[zilfondel]

Losses put OHSU at crossroads (http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1193716504146610.xml&coll=7)
Expenses - University development, including a waterfront campus, will not go forward until finances stabilize
Tuesday, October 30, 2007
TED SICKINGER
The Oregonian

Oregon Health & Science University's losses on laboratory research and doctor education are growing far faster than anticipated and are projected to reach $50 million this year.

Those losses mean tough choices for the university, which has ambitious plans to treat more patients, expand its scientific research and build a world-class medical school that will train new doctors for Oregon.

OHSU President Joe Robertson told The Oregonian that the university has sufficient resources for the next 20 months, but that its current financial course is "not sustainable."

Robertson declined to speculate how the university might address the growing losses or say whether cost-cutting alone could close the gap. OHSU will complete unfinished space in its new hospital wing, he said, because that will bring additional profits. But the university will not go forward with other plans, including a medical school campus on Portland's waterfront, until it stabilizes its finances.

"We cannot embark on development that will strain our finances," said Robertson, president since September 2006. "Our university has to be self-sustaining."

At a board meeting today, Portland's largest employer is set to unveil results of a yearlong strategic planning process undertaken when Robertson succeeded longtime President Peter Kohler last year. The detailed plan includes 170 "tactics" intended to enhance OHSU's ability "to contribute to the health and well-being of Oregonians."

It calls for increased efficiencies but does not specify cuts or savings.

Five-year plan

The university could sharply pare expenses to end the losses, and Robertson said the administration intends to present a five-year financial plan to the OHSU board in December that targets higher profit margins, partly by cutting $45 million in operating costs by 2011.

"Hitting those numbers and getting those efficiencies is the key to making the reinvestments we need to make," Robertson said.

But he acknowledged that such cost-cutting is a delicate balancing act. OHSU has already been tightening its operational purse strings for years, even while expanding. The risk, Robertson said, is losing the top-shelf scientists and clinicians that OHSU has worked so hard to recruit. "They're highly mobile," he said.

Such departures could lower patient revenue and research grants, leaving OHSU even less money to provide cutting-edge care and increase the supply of doctors.

Financially, OHSU divides its operations into two parts -- the hospital, or clinical operations, and the university, which includes research and medical school operations. Although the hospital is profitable, the university is not.

This year, the hospital is projected to make $36 million, even after it transfers $35 million to subsidize the university's medical school and research.

Even so, the university is projected to spend about $50 million more than it takes in. That might not sound like much for an institution with an overall budget of $1.2 billion. But such a loss would wipe out all of the hospital's operating profits plus an additional $15 million.

Research loses money

University losses have plagued OHSU for years, so much so that its former chief financial officer, Jim Walker, repeatedly warned board members about the potential for a financial meltdown.

Research provides many downstream benefits to OHSU. It helps attract patients, philanthropy and doctors with profitable practices. It also can create profits if researchers come up with an invention that is licensed to a company.

Yet viewed strictly as a business, on its own, research loses money. Typically, the more research is done, the bigger operating subsidy is needed from philanthropy or clinical revenue.

Two and a half years ago, OHSU was at the tail end of a research and clinical expansion that saw taxpayers inject $100 million to build a research building and another $75 million to recruit scientists and provide them with multiyear support packages to re-establish their labs and grant support. Donors chipped in another $360 million.

At the time, then-President Kohler predicted that the university could continue growing its research funding at a brisk pace. Kohler also forecast that OHSU could drive its internal research subsidy to close to zero by boosting researchers' productivity and reducing administrative costs.

So far, the expansion hasn't panned out that way.

OHSU saw a 3 percent rise in federal grant awards last year, a performance it touts as impressive at a time when grants from the National Institutes of Health have been flat or, in inflation-adjusted dollars, declining. But even as that money begins flowing, expenses on OHSU's university side are projected to grow almost 10 percent this year.

OHSU Chief Financial Officer Brad King said the university's portion of research costs not covered by grants has increased from about $20 million in 2005 to between $40 million and $55 million this year.

Parcel of land sold

To balance its books, OHSU sold a parcel of land on the South Waterfront to a retirement community developer and the former campus of Oregon Graduate Institute to an investment group. A combination of those sales, plus its planned sale of another parcel of its West Campus this year, are projected to bring in a one-time gain of about $30 million.

Land sales are hardly an ideal way to finance current operations, Robertson conceded, but "the good news is that was available at the time we needed it."

The university will need a lot more cash in the near future.

Its near-term capital plans call for spending $30 million to build out additional floors of its new hospital wing, $35 million to install a costly electronic medical records system, and some $65 million to cover new equipment, technology and maintenance in the university.

By 2010, OHSU is committed to begin construction on a new parking garage on the South Waterfront that is expected to cost at least $40 million. OHSU already renegotiated a development agreement to delay construction as it searched for ways to finance the garage.

OHSU has some excess borrowing capacity. It is hoping that Standard & Poor analysts who recently visited the campus will upgrade OHSU's credit rating to investment grade, which would reduce borrowing costs.

Revenue from the 1,200 to 1,500 parking stalls, however, would likely be insufficient to service the debt, said Mark Williams, director of the South Waterfront project for OHSU.

Finally, the university is planning an all-new medical campus on 19 acres of land below the Marquam Bridge that was donated by the Schnitzer family in 2002. The campus is likely a multidecade, multibillion-dollar undertaking that would require massive philanthropic support and an expensive expansion of city roads and sewers.

