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0 of 3 Premium Clicks used this month SUBSCRIBE Print + Online Subscriber Activation | Register x Forgot Password | Need an Account? e-edition | subscribe | newsletter | deals Classifieds Jobs Autos Real Estate FEATURED » NEWS NOW Ashland man admits to laundering pot money ... Pot crash course offered in Ashland ... Animal Control rescues stranded Labrador ... Ashland man admits to laundering pot money ... Pot crash course offered in Ashland ... Animal Control rescues stranded Labrador ... OHSU gets option to buy stake in struggling Moda Health Comment By Jeff Manning The Oregonian MailTribune.com By Jeff Manning The Oregonian Posted Nov. 17, 2015 at 5:14 PM By Jeff Manning The Oregonian Posted Nov. 17, 2015 at 5:14 PM » Social News PORTLAND — Oregon Health & Science University has agreed on terms with Moda Health Plan Inc. that allow the public entity to purchase a 25 percent share of the struggling insurer. OHSU has signed a letter of intent that gives the academic health center the option to convert the $50 million debt it is owed by Moda Health into a 25 percent equity stake in the struggling health insurance company. Dr. Joe Robertson, president of OHSU, said the option speaks to the tight relationship between OHSU and Moda. "Equity is longer-term than debt," he said. It's highly unusual for a public corporation like OHSU, which still receives millions of state tax dollars a year, to buy a stake in a private insurance company. It's even more so in this case as Moda has been hit with significant financial losses after betting heavily on the new individual insurance market mandated by the Patient Protection and Affordable Care Act, which went into effect last year. The Oregon Insurance Division would have to approve the deal before OHSU goes ahead with the debt-to-equity conversion. The new agreement gives OHSU a year to do so. Robertson said there is a possibility OHSU could inject additional cash into Moda for additional stock, though he said that's likely a decision that wouldn't be made any time soon. OHSU likely would not take more than a 50 percent stake in the company. "Twenty-five to 50 percent is probably the sweet spot," Robertson said. "We are in violent agreement (at OHSU) that we don't want to own an insurance company." Moda borrowed $50 million from OHSU in December 2014. Since then, the Portland health insurance company has been hit by large financial losses that depleted its capital. Last month, the insurance rating firm A.M. Best placed the finances of Moda and its parent company "under review with negative implications." On Friday, Moda said it had borrowed an additional $50 million from its parent company to stabilize its financial condition. In addition to Moda, PacificSource and other Oregon insurers have lost money in recent years as they struggle to figure out the significant changes wrought by the Affordable Care Act. Moda was forced to raise premiums 25 percent for 2016 for its customers in the individual market. Moda contends its financial position is strong. In a prepared statement, Dr. William Johnson, president of Moda Health said of the OHSU announcement that the two companies have a longstanding relationship, and "it makes perfect sense now that we move to deepen that partnership." Robertson said Monday he is satisfied that Moda is out of the financial woods. "We would not invest if we thought Moda was insolvent," he said. "We don't think Moda is insolvent, the Oregon Insurance Commissioner doesn't think Moda is insolvent." Robertson said the deal is in keeping with OHSU's "laser-like focus" on improving Oregonians' health. He declined to release a copy of the letter of intent. Though the agreement has not been acted on yet, OHSU officials already describe the new relationship as a "partnership." They say the change is intended to improve patient care and protect the academic hospital's position in the state's increasingly tumultuous insurance market. Amid the uncertainty created by the advent of the Affordable Care Act, Oregon insurers are scrambling to create new alliances and shore up their competitive positions. In addition to the OHSU-Moda deal, Legacy Health, operator of Legacy Emanuel Medical Center and five other metro-area hospitals, last month bought a 50 percent interest in PacifiSource Health Plans for $100 million. Recently, one of the smaller Oregon insurers, Health Net agreed to terms with national health insurance giant Centene, which is focused on Medicaid. Robertson said he expects more out-of-state firms to come into the market. Moda remains one of the state's biggest insurers in the state. For OHSU, cementing its position with Moda can only help its bargaining position with other insurers. In other states, specialist-heavy academic medical centers have been excluded from some insurers' provider networks to save money. OHSU faces similar hard-bargaining from insurers, Robertson acknowledged. "The threat that we see from this consolidation is that Oregonians might not have access to their state's academic health center," he said. "And we think that Oregonians deserve that access." Earlier this month, OHSU entered into a partnership with Salem Health that fell just short of a merger. Under the name OHSU Partners, the two entities will "manage their respective clinical services as an integrated health system," according to a statement from OHSU. OHSU has also entered into a letter of intent for a similar affiliation with Tuality Healthcare. By Jeff Manning The Oregonian MailTribune.com By Jeff Manning The Oregonian Posted Nov. 17, 2015 at 5:14 PM » Comment or view comments Reader Reaction » STAY INFORMED Email NewsLetter Sign Up Today Sign up for our newsletter and have the top headlines from your community delivered right to your inbox. Southern Oregon Directory Featured Businesses Loading... 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