On Nov. 17, Lane County commissioners will decide whether to approve $179 million in tax-exempt bonds for QKA Health, the new nonprofit buying McKenzie-Willamette Medical Center from Quorum Health. They should vote no.

Quorum’s majority owner is the private equity firm GoldenTree Asset Management, which also holds about a quarter of Quorum’s senior debt. QKA says the creditors are taking a haircut. The filings say otherwise: QKA would pay $956.7 million to Quorum’s investors, mostly to pay off about $968 million in long-term debt. That gets them nearly all their money back on a bad bet.

Taxpayers make that payout possible. Tax-exempt bonds save the system about $31 million a year in interest, and federal taxpayers foot that bill. Nonprofit status also takes the hospital off the property tax rolls. That could cost local governments about $2 million a year, including roughly $808,000 from Springfield’s general fund and police and fire levies. Springfield schools and Willamalane would lose money, too.

The deal also leaves the hospital deeper in debt. The new nonprofit would owe about $1.26 billion, 30% more than Quorum does now, at a blended rate near 8.25%. For five years it pays only interest. Principal payments begin around the end of 2031, just as most of the Oregon Health Authority’s conditions on the deal expire. That gives Quorum time to flee the scene of the crime before we realize a murder has happened.

Quorum’s CEO told commissioners that, without approval, the buyer “could walk away.” Let it. The merger agreement expires Dec. 31, and investors about to get nearly everything back need this deal far more than Springfield does. If the deal dies and Quorum goes bankrupt, a court can sell the hospital to an operator that isn’t drowning in debt. The creditors would take the loss they signed up for.

McKenzie-Willamette matters to this community. That’s why commissioners shouldn’t pile more debt on it to make Wall Street whole.

Steve Eller
Springfield