OHSU received an anonymous $40 million donation earlier this year toward its first building there, but it's doubtful construction will start anytime soon. OHSU won't even launch a feasibility study on the capital campaign until later this year.

"For the academic expansion, we'll have to raise the money or expand with another capital partner," Robertson said.

Even as OHSU starts the process of identifying efficiencies, it faces outside financial threats.

The Oregon Supreme Court is considering whether to uphold a lower court decision that removed a tort cap on employees of state agencies. The cap limited medical malpractice damage awards against OHSU to $200,000. If the decision is upheld, it could cost OHSU $18 million a year in additional insurance premiums.

OHSU also is worried about a federal proposal to eliminate Medicaid payments for graduate medical education. The proposal, shelved for one year under heavy lobbying from academic health centers, could cost OHSU up to $30 million a year.

Either situation would be a serious hit.

Robertson said the university has the time to get its financial house in order. He calls 2008 "a transition year." The new strategic plan, he said, will provide a manifesto to drive detailed financial decisions.

"We have excellent data that suggest we're stable for the next 20 months," he said. "We have 20 months and we have a roadmap."

Ted Sickinger: tedsickinger@news.oregonian.com; 503-221-8505

[zilfondel]

Sorry about the thread title, but this is extremely bad news. :(

[Dougall5505]

By 2010, OHSU is committed to begin construction on a new parking garage on the South Waterfront that is expected to cost at least $40 million. OHSU already renegotiated a development agreement to delay construction as it searched for ways to finance the garage.

Above ground?!?!

[PacificNW]

Because of this situation I bet we hear more on the proposal of combining PSU and OHSU into "one" major research university....

[pdxman]

I can just see the jack bogs of the world sinking their teeth in to this one...

[tworivers]

I think so. I seem to remember that it was planned for one of the blocks next to Macadam. With affordable housing on top.

[tworivers]

I was just thinking... remember when OHSU first put those surface parking lots in around the new building, and everyone here was up in arms, worried about Lloyd District part 2? Ahem... actually, I'd hope they'd just sell off those blocks for other uses if they can't afford to develop them.

[MarkDaMan]

^they are...however the Schnitzer gift isn't so easily sold.

[pdxtex]

Because of this situation I bet we hear more on the proposal of combining PSU and OHSU into "one" major research university....


wasn't OHSU part of U of O at one time? i could see things coming full circle though and PSU becoming the large university it strives to be if it ever did merge with the hospital.

[MarkDaMan]

The more I think of it, I think 'deep shit' is kinda harsh...They need to redefine their goals and do it in a sustainable way. In light of the several huge financial gifts given Oregon Universities recently, I think OHSU could do a fundraising campaign to at least get the new medical school started. They already have that $40M gift that supposedly was going to be earmarked for that building.

[MarkDaMan]

A rumbling on Marquam Hill
After years of hand-waving and golden promises, OHSU takes a hard look at itself and its financial future
Wednesday, October 31, 2007

O regon Health & Science University board members spent Tuesday afternoon examining ways to reverse the widening gap between income and outgo at the institution, which is Portland's largest employer. Their choices, along with those of new president Dr. Joseph Robertson, will determine whether the school and hospital will grow to be the regional economic engine that they hoped, or will recede back to the middle ranks of the nation's teaching hospitals.

As The Oregonian's Ted Sickinger described in a revealing story Tuesday, OHSU is on an unsustainable financial trajectory, with its income from grants and hospital revenue falling short of the amount it has been spending to expand and maintain operations. Although the university has plenty of runway before it hits the wall, it must take corrective action now if it's to resume its growth toward the upper ranks of American teaching and research hospitals.

OHSU closed the financial gap this year by selling some real estate, which provides a one-time boost to its income statement, but does nothing to address the underlying trends in the institution's operations.

Robertson's predecessor as president, Dr. Peter Kohler, drove the institution toward an ambitious vision as an economic development dynamo that would power an emergent biotech sector in Portland, but Robertson must focus on tying up some of Kohler's loose ends. At the same time, he must sustain OHSU's important roles as a teacher of doctors and nurses and a provider of top-notch hospital care. While Kohler enjoys retirement, Robertson also must make tough choices about which capital projects to complete and which to delay. His responsibilities are less sexy than Kohler's, but every bit as essential.

For now, that certainly means a delay in building out the South Waterfront campus at the bottom of the tram. That's a jolt to the developers and condo buyers who made early bets on the district, but OHSU's first duty is to ensure its own survival, so it's doing the prudent thing.

In addition to paring costs where it can do so without damaging its core mission or accelerating its brain drain, OHSU can help itself by redoubling its efforts to commercialize promising research. In August, for example, it announced the spinoff of a tiny company called Yecuris, which was created to exploit the work of Dr. Markus Grompe, who is examining the effects of drugs on the liver's metabolism, including turning laboratory mice into liver cell "factories." Some suggest that his work will lead to an entirely new way to research such drugs, while feeding a huge worldwide market for liver cells. OHSU needs to spin off lots of little companies like Yecuris.

It's critically important for OHSU to find ways to grow from within rather than relying on real estate sales or emergency handouts from the Legislature. Robertson and his board must find ways to retool the university's operations without losing hard-won momentum in medical research. His focus on broadening and deepening working relationships with other institutions and private-sector companies appears to be the right one.

