St. Charles’ health is mixed


Last updated 2/7/2023 at Noon

A new cancer center is slated for Redmond. PHOTO PROVIDED

At the same time that the bond ratings house Moody’s Investors Service changed its outlook for St. Charles Health System from “stable” to “negative,” the four-hospital system has announced plans for a $90 million Cancer Care Center in Redmond at the corner of Canal Boulevard and Kingwood Avenue. The goal is to break ground in 2023 and to open the facility in 2025.

The expansion is being funded with bonds secured in 2020.

Who will staff it?

Patient care staff expressed uncertainty about the decision with the Oregon Nurses Association, who represent 1,200 professionals at St. Charles, asking where the health system was going to get enough staff to care for the patients.

“St. Charles is so understaffed that nurses are forced to work 12-hour shifts without meals and breaks to care for patients and cover up St. Charles’ chronic staffing shortages,” said Kevin Mealy, Oregon Nurses Association (ONA) spokesman. “When there aren’t enough nurses, patients have longer wait times and hospital stays, get more infections and injuries, are more likely to be readmitted to the hospital, and are more likely to die.

“St. Charles can afford to buy a new $90 million building but patients and caregivers are already paying the price for St. Charles’ unsafe staffing,” Mealy told media outlets.

The ONA and St. Charles have been bargaining for months, with the latest rounds taking place January 18-19.

Mari Chay, Chief nursing officer for ambulatory care at St. Charles, said there would probably be 12-13 medical oncology professionals working in the Redmond center, though some could work both in Redmond and in Bend, so it’s uncertain how many new jobs would be created. Presently there are 14 chemo infusion chairs at the existing Redmond site that will grow to 26 in the new center.

Constructing such a facility is quite complicated and precise. According to Chay, physicists are essential to study design plans and there are stringent demands for the amount of concrete and lead needed to surround the linear accelerator and the two vaults.

State of the art

In prepared statements, St. Charles said that the new Cancer facility will include a linear accelerator to provide radiation oncology treatments, along with space for chemotherapy treatments, nutrition, massage, acupuncture, and other support services. It will also include space for additional outpatient services and medical office building needs.

More than 40% of patients treated at the St. Charles Cancer Center in Bend travel from Redmond, Madras, Prineville, and other rural communities for their care. If they need radiation as part of their treatment, this can mean traveling more than 50 miles for services multiple days in a row for weeks at a time.

“We know that many of our patients travel farther than patients at other cancer centers in the country for their care,” said Dr. Linyee Chang, medical director of the St. Charles Cancer Center. “Some patients opt out of treatment because of the travel and that’s not OK.”

Money woes

Financial reports for the third quarter ending December 31 are under preparation but the health system posted a $30.3 million operating loss for its first two fiscal quarters ending September 30. A loss of $123 million in investment income created a total deficit at the end of September of $152.7 million. With revenues nearly $1 billion and close to 4,500 employees, combined with 19,500 admissions, the financial health of the system is vital to the region. St. Charles had $397 million in long-term debt at the end of 2021.

Moody’s unchanged A2 grade reflects the expectation that St. Charles Health System will continue to benefit from a number of underlying strengths while at the same time it works to shore up challenging operations and weakening liquidity. Following a very weak first six months of fiscal 2022, management expects the second half of the year to show significant improvement, Moody’s reports.

St. Charles’ balance sheet was the key driver in Moody’s retention of the A2 rating despite large operational losses.

“Full-year results are likely to be modest, providing at best thin headroom to the system’s debt service coverage covenant. Operating challenges include: chronic understaffing; the heightened use of travelers and increased rates; pronounced COVID surges in this part of the country; increased length of stay due to the shortage of post-acute beds; and high inflation. At the same time, liquidity has been weakening, with days’ cash on hand dropping to its lowest point in six years (excluding Medicare Advance Payments and deferred payroll tax),” Moody’s explains in its ratings rationale.

The negative outlook reflects ongoing operating challenges which may result in St. Charles failing to satisfy its 1.1 times debt service coverage requirement at the end of the fiscal year, which under its direct placement agreement with J.P. Morgan would result in an event of default.

Management is said to be in active discussion with counterparties to explore all available options. The negative outlook also reflects the ongoing decline of balance sheet measures, which if further weakened could additionally erode St. Charles’ credit quality.


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