pays are patients, employers and health plans who increase their premiums to cover rising costs.”
Dr. Steven Marks — medical director for PacificSource Health Plans, a Springfield health insurer — told the Register Guard newspaper that employers, insurers and consumers will indirectly cover costs of new technology and new facilities “somewhere along the line.” Marks did say that the bulk of what people pay in medical services is for salary and technology, not construction and maintenance.
PeaceHealth has added 250 new workers to operate RiverBend, which employs 2,500 people overall. Expensive items like new technology tend to drive up health care costs nationally, says a 2007 study from the Kaiser Family Foundation.
In the U.S., annual spending on health care increased from $75 billion in 1970 to $2 trillion in 2005, and the Kaiser Foundation estimates it will reach $4 trillion in 2015. The U.S. spends an expanding share of GDP on health — from 7.2 percent in 1970 to a projected 20 percent by 2015.
Health care competition sometimes drives health systems to provide the latest and best technology to attract patients, says the Kaiser Foundation. From the start, competition has been part of the story of RiverBend, which was built not far from McKenzie-Willamette Medical Center, which took legal action early on to block the project.
But calculating the true cost of new technology and hospital facilities is tricky. Some machines and buildings, though they cost plenty, may save money overall. For example, pioneering hydraulic ceiling lifts at RiverBend help nurses move patients. The $1.6 million cost could be recouped within three years because it will eliminate injuries to nurses and patient falls, PeaceHealth says.
Sacred Heart will likely care for even more patients who cannot pay, says Karen Shepard, Peacehealth’s vice president for finance in Oregon. Those at or below 200 percent of federal poverty level are treated at no charge.
Each year, about 43 percent of all charges are written off as uncompensated care, either from charity care, bad debt or insurance adjustments.
Sacred Heart will continue to operate a 104-bed hospital and emergency department at the old Eugene site, now being called the University District campus. That facility will undergo a $97 million update.