Even if OHSU never becomes quite the biotech dynamo that some proclaimed, it can strengthen its role as an anchor in the city's economy and the region's medical infrastructure. The region has a lot invested in its success.
http://www.oregonlive.com/editorials/oregonian/index.ssf?/base/editorial/11937903656350.xml&coll=7

[Leo]

OHSU should be fiscally sustainable, but the idea that university research has to pay for itself or even turn a profit is ludicrous. The whole idea of doing academic research in the first place is to learn the things that private industry won’t and then disseminate that knowledge freely. The research that easily turns a profit you can leave to private industry; they’ll find it soon enough.

With this kind of constraint on research, we would never have invented the lightbulb.

[Snowden352]

um, A, the lightbulb was invented by private inventors (edison) as well as many of the modern conveniences during the late 19th and early 20th century, and B, how much do we, on this blog, actually know about successful research universities? To the extent of my knowledge, that is within the limits of my ken, I am unaware of any major research universities, (i.e. berkeley, mit, caltech, etc.) suffering from a cash crunch and needing the gov't to step in.

I could be wrong...

[Leo]

“um, A, the lightbulb was invented by private inventors (edison)”

True. The point was that if these private inventors had the attitude that their research *had* to generate a profit, they would never have gotten anywhere. Research is exploratory; there are no guarantees. In fact, research in that time period was particularly productive because of a large appetite for risk-taking. This is absent if you try to run research like a business. Private inventors such as Edison didn’t make their money selling lightbulbs; they made money to support their research.

Every one of the universities you mention gets government assistance. Research scientists bring in tons of government grant money in order to conduct their research. Universities typically “tax” this grant money to cover overhead costs.

There is a reason why private industry does not do first-class research. Universities should not try to emulate that.

[EastPDX]

... public entities. Lets get beyond light bulb and electricity discoveries. The biggest, was the microprocessor research done by the military and space agency of the early sixties. Private companies then piggy backed on tax payers money. Drug companies do the same thing.

OHSU and the OGI (Oregon Graduate Institute) are at a crossroads from the standpoint of their research needing to start showing results (getting spin offs started and successful).

I'm starting to think that OGI could be moving under PSU shortly (two years max.) and then the new campus location (former Schnitzer land) becomes a join venture between OHSU and PSU. I think the risk will need to be shared and broadened before the banks will loan the cash.

EP

[zilfondel]

heh, PSU doesn't have the means to expand a new campus down to SOWA, nor is it in their long-term plans: they've sunk millions into acquiring properties near 405 and 4th ave. Not to mention the new engineering building and Montgomery Blocks.

[MarkDaMan]

Cancer startup leads new wave of OHSU companies
Portland Business Journal - by Robin J. Moody Business Journal staff writer

Dr. Brian Druker sees a future in which common cancers are subdivided into a dozen different categories based on their molecular profiles. The business he recently founded aims to provide the tests that detect and monitor treatment for those cancers.

Druker's venture, MolecularMD, was one of this year's hatch of five companies created by faculty or intellectual property gleaned from Oregon Health & Science University.

The Portland-based venture centers around a series of tests to diagnose cancer and monitor ongoing effectiveness of treatment. The company is initially focused on chronic and acute myeloid leukemia, lung cancer and on a type of tumor that forms in the brain or spinal cord. Its leaders aim to expand their offerings to include detection and treatment monitoring for other cancers.

The eight-person company experienced a vigorous first year, in part because Druker's international reputation opened doors for the startup. Druker was the first to prove that molecularly targeted therapy works, and is best known for his breakthrough research on Gleevac, the drug that revolutionized treatment for chronic myeloid leukemia.

MolecularMD is already profitable after inking contacts with several pharmaceutical companies that use its tests to diagnose and monitor patients during clinical trials. Treatment monitoring is powerful for pharmaceutical companies in testing new therapies because they can say with certainty whether a drug works.

MolecularMD tests have also been approved for reimbursement under the federal programs Medicare and Medicaid -- which pay for about half of the medical care in this country -- in addition to several commercial health plans. Patients can also access the tests by contacting the company through its Web site.

The future looks promising, as MolecularMD plays in the revolutionary and growing area of medicine in which patients' treatments are tailored to their particular genetic profile. The molecular diagnostics market is projected to grow from $13.8 billion in 2005 to $22.7 billion in 2010.

The genesis for the business grew out of discussions with Oregon Health & Science University investigators who reported their patients frequently develop genetic aberrations during the progression of their disease, and thus needed an accurate molecular diagnosis to determine whether alternative therapies or higher doses were recommended.

In the next year, the business will expand from a service-laboratory model in which tests are performed on site, to a model in which testing kits are sold to outside laboratories.

A recent third-party review of the various molecular testing systems ranked MolecularMD's tests as tops in sensitivity and reliability. Druker said that high-sensitivity tests help patients avoid the emotional roller coaster that often ensues when a diagnostics test detects no disease marker one month, but shows a different result a short time later.

"When you improve sensitivity, you can detect steady improvement," Druker said.

Other partners in the business include Dr. Michael Heinrich, acting head of the division of hematology and oncology at OHSU; Dr. Chad Galderisi, OHSU assistant professor; and Dr. Stepane Wong, who serves as chief operating officer for MolecularMD.
OHSU keeps spinning

Discoveries at Oregon Health & Science University spawned five new startup companies in 2007, bringing OHSU's recent startup count to 33 since 2000.

