Surgery Center of Southern Oregon to close on June 30

The Surgery Center of Southern Oregon (SCSO) in Medford will close on June 30 after nearly three decades of operation.

KOBI-TV, which broke the story last week, reported that the closing will cause the loss of 84 jobs.

Local health system Asante partly owned SCSO and had worked since October to fully consolidate operations and own it entirely. Asante is now ending that effort due to what KOBI reports “how the Oregon Health Authority (OHA) handled the situation,” which involved an approval of the transaction through its Health Care Market Oversight (HCMO) program. “Both Asante and SCSO “appear frustrated by the lack of movement in HCMO,” KOBI reports.

“With the Surgery Center struggling financially, on April 22, Asante requested an Emergency Exemption to take over on May 1,” reports KOBI. Asante has now rescinded that request. The TV station stated that Asante called the OHA’s questions and requests “broad and burdensome, and later, unnecessary.” Asante’s general counsel wrote to OHA that “it seems you have no intention of approving this transaction, regardless of whether we meet the requirements set forth under the law,” according to KOBI.

For its part, SCSO stated to KOBI that “it is regrettable that this important surgical access point for patients will no longer be available after nine months of engaging in good faith with OHA’s Health Care Market Oversight program review process.”

OHA provided a statement that you can read in full in KOBI’s report. Highlights of the statement:

• OHA “acknowledges the decision” by Asante and SCSO to “cease operations rather than proceed” with the HCMO program’s evaluation of the emergency exemption.
• According to OHA, Asante planned to license SCSO as “an outpatient department of Asante’s Medford hospital, the Rogue Regional Medical Center.”
• In its original notice to OHA, “Asante shared plans to close SCSO for approximately six months for physical renovations and noted that ‘patients who might otherwise have received care at SCSO can receive outpatient surgical care across the street at [Rogue Regional Medical Center] (or of course, if they prefer, any non-Asante facility).’”
• OHA’s 30-day preliminary review was paused on Nov. 14 when OHA requested “additional, necessary information from the entities to evaluate the proposed transaction’s potential impacts. The review remained paused for several months while the organizations refused to provide all of the requested information.”
• Asante’s emergency request, which was withdrawn in a little over a week, stated that SCSO “will become insolvent immediately without prompt approval by OHA and the needed capital from Asante’s investment. OHA quickly began examining financial and other information to evaluate if the situation met legal criteria for a transaction to be exempt from HCMO review.”
• “Had the entities not withdrawn their requests, OHA could have either: granted the emergency exemption, which would have permanently ended the HCMO review and enabled the transaction to move forward, or denied the exemption request and resumed OHA’s usual HCMO review process.”
• “This was the third emergency exemption request that the HCMO program has ever received. To date, one emergency exemption has been granted, one has been denied and now one has been withdrawn.”

Rogue Valley Times reports that Asante’s emergency exemption was requested “after Asante officials refused to provide three years of payer contracts for the hospital and surgery center. Asante officials alleged, according to OHA filings reviewed by the Times, that providing the documents would be too costly and time-consuming. Asante officials admitted that per-procedure cost of services at the surgery center would increase under full Asante ownership.”

Rogue Valley Times states that “a large loss of revenue” at SCSO was reported in the filing with OHA due to the opening of a Southern Oregon Orthopedics ASC “in the same service area, which has negatively affected the volume and revenue of SCSO, and the remaining providers at SCSO are unable to sustain the volume necessary to keep SCSO financially viable.”

Rogue Valley Times has much more on the specifics of the situation. Read its full report here.