Lane County commissioners face decision with McKenzie-Willamette Medical Center 

McKenzie-Willamette Medical Center’s private equity owners want to make the Springfield hospital part of a new nonprofit company. 

As part of that deal, corporate executives want Lane County commissioners to approve the issuance of $179 million in tax-exempt bonds as part of a complex financial and corporate debt restructuring. The approval would not require Lane County to pay anything for the bonds, but the decision could play a role in the future of the 113-bed hospital in Lane County for years to come.

QKA Health Corp., doing business as Healthside Partners, requested a public hearing and approval from the county board. Federal law requires the blessing of a local jurisdiction such as Lane County to proceed with the bonding.

QKA Health Corp. is the new nonprofit company that wants to run McKenzie-Willamette Medical Center instead of its current owners, Quorum Health. QKA Health seeks Lane County approval to take out the $179 million in tax-exempt bonds needed to acquire the Springfield hospital and equip a planned 16,000-square-foot leased building in Eugene that will be a satellite emergency department affiliated with the hospital. 

“We feel like this transaction that we’re proposing is what sets up the hospital to continue to provide the best care that it can to the citizens of Lane County,” Chris Harrison, chief executive officer of Quorum Health, told commissioners during a public hearing Tuesday, Nov. 3. 

Lane County commissioners took no action Tuesday and plan to revisit the issue Nov. 17.

Here’s a look at how we got to this point, what’s at stake and what’s next: 

How we got here 

Tennessee-based Quorum Health is the parent company of McKenzie-Willamette Medical Center. Quorum Health is being sold by its owners and creditors, including majority owner and private equity firm GoldenTree Asset Management, to a new nonprofit entity called QKA Health Corp., according to a county memo. 

QKA is doing business as Healthside Partners. 

In August, Lane County staff received a request from QKA for the county to have a public hearing and approve the issuance of the bonds. 

The hearing is required under the federal Tax, Equity, Fiscal and Responsibility Act of 1982, which passed during the Reagan administration and applies to nonprofits and tax-exempt bonds.  

As county staff researched the issue, the company also sought Oregon Health Authority approval for the transaction. In October, health authority regulators conditionally approved the transaction, allowing McKenzie-Willamette to operate under the nonprofit organization. 

As part of the health authority’s conditions, the hospital must:

• Provide, without a significant reduction, the same essential services it currently offers, including an emergency department, trauma services, intensive care, birthing, labor and delivery services, on-site pharmacy services, and diagnostic imaging and laboratory services. 
• Maintain a hospital board with at least nine members.
• Make a variety of other public disclosures, such as executive compensation. 

About the transaction 

Through the transaction, QKA purchases Quorum’s assets for $942 million, through a mix of public and private financing. The public bond measure for all of Quorum’s hospital properties adds up to $1.1 billion. About $179 million of that is tied to Quorum’s McKenzie-Willamette Medical Center and other Oregon interests. 

QKA will have a higher debt load than Quorum — about $1.26 billion total. (That figure includes $120 million for a debt service reserve fund on top of the $1.1 billion in bonds.)

Quorum’s owners will exit hospital operations. 

It’s part of a bigger push to convert Quorum’s for-profit health systems into a nonprofit system. 

“The substantive effect of the transaction will be to convert Quorum’s for-profit health systems of 11 hospitals in nine states into a charitable nonprofit health system,” James W. Blake, board chair of QKA Health Corp., wrote in an Aug. 14 letter about the bonds to County Administrator Steve Mokrohisky. 

The letter highlights benefits that include: 

• As a charitable nonprofit organization, any excess revenues beyond expenses will be invested back into local health services rather than to equity owners. 
• A portion of the bond financing will help cover the satellite emergency department project in Eugene. 
• The new model will expand free or discounted medical care for low-income and uninsured patients. 

Mark Robinson, the hospital chief executive officer, urged commissioners at Tuesday’s hearing to consider the deal’s community benefits and highlighted the hospital’s financial struggles. 

McKenzie-Willamette had a net loss of $14.9 million in 2025, after reporting net profits in 2023 and 2024, county and state records show. 

“I’m running a hospital that’s staring down a $20-plus million dollar loss — not a miss to budget but a loss,” he said. “And every week I have a meeting that in my subsequent 27 years I haven’t had to make in the other hospitals that I’ve been a part of. But I have a meeting to figure out who we’re going to pay this month.” 

Robinson added: “We’re a paycheck-to-paycheck family at McKenzie- Willamette Medical Center figuring out are we going to pay for our hospitalist program this week? Are we going to pay for anesthesia? Are we not going to pay for food and nutrition?”