Recent spinout companies are as follows:

ID Biopharma was spun off by Virogenomics Inc., an earlier OHSU startup. The business was created to accelerate the development of vaccines, therapeutics and diagnostics to fight infectious diseases.

Yecuris Inc. will launch products to address the problem of liver toxicity, a primary obstacle to safe and efficient drug development.

Cylerus. Founded by head of the OHSU Department of Biomedical Engineering Stephen Hanson, Cylerus is developing technological improvements that will enable uniform, localized drug delivery to preserve the functions of artificial blood vessels or vascular grafts.

Portland Bioscience Inc. is a privately owned molecular diagnostics and health information technology company. It provides proprietary software and hardware to aid personalized medicine and the prescription of specific drugs based on an individual's unique genomic composition.
http://portland.bizjournals.com/portland/stories/2007/11/05/story8.html?t=printable

[sopdx]

Mark, you mentioned something about the inability of OHSU to sell off some of the Schnitzer gift. Is that true? It would make alot of sense if they could sell off some of it in addition to refocusing their overall financial and educational goals.

[MarkDaMan]

^I don't know the specifics of the Schnitzer gift, but OHSU is looking at selling property around the tram while keeping the Schnitzer property together, at least for now.

Most gifts come with strings attached and I just wonder (don't know anything specific) if there is a clause forbidding them from selling the land, or have conditions when they do sell.

[Snowden352]

Scientists report cloning monkey embryos
By MALCOLM RITTER, AP Science Writer 24 minutes ago

NEW YORK - American scientists reported Wednesday that they had cloned embryos from a 9-year-old male monkey and derived stem cells from them, reaching a long-sought goal that may pay off someday in new treatments for people.
ADVERTISEMENT

The work was published online by the journal Nature, which took the unusual step of asking another team of researchers to verify the work before publication. That reflects the legacy of a spectacular fraud in stem cell research from South Korea several years ago.

The new work is important because someday researchers hope to use such a process in humans to make transplant tissue that's genetically matched to patients, thus avoiding the risk of rejection.

Scientists had tried for years to produce stem cells through cloning in monkeys, because the animals are so closely related to humans and so provide a good way to study the process. But until now, it hasn't worked.

The advance is reported by Shoukhrat Mitalipov of the Oregon National Primate Research Center in Portland with colleagues there and elsewhere. Some media outlets, including The Associated Press, had reported their success earlier, based on a presentation at a scientific meeting.

The scientists combined DNA from skin cells of the monkey, a rhesus macaque, with unfertilized monkey eggs that had their own DNA removed. The eggs were grown into early embryos, from which stem cells were removed.

The researchers cautioned that even if their procedure could be used to produce human stem cells, it's far too inefficient to be used in medicine. Human unfertilized eggs are in short supply and are cumbersome to obtain. The monkey work required 304 eggs from 14 female macaques to produce just two batches of stem cells, they wrote.

Still, Dr. George Daley of the Harvard Stem Cell Institute, who was familiar with the work, told the AP it was a "a very important demonstration" that the process is feasible in primates, the group that includes monkeys and humans.

Nature also published a verification of the results by an Australian team. In an e-mail to the AP, the journal said one reason was the highly publicized 2004 fraud that came out of South Korea, where researchers claimed to have produced stem cells from a cloned human embryo.

The journal emphasized that its request didn't indicate mistrust of scientists in the cloning field. Instead, the statement said, because of "questions will likely be raised about the veracity of the (American) experiments, given recent history in the cloning field, we view this as a relatively straightforward way of putting these questions to rest."

The Australian study, by David Cram and others at the Monash University, used DNA analysis of the male macaque, the two monkeys that donated eggs for creating the embryos, and the stem cells. The result "demonstrates beyond any doubt" that the stem cells came from cloned embryos, the Australians wrote in their Nature paper.

Oregon lab makes cloning breakthrough
Stem cells - A team says it has duplicated monkey embryos, a big medical advance
Wednesday, November 14, 2007
ANDY DWORKIN and RICHARD L. HILL
The Oregonian

Oregon researchers have made a breakthrough in the ability to reliably clone embryonic stem cells -- those with DNA identical to an adult monkey's -- a first step that could eventually lead to new medical treatments for humans.

The innovations, some as simple as marinating cells in a caffeine solution, have created dozens of multicelled blastocysts, the precursor to embryos in development. Blastocysts are a prime source of embryonic stem cells.

Shoukhrat Mitalipov, an Oregon National Primate Research Center researcher, told an Australian conference in June that his lab had crafted two stem cell lines whose genetic code came from skin cells off monkeys' ears, according to news reports from the conference.

"We were able to produce cloned embryos that grew to the blastocyst stage. That was a great breakthrough for us," said Don P. Wolf, a professor emeritus at Oregon Health & Science University who has long worked on cloning and reproduction at the primate center.

The work did not try to create pregnancies or babies from the cloned embryos. That would be technically difficult, Wolf said, because cloned embryos "aren't exactly normal" and don't lead to healthy successful pregnancies like normal embryos, even if they may yield stem cells.

