State health agency approves emergency takeover of struggling Corvallis Clinic

 

By AMELIA TEMPLETON/Oregon Public Broadcasting

The Oregon Health Authority on Thursday granted emergency approval for a merger between the Corvallis Clinic and Optum Oregon, a division of the largest for-profit healthcare company in the country.

Attorneys for the Corvallis Clinic said the business was running out of cash and would have to start layoffs and stop seeing patients unless the state approved the merger right away.

State regulators looked at the Corvallis Clinic’s bank statements and payroll and agreed there was an immediate emergency.

The Corvallis Clinic, with over 100 doctors and other providers and a support staff of over 500, is the largest multi-specialty outpatient healthcare provider in the mid-Willamette Valley. It serves the Benton, Lincoln and Linn county markets.

Some in Benton County, are criticizing the fast-tracked merger. Clinics across the country are facing a cash flow crisis this month due to a cyberattack on Optum, the same healthcare giant that’s involved in the merger.

The Corvallis Clinic last week asked the state to immediately approve its proposed merger with Optum Oregon and bypass a longer state process because of financial issues

The Oregon Health Authority had been reviewing the proposed merger since Optum Oregon filed notice of its intention to acquire the clinic in December 2023.

The merger has been controversial. Optum Oregon is a local subsidiary of Optum, an arm of the largest for-profit health care company in the country, UnitedHealth Group. United, which is also a dominant player in the insurance market, has alienated some local providers with its reimbursement practices.

Since 2022, a division of OHA has reviewed all mergers and acquisitions between parties that make at least $10 million in annual revenue.

On Friday, attorneys representing the Corvallis Clinic filed a request for an emergency exemption from the state’s oversight process, citing a financial emergency.

“Because of the clinic’s lack of stability from a cash perspective,” their lawyers wrote “the Clinic simply doesn’t have the time to undergo continuing regulatory review without necessitating further cost-cutting measures.”

Moving forward with the Optum merger immediately would provide access to cash to cover rent, payroll and expenses, allowing the clinic to keep its 600 providers and support staff employed, the lawyers wrote.

But the Corvallis Clinic and Optum redacted a more detailed description of the immediate financial emergency from the filings, claiming the details of the situation are trade secrets, exempt from public disclosure.

If Corvallis Clinic is facing an immediate cash flow emergency, one possibility is that it’s been triggered by the recent cyberattack on Change Healthcare — yet another subsidiary of United Health and Optum.

The attack in late February has disabled the platform many health care providers in the U.S. use to process medical claims, leaving them unable to collect reimbursements from the government or private insurers this month. Change Healthcare processes 15 billion health care transactions annually, according to federal officials.

Parts of the claims processing system remain down, with United Health estimating it will be working again Monday.

Optum said it launched a temporary funding assistance program “to help bridge the gap in short-term cash flow needs” for health care providers affected by the hack.

Corvallis Clinic officials declined this week to clarify whether it uses Change Healthcare’s clearinghouse to process its claims and whether the cyberattack has contributed to the clinic’s financial emergency.

“We are not making any comments about that at this time,” said Courtney Pouliot, a spokesperson for the clinic.

Benton County Commissioner Xan Augerot asked the OHA to deny the clinic’s emergency request, suggesting UnitedHealth was seeking to take advantage of a situation it had created.

“Is it appropriate to grant emergency access to this acquisition to a predatory, vertically integrated company that has just ensured it will get access to Corvallis Clinic at a fire sale price?” Augerot wrote.

OHA said this week that its health care market oversight team was reviewing the request for an emergency exemption which it can approve if there is a situation that immediately threatens health care services and customer transactions.