After the transaction closes, all Quorum executive team members and corporate employees will be employed by QKA, health authority records show. 

“This transaction is facilitating the exit of private equity, but there is public concern about the level of debt that the new non-profit will carry and the sustainability of that debt beyond the five-year life” of the health authority’s conditional approval, according to a county memo.

Staff consulted with Hawkins Delafield & Wood LLP, Lane County’s legal bond counsel, on the request. An attorney for the firm concluded that the county “is not obligating itself to be involved with the bond issue in any other way” than holding the hearing and deciding on the request.

Financial considerations 

Although attorneys concluded that Lane County would face no financial risk by approving the bonds, commissioners worry about something else — loss of property tax revenue.

County officials estimate that the nonprofit exemption for QKA would result in a $2 million loss in annual property tax revenues for local governments. 

Springfield would lose about $808,000 and the county’s share would be about $220,000, city and county estimates show. Other agencies, like Springfield Public Schools and Willamalane Park and Recreation District, would also lose funding.

That loss concerns commissioners and other local agencies that rely upon the tax revenue. 

Niel Laudati, Springfield assistant city manager, told commissioners that local officials want the hospital to succeed and remain stable long term. 

“At the same time, we want to bring to your attention the potential financial impacts the hospital’s transition to a nonprofit ownership may bring,” he said. “If the hospital’s property qualifies for a charitable property tax exemption, Springfield community could experience a significant reduction in annual tax revenue.”

For the city of Springfield, the estimated $808,000 loss includes $598,000 in permanent property tax revenue that supports the general fund and $210,000 in dedicated funding for police and fire service through levies, Laudati said. 

“Our public safety agencies and McKenzie-Willamette Medical Center serve interconnected roles in protecting the health and safety of our community,” Laudati said. “Police officers, firefighters, emergency medical responders and hospital staff all contribute to the coordinated system of care and emergency response.”

Laudati said officials would welcome the opportunity to work with hospital officials and the county to explore options to address the property tax losses. 

Harrison said the company is committed to discussions and ensuring Lane County and Springfield don’t have a “huge gap in their budgets that we’ve caused because of this transaction.”

Commissioner Heather Buch said she appreciates that commitment, but “that’s no guarantee that the municipalities are going to be able to get the revenue they need.”

But the deal could help shore up the overall health system’s finances. 

The health authority order that approved Quorum’s request for QKA to operate McKenzie-Willamette Medical Center (MWMC) on a nonprofit, tax-exempt basis, noted the tax-exempt financing will reduce the health system’s overall borrowing costs by about $31 million annually. 

Other tax benefits include nonprofit exemptions for property, sales and use taxes, totalling about $13 million annually. 

Yet despite those benefits, QKA will “remain highly leveraged,” the health authority order states. “The Transaction will increase long-term debt by 30% from $968 million to approximately $1.259 billion post-closing.”

(That figure includes $120 million for a debt service reserve fund on top of the $1.1 billion in bonds.)

“In the long run,” the health authority order states, “whether QKA remains financially viable will depend in large part on whether it can successfully turn around struggling hospitals, including MWMC, and build sufficient reserves to reduce its debt load and withstand external financial headwinds.”

Health care considerations 

McKenzie-Willamette Medical Center’s 113 beds help shore up the county’s hospital bed supply.

Lane County has 532 licensed hospital beds, including McKenzie-Willamette and the three PeaceHealth hospitals: Riverbend, Peace Harbor, and Cottage Grove.  

“Preservation of existing hospital beds is of vital importance as partners within the region are working to open new licensed beds for rehabilitation,” the county’s memo states. 

That includes 89 beds for in-patient psychiatric care at the PeaceHealth Timber Springs facility, which will be co-located with the Lane County Crisis Stabilization Center. 

McKenzie-Willamette accounts for about 20% of Lane County’s current emergency room treatment capacity and has proposed adding up to 12 new emergency beds at a new facility in Eugene, the county memo states. 

That Eugene facility, though, hinges on the transaction. 

Next steps 

Commissioners unanimously decided to push the decision forward to Tuesday, Nov. 17. 

A key sticking point: the impact of lost property taxes. During the next two weeks, local officials and the company will discuss how to cover that loss. 

While commissioners appreciated the company’s verbal assurances, Lane County Commissioner Laurie Trieger said, “ I want to see it on paper.” 

Commissioner David Loveall said he would reluctantly support waiting to get the agreement on paper, even though he hoped to see the bonds approved right away. Commissioners also will send a letter to the health authority with an update about next steps. 

At the same time, the company told officials that time is running short. Harrison, the executive, said the merger agreement expires Dec. 31. 

Without a bond approval, he said, “They could walk away from the deal if they so chose.”