The Oregon scientists are expected to announce further breakthroughs in the journal Nature in the coming weeks. Mitalipov, Wolf and officials with OHSU, which operates the primate center, declined to comment on that research Tuesday, saying Nature has placed an embargo on the information.

Scientists worldwide have spent years trying to create embryonic stem cells from primates -- cells that could grow and turn into any kind of cell in the body. Advocates say research could turn such cells into powerful tools to treat devastating diseases, including Parkinson's and multiple sclerosis, and spinal cord injuries. But to work well as treatments, the cells should be identical to the patient's: in other words, cloned to match a patient's DNA.

In August, Wolf and Mitalipov said they had used somatic cell nuclear transfer -- also called "therapeutic cloning" -- to produce embryos with DNA identical to that of adult rhesus macaques. The procedure involves removing the DNA from an egg and replacing it with DNA from another animal's adult cell.

That "cloned" cell must then be made to grow -- a challenge plagued with problems the Oregon lab has done much to solve.

Cells cloned from adult monkeys have grown poorly because the two cells involved -- the adult donor and the egg cell -- are at different life stages. When the two cells join, they essentially have different ideas about when to grow and divide. It's like two people trying to dance together, with one starting at a tune's first beat and the other starting in the middle of the song.

The Oregon lab realized that chemicals in the cell can send powerful signals to reprogram the donated adult DNA, telling it to divide like a fertilized egg. But those signals were being clouded by the steps used in therapeutic cloning.

The lab found better ways. For instance, a staining process used to see a spindle that pulls chromosomes apart harmed the hybrid cell's chances to grow normally. The Oregon scientists used polarized light to see that spindle instead. They also found that special chemical environments -- including small doses of caffeine -- can help give the proper signals for forming blastocysts.

The group made many cloned blastocysts from a variety of cells, including skin cells from adults, according to its August paper in the journal Human Reproduction.

Some blastocysts cloned from male adult monkeys had male sex chromosomes. That proved the DNA came from the male donors, not the female monkeys that produced the eggs. No one had previously given convincing evidence of cloning embryos from adult primates, Wolf said.

The research received renewed attention this week after a London newspaper, The Independent, reported on the work. The paper quoted Wolf as saying that "we could now produce cloned blastocysts (embryos) in the monkey at a reasonable frequency, at least a frequency that would allow us . . . to study the cloned blastocyst."

Finding a reliable and efficient way to clone blastocysts from adult DNA should let scientists make large numbers of primate embryonic stem cells. While that is a big advance, many more problems must be solved before medical treatments result.

Those include learning more about monkey stem cells, figuring out how to turn them into adult cells needed for disease treatments, perfecting the same methods in humans and -- finally -- testing whether the theories work to cure diseases.

The work to make embryonic stem cells in monkeys was largely funded by federal grants. Research on making embryonic stem cells, especially from humans, is politically controversial. The Bush administration has limited making new embryonic stem cells with federal money, but several states including California have financed that work.

The primate center has received worldwide attention before, often for efforts in "reproductive cloning" or making living animals, a different thing from therapeutic cloning for stem cells.

In 1997, scientists at the Hillsboro facility announced the birth of two rhesus monkeys -- Neti and her brother Ditto -- with a cloning-like technique, a first in nonhuman primates. In 2000, another group of primate center researchers produced a female monkey named Tetra using a technique known as embryo splitting.

Andy Dworkin: 503-221-8564; andydworkin@news.oregonian.com

-------------------------
I just dig this stuff (and it's being done in my backyard, too!--well, not my LITERAL backyard, but in the city I live in)

[MarkDaMan]

Discipline key point of OHSU 5-year plan
Expansion - A proposal relies on a bigger hospital that generates cash for maintenance and research
Friday, December 14, 2007
TED SICKINGER
The Oregonian

Oregon Health & Science University is planning another major expansion of its profitable hospital and targeting budget cuts and changes in its research and education in hopes of bolstering its finances during the next five years.

University officials on Thursday unveiled a long-awaited five-year financial plan at its regular board meeting. The plan follows a yearlong strategic planning process that OHSU President Joe Robertson set in motion when he took over from Peter Kohler in late 2006.

Robertson has pledged to put the university on a more sustainable financial path by bringing a more businesslike discipline to its budgeting and planning and making sure that any initiative OHSU undertakes can stand on its own financially. Mounting losses from unfunded research expenses and medical education have consistently drained the university's finances and underminded its stability during a period of bold expansion.

The new plan leans heavily on continued growth of OHSU's profitable hospital operations. The hospital is OHSU's financial engine, generating cash to replace aging buildings and equipment and subsidize money-losing research and education.

To that end, the university plans to spend $375 million between 2009 and 2011 to add 150 hospital beds. That comes on top of 80 new beds -- at an additional cost of $40 million -- that are planned as OHSU completes the build-out of the Kohler Pavilion, a hospital wing opened last year on Marquam Hill.

Fifty-eight of the beds OHSU plans to add would replace two floors that OHSU leases at the Veterans Affairs Medical Center on Marquam Hill. The VA needs the space for veterans returning from Iraq and has asked OHSU to vacate the floors by early 2011.

All told, however, the university intends to expand its current inventory of 524 hospital beds by almost one-third.

OHSU's expansion comes as hospitals in Oregon and across the nation are in the middle of a construction boom, replacing or expanding older facilities, many built in the 1970s or earlier. In Oregon, urban hospitals poured more than $733 million into new construction from 2001 to October 2006, according to Oregon Health News, a newsletter that monitors the industry.

