Ashland hospital experiences a $2.5 million loss

A multimillion-dollar loss last fiscal year for Ashland Community Hospital wasn't unexpected and illustrates its board members' rationale for seeking an outside partnership, hospital officials said.

Unreimbursed costs associated with treating Medicare and Medicaid patients, other unpaid medical bills and charity care made up the bulk of the $2.5 million loss, said Janet Troy, the hospital's director of development.

"We're seeing an increase in Medicare and Medicaid and charity care patients, and Medicare and Medicaid rarely reimburse us for the full cost of care," Troy said. "This is a big part of the reason that led us to make the decision to affiliate with a hospital system."

The hospital received 53 percent of its total revenue from the Medicare program during the 2010-2011 fiscal year, up from 41 percent in 2003-2004. The hospital experienced a $500,000 shortfall in 2010-11 and absorbed $9.4 million in Medicare patient costs above what the federal program reimbursed, hospital officials said.

The relatively small size of ACH and the likelihood that possible cuts in Medicare and Medicaid reimbursements would further strain its resources drove the ACH board to pursue a partnership over a year ago, said Mark Marchetti, the hospital's chief executive officer.

The hospital is on track to wrap up its first phase of negotiations with potential partner Dignity Health by the end of August, Troy said.

Once those talks conclude, a series of meetings with ACH employees and the community will take place before representatives of the two organizations go back to the table looking to finalize a partnership.

A memorandum of understanding will have to be signed in order to formalize ACH's membership with Dignity Health.

If the process goes accordingly, a partnership will be formed by the beginning of October, Troy said.

Dignity Health, the nation's fifth largest hospital system, is based out of San Francisco and operates 40 hospitals and 150 care centers in California, Arizona and Nevada, employing about 65,000 people. If a partnership is formed with ACH, it will be the health care system's first affiliate in Oregon.

Because the hospital operates under a long-term lease with the city of Ashland, the City Council will have a hand in approving whatever lease arrangement emerges out of an alliance.

Reach reporter Sam Wheeler at 541-499-1470 or email

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