OHSU Board Adopts Cost-Saving Plan in Response to Tort Cap Loss

01/23/08  Portland, Ore

The Oregon Health & Science University Board of Directors today adopted a new five-year financial plan to deal with the challenges created by the recent Oregon Supreme Court ruling on the Oregon Tort Claims Act. The ruling effectively eliminated tort cap

The Oregon Health & Science University Board of Directors today adopted a new five-year financial plan to deal with the challenges created by the recent Oregon Supreme Court ruling on the Oregon Tort Claims Act.  The ruling effectively eliminated tort cap protection for all public bodies in Oregon and created a significant budget shortfall for OHSU.

To cover the cost of higher insurance bills and liability claims, OHSU was forced to cut $30 million per year out of its budget immediately and for the foreseeable future. The cap was a significant source of indirect support from the state and is comparable to the state’s annual direct support for the university’s operating budget, which totals $43.3 million.  The state also makes $16 million in annual bond payments for OHSU on the Oregon Opportunity.

This challenge comes in the wake of a five-year, $114 million consolidation and efficiency drive that began in December. The loss of the tort cap more than doubles how much OHSU will have to save over the next five years.  “This is an unprecedented loss for OHSU,” said Dr. Joe Robertson, OHSU President.

OHSU has long recognized the need for a cap higher than the current $200,000 and began lobbying for a new tort cap limit in 2006. “It isn’t the size of the cap that matters as much as the existence of a cap,” said Dr. Robertson. “For example, if the cap were $1 million per individual and $3 million per occurrence, the total cost to OHSU would be $5 million. If that cap were in place now,” Dr. Robertson told the Board, “we wouldn’t be here today.”

As part of the cost-cutting efforts, an estimated 200 to 300 positions will be eliminated. These cuts will take place through program reduction, attrition, voluntary departures and transfers.  Additional changes include:

  • The MARCH Wellness Center at South Waterfront will be outsourced or closed.
  • A reduction in the School of Science Engineering which will also be merged with the School of Medicine.
  • OHSU will also accelerate the move of the School of Science and Engineering away from the university’s West Campus.
  • Closure or restructuring of the Russell Street Dental Clinic which provides dental services for the underserved.
  • Closure or transfer of the rural health clinic in Union, Oregon which serves residents from the surrounding region.
  • Discontinuation of additional community outreach services.
  • The university will reduce central university services in finance, human resources, administration and other areas.
  • Research centers at OHSU may be unable to absorb their share of the additional costs, which may result in the loss of some centers.
  • A reorganization of an OHSU-initiated statewide health research program. The program may also be slated for closure at a later date.
  • A reduction in class size for the School of Medicine which is a significant issue for Oregon as the state is facing a physician shortage which is expected to worsen.

OHSU has been forced to shift from the posture of preserving and strengthening all programs to one of preserving the core activities of OHSU. The cuts, program reductions and organizational changes were developed to address the new, long-term financial reality of OHSU.  Even if the legislature were to act immediately, relief for OHSU would not come until after a new cap had been tested and upheld by the Oregon Supreme Court, a process that would take at least 4-5 years and possibly much longer.

 “These cuts will affect our size but not our excellence,” explained Dr. Robertson. “We will emerge from this with fewer programs, but we are committed to keeping the programs that remain strong so they can meet the needs of Oregonians.”

For more information on impacts to OHSU from the loss of the tort cap, please visit: http://www.ohsu.edu/tortclaims/