The building boom is fueling heated competition for the most profitable segment of patients: those with private insurance seeking complex services.

Still, Robertson contends that the university's goal of increasing patient revenue by 6 percent a year for at least the next five years is conservative. Statewide, hospital patient care revenue grew 10 percent to 15 percent every year starting in 2000, then tapered to a 7.3 percent increase last year. In addition to population growth in the Portland area and the bulge of aging baby boomers, Robertson figures OHSU can steal market share from other hospitals in the region.

Volume growth is the linchpin, as OHSU will substantially increase its debt to pay for the expansion. It plans to borrow $400 million to cover capital investments totaling $1 billion.

About 40 percent of the capital spending will be chewed up by routine investments in equipment and buildings. The university is also required to start construction on a $70 million parking garage on the South Waterfront by 2010.

One thing missing from the capital plan was any spending on a proposed new medical campus on 19 acres donated by the Schnitzer family. Robertson said the university will start construction on that campus only when it has the financial means.

The OHSU foundation is planning a feasibility study next year that will test donors' interest in the campus, research funding, and possibly the new hospital expansion. The foundation had trouble attracting big donations for buildings during its last big campaign.

OHSU's five-year plan includes a grab bag of revenue enhancements and cost cuts to achieve its targets. In addition to a $35 million increase in tuition and state support, university officials figure they can lasso $12 million in new program grants and increase revenue from technology commercialization by nearly $7 million.

Robertson was reluctant to specify any cuts the university might undertake.

"What you don't see here are large reduction in force," he said. "You don't see large reductions in programs."

But the financial plan calls for $76 million in cost reductions and "interventions" over five years. Those include such initiatives as "rebalancing of research revenues and costs," "efficiencies from unit consolidations" and "restructuring of infrastructure and support services."

Pressed to be more specific, Robertson said those measures could include reductions in internal research funding, consolidation of departments and institutes, and downsizing of redundant support services.

"There are no homerun strategies," Robertson said. "This is a plan at the level of rolling up your sleeves and doing a lot of hard work."

Ted Sickinger: 503-221-8505; tedsickinger@news.oregonian.com


http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1197608112266020.xml&coll=7

[Okstate]

*$70 million dollar parking garage in South Waterfront* Will this be above ground?

[MarkDaMan]

I think the name on this thread should change too, to OHSU news or something.

[bvpcvm]

*$70 million dollar parking garage in South Waterfront* Will this be above ground?

that's gotta be a mis-print. either that, or a it'll be covered top to bottom in marble and granite.

[zilfondel]

How many stories could you get an above-grade parking garage for $70 million? It's gotta be a lot.

[Okstate]

Here at OSU (which is Oklahoma State to everyone in my region) we're builing around a $70 million dollar garage that is around 1,500 spaces...& around 6 stories tall.

[bvpcvm]

that's gotta be one hell of a nice garage.

[tworivers]

Maybe they should give the Schnitzer land to PSU.

If Tri-met abandoned its moronic plan to run Milwaukie MAX along Lincoln instead of 405, it'd be a fast connection between campuses.

[pdxman]

How would it work running down 405?

[bvpcvm]

no kidding - *where* down 405?

[MarkDaMan]

OHSU unveils expansion plans
Portland Business Journal

The Oregon Health & Science University Board of Directors this week adopted a five-year strategic plan that calls for hospital expansion.

OHSU operations include a hospital, outpatient medical clinics, medical research, and schools of medicine, nursing, dentistry and other programs. The institute is coming off an expansion tear that included the construction of three new buildings and an aerial tram.

The university said it plans to spend $375 million to add 150 hospital beds to its 524 existing beds.

It will end the year with a consolidated net loss of about $17 million on $1.2 billion in revenue, which includes a net gain of about $37 million for hospital operations, and research and educational losses of $52 million.

"Each dollar we save is a dollar we can reinvest to catalyze research discovery," said OHSU President Dr. Joe Robertson in a statement.

The plan describes a number of philosophical approaches that will improve organizational performance, and is not a line-by-line budget. These changes include:

* Eliminate unneeded duplication of service.
* Implement incentives to motivate employees to become more efficient.
* Increasing philanthropic and grant support, and developing expanded community partnerships.

Other strategic initiatives include addressing work force shortages in the health and science professions and partnering with communities, industry, other colleges and universities and private citizens to develop community-based solutions to community problems.

OHSU officials said the timetable for the Schnitzer Campus will continue as scheduled.
http://www.bizjournals.com/portland/stories/2007/12/10/daily49.html?f=et75&ana=e_du

[zilfondel]

$70 million w/1,500 spaces = $46,000 per space
$70 million @30,000 per space (average cost) = 2,300 spaces

That's like around 12 stories or more?

[tworivers]

I'm sure running tracks along either side (or both sides) of 405 is do-able with some finagling.

http://www.cgis.ci.portland.or.us/giswrap/servlet/GisWrapServlet?MjIsISp4bBwfCBMcbTVhCQsbAwZmXFJcPDcqLS47LC43JjsyXFJcLys/MjcqJ1wDUgVcODcyOyE0ODc4XFJcTEpcUlxGS1wDV1EtOzI7PSpeVF44LDEzXiUzHw4xGFZcMQwKFhFcUgVcTE5OSF4xDAoWEQ1cA1JISk5SSE5OUhsQCBsSEQ4bVklISk5LTEhQSE9LUklISktOTkhQSE9LUkhGTk1GTFBPR1JISUhPRkxQT0dXUgUuERcQClZJSEpMSUhIUEhPS1JISUZMRkxQT0dXA1IFLQoHEhs5HxISGwwHLQcTHBESVlw5Ny0vMlANCgcSG1xSXDMfDBUbDF4tBxMcERINXFJcOhsYHwsSClxSXC0bEhsdChcREFxXA1cjRQ==

I want to see MAX go straight from SW Jackson to Riverplace/Sowa, rather than stop on Lincoln, which will slow it down and practically duplicate streetcar service. I guess I wish more attention was paid to the "express" part of MAX sometimes.

Regarding the parking garage, I remember reading ages ago that the parking garage OHSU is under contract to build also includes affordable apartments above. Maybe the 70 million number that is getting thrown around includes the housing?

[bvpcvm]

i would love to see the "xpress" in max get a little higher priority. but i drive that part of 405 daily and i don't see a lot of room there to add a max line. that's a 30' swath at the very least.

another option might be to go south across 405 and cut through the less-residential north end of corbett-lair hill (though given the topography it would probably require elevated tracks). as in:

http://i6.photobucket.com/albums/y237/bvpcvm/psusouth.jpg

[bvpcvm]

on the other hand, i haven't heard one word that any of the agencies involved in planning this are looking at putting max anywhere other than on lincoln.

[PacificNW]

Friday, January 18, 2008 - 1:11 PM PST
OHSU to close, outsource services to trim costs
Portland Business Journal - by Robin J. Moody Business Journal staff writer

Print Article Email Article Reprints RSS Feeds Add to Del.icio.us Digg This
Oregon Health & Science University leaders on Friday outlined cost-cutting measures for the medical institute -- including layoffs -- and explained the anticipated effects of the recent court decision to eliminate a cap on damages from tort claims.

The Oregon Supreme Court dealt a blow to OHSU and other public entities Dec. 28, when it ruled that a $200,000 cap on damages is unconstitutional in certain cases.

The end of the cap is estimated to cost OHSU $30 million in annually -- the research, health care and academic institute will have to set aside that much to pay potential legal claims. The estimated $30 million annual financial liability comes on top of a five-year, $114 million cost-cutting drive to shore up financial losses.

OHSU leaders were already expecting to trim costs as a result of recent financial losses, but the end of the tort cap will deepen cutbacks, which include several hundred job cuts, reductions in educational programs and scaled-back infrastructure investments. It will also raise tuition for educational programs.

The following is a roundup of other operational changes:

A reduction in class size for the School of Medicine.
The March Wellness Center at South Waterfront will be outsourced or closed.
Closure or restructuring of the Russell Street Dental Clinic, providing dental care for the underserved.
Closure or transfer of the rural health clinic in Union, which serves residents from the surrounding region.
Discontinuation of additional community outreach services.
Reductions at the School of Science and Engineering which will also be merged with the School of Medicine. Additionally, OHSU will accelerate the move of the School of Science and Engineering away from the university's West campus.
The university will reduce central university services in finance, human resources, administration and other areas.
Possible closure of research centers unable to absorb their share of the additional costs.
A reorganization of an OHSU-initiated statewide health research program. The program may also be slated for closure at a later date.
OHSU ended its last fiscal year with a consolidated net loss of about $17 million on $1.2 billion in revenue, which includes a net gain of about $37 million for hospital operations, and research and educational losses of $52 million.

The Oregon Supreme Court's Dec. 28 decision on Clarke v. OHSU, which involves the Oregon Tort Claims Act, reaffirmed a previous Oregon Court of Appeals July 2006 conclusion that OHSU is a public body and therefore entitled to tort cap protection like other public entities such as schools and fire departments.

However, it also ruled that the Oregon Constitution provides for a remedy that is "adequate," and apparently determined on a case-by-case basis. The court added that it is unconstitutional to substitute a public body like OHSU as the defendant in place of an individual employee if that results in an inadequate remedy.

In short, the Oregon Supreme Court effectively struck down the liability cap in this instance, which could allow damages above the $200,000 noneconomic cap to be awarded during future court proceedings. The cap limited damages to $100,000 in economic damages and $100,000 in noneconomic, or pain and suffering, damages.

rmoody@bizjournals.com | 503-219-3438


http://www.bizjournals.com/portland/stories/2008/01/14/daily33.html?jst=b_ln_hl



Not good news for SoWa....but this medical building could be an attractive
facility for another medical operation... NIH, CDC, VA expansion, Legacy, Kaiser? (One can hope.) :)

[MarkDaMan]

OHSU struggles with sale of South Waterfront land
Portland Business Journal

Oregon Health & Science University Chief Financial Officer Brad King didn't have much positive news at the university's board meeting this week.

Budget and program cuts at Portland's largest private employer are going to be deeper than expected due to changes to the university's medical liability cap and missed budget projections.

The university has also been challenged to sell a piece of South Waterfront land it hoped to sell for $6 million to a hotel developer.

"It may be that the party we are dealing with won't be able to proceed," said OHSU Chief Administrative Officer Steve Stadum at the Jan. 22 meeting. "We planned to sell, but changes in the capital market make the deal more speculative."

A tanking economy means many would-be patients will likely become reluctant to get elective procedures, and OHSU's hospital and clinics will see more uninsured patients.

Recent developments in the bond market could also force the university to pay a higher interest rate on its bonds. The university has $600 million in liabilities.

"We have a fairly high level of debt on the books at this time," King said.

Tuition at OHSU's medical school will also likely become the highest in the nation for public universities following tuition hikes scheduled to offset the university's losses. Proposed increases would raise tuition 17 percent, to $43,115 annually for out-of-state students and $30,500 for state residents.
http://portland.bizjournals.com/portland/stories/2008/01/28/newscolumn2.html?t=printable

[bugsy]

As a quick aside, what's with not allowing GMail addresses? That's all I have used for years, awfully annoying. Anyway, here's some relevant news regarding OHSU.

http://www.ogi.edu/about/news/dsp_news.cfm?news_id=5EAF9711-D767-5360-0D1D8421B25CF21A

School of Science & Engineering Announces Details Of Plan To Transition Into School of Medicine
April 25, 2008

Portland, Ore. - OHSU executives, School of Medicine (SoM) Dean Mark Richardson, and School of Science & Engineering (SoSE) Dean Ed Thompson have announced details of the School of Science & Engineering's planned transition into the School of Medicine.

On July 1, 2008, the School of Science & Engineering will become the Department of Science & Engineering in OHSU's School of Medicine. The department will consist of three divisions:

* Biomedical Engineering,
* Biomedical Computer Science (resulting from the reconfiguration of the current Department of Computer Science & Electrical Engineering and the Center for Spoken Language Understanding), and
* Environmental & Biomolecular Systems.

The department will retain SoSE's focus on combining science and engineering to solve major problems in human and environmental health. Its divisions plan to offer all of the degrees currently associated with SoSE's three research departments, subject to approval by OHSU's School of Medicine Graduate Studies Council.

One current SoSE unit--Management in Science & Technology (MST)--will become a free-standing division within SoM's educational programs, and plans to shift its focus from high-tech to bioscience and healthcare. MST's high-tech programs will be fully supported for currently enrolled students completing their degrees, but no additional students will be admitted. In Fall, 2008, the unit will, pending final approval by the Oregon University System, begin offering a new MBA in Healthcare Management jointly with Portland State University.

One current SoSE center--the Center for Coastal Margin Observation & Prediction--will retain strong links with the department, but because it is a multi-institutional collaboration its director will report primarily to OHSU's Provost, Lesley Hallick, and secondarily to the Vice President for Research, Dan Dorsa.

One current SoSE educational program--the track in Computer Engineering & Design (CED)--will either be phased out in the same way as MST's high-tech programs or transitioned to another educational institution. OHSU leaders are currently in active discussions with other educational institutions regarding a potential home for the CED program.

The Department of Science & Engineering--SoM's newest--will remain headquartered on OHSU's West Campus, though its Division of Biomedical Engineering has already transitioned to the 13th floor of the Center for Health & Healing on OHSU's South Waterfront Campus. As appropriate additional space at OHSU's downtown campuses becomes available, SoSE researchers will transition away from the West Campus. Any vacated space will be occupied by new tenants seeking to join the growing list of startups, venture capital firms, and biotech companies already located on the SoSE campus.

Planning for a financially sustainable future for SoSE began in 2007 as a part of OHSU's Vision 2020 strategic plan, but the reductions necessitated by the loss of the tort cap magnified the scale and accelerated the timeline of the required changes.

Dean Ed Thompson noted that SoSE leadership was guided in their planning process by three criteria, prioritized as follows:

* To create a robust and vibrant environment for faculty, and retain as many faculty positions as could be supported in a financially sustainable way.
* To provide a level of departmental infrastructure that adequately supported faculty efforts in research and education.
* To provide a level of overarching infrastructure that was appropriate for the size of the faculty and leverages support from other parts of OHSU wherever possible.

Although the administrative cuts following from this ranking are significant--the SoSE Dean's Office and Department of Graduate Education will be reduced by more than 80 percent by FY10, resulting in savings of approximately $1M--the research and educational core of SoSE will remain strong and will be fully supported over the long-term. All current faculty contracts are being honored, and stable, long-term core funding for the newly formed department will come from SoSE's endowment. SoM administrative and educational infrastructure will be leveraged to replace most of the functions lost in this consolidation.

"While the circumstances necessitating this transition were not ideal," said Thompson, who will become the new department's interim head, "it will result in a strong and financially sustainable department, closer links between science and engineering faculty and their colleagues in the medical school, and better solutions for the health and well-being of Oregonians."

SoSE's Department of Graduate Education is working with the School of Medicine to ensure a smooth transition for current and future science and engineering graduate students. There will be few changes in degree programs, and degrees will continue to be granted through OHSU with diplomas issued from OHSU. SoSE Students graduating in 2008 will, however, be the final class to hold a separate SoSE hooding ceremony; starting in 2009, students will go through hooding and commencement with students from all other SoM departments.

SoSE's transition into the SoM will be official as of July 1, 2008, though administrators report that there will be a lengthy period during which many systems and processes will need to be readjusted. They anticipate that the department will be fully integrated by the end of FY09. In the meantime, students, staff, and faculty with questions are encouraged to send them to questions@ogi.edu.