Lights Out

After nearly five years, a Pennsylvania company gives up on plans to open a new rehab hospital in Oregon.

SUBJECT: Post Acute Medical Withdrawal of Application for Certificate of Need

FROM: Arden J. Olson, attorney for Post Acute Medical

TO: Oregon Health Authority

DATE: July 5, 2023

Last week, Post Acute Medical LLC, which operates 41 post-hospitalization rehabilitation facilities in 22 states, pulled the plug on its nearly five-year effort to open a new, 50-bed rehab center in Tigard.

Post Acute Medical, along with another rehab provider, Encompass Health, had hoped to fill what it saw as a gaping need: Oregon ranks second to last in the nation in rehab beds, which serve patients who have suffered strokes, heart attacks, brain injuries and other traumatic incidents.

In order to open in Oregon, the newcomers had to obtain a “certificate of need” from the Oregon Health Authority, effectively a finding that there was demand for the new services.

Over the objections of Legacy Health, the state’s biggest existing rehab provider, and the Oregon Health Care Association, which represents nursing homes that also provide rehabilitation services, the state granted both applications. Legacy and the OHCA appealed, and the matter is currently awaiting action in the Oregon Court of Appeals. But on PAM, at least, the opponents won.

“The dogged self-interest of PAM’s opponents (who sought delay at every turn and plainly have no concern about the patients who would benefit from PAM’s ser- vices) shows no signs of abating, and the Oregon appellate courts promise to give those opponents years of further delay at the very best,” wrote Arden Olson, attorney for Post Acute Medical.

CHILD’S PLAY

Portland cut a deal for an empty museum, and has no cash to repair it.

ADDRESS: 3037 SW 2nd Ave.

YEAR BUILT: 1918

SQUARE FOOTAGE: 6,456

MARKET VALUE: $1.4 million for the entire property, which includes Lair Hill Park

OWNER: City of Portland

HOW LONG IT’S BEEN EMPTY: Since 2001

WHY IT’S EMPTY: Portland Parks & Recreation is broke.

The stately, two-story brick building on the corner of Lair Hill Park in Southwest Portland has had a rich life.

The withdrawal prompted a series of reactions from involved parties.

Kathryn Nichols, whose son David, a young Boeing engineer, nearly died in a 2017 climbing accident, says her family’s experience—they had to go to Colorado for rehab services—shows the shortage of beds in Oregon (“Free Fall,” WW, Jan. 18). She’s frustrated that existing providers can use the regulatory approval process to keep competitors out.

“As the parent of a traumatic brain injury survivor, I was very disappointed and saddened to learn that PAM has withdrawn its application,” Nichols says. “This outcome illustrates well how the state’s certificate of need process can be highjacked and become a barrier to meeting a critical and long-standing well-documented need affecting many.”

David Kracke, the state’s brain injury advocate coordinator at the University of Oregon, agrees. “We should have a system in place that prioritizes patients over antiquated, and bureaucratic, processes,” Kracke says. “Demand for these in-patient rehab beds is increasing and will continue to increase over the coming years.”

But Phil Bentley, CEO of the Oregon Health Care Association, says PAM’s withdrawal is a recognition that the company would have lost in court. The nursing homes believe they can provide many of the services PAM and other companies do, at lower prices, but the state disagreed. “We believe that when PAM read our appellate brief, it became clear that OHA’s erroneous final order will not hold up,” Bentley says. Legacy did not respond to a request for comment by press deadline.

PAM’s withdrawal leaves an application from Encompass Health for a 50-bed facility in Hillsboro still pending—and still part of the case in front of the state Court of Appeals. And regardless of how that case ends, the issue isn’t over: Records show that Vancouver, Wash.based PeaceHealth filed an application in June for a certificate of need for a 50-bed rehab facility in Springfield. NIGEL JAQUISS.

It was first built as a dormitory for county nurses in 1918, before being remodeled two decades later into offices for a New Deal youth employment initiative. Then, in 1949, it was converted into a museum for children, which it remained for the next half century, until the Portland Children’s Museum moved up to Washington Park in 2001.

The building has sat vacant since. Neighbors aren’t sure who owns it, and they’ve never seen anyone in it. Even the restrooms on the ground floor that open out onto the adjacent playground are locked and scrawled with graffiti.

In 2016, the city contemplated renovating and leasing the building. But there was a hitch. When it obtained the building from the county more than a century ago, the deed restricted the property to “public park use.”

So, in a remarkable moment of city-county cooperation, the two sides came up with a deal. The county would give up the restriction on the former dormitory, and the city would give up its interests in a section of a Troutdale pig farm the county wanted to sell to McMenamins, which was expanding Edgefield Hotel.

The upshot: McMenamins got its 65-acre farm, the county got $3.2 million, and the city of Portland got a dilapidated building it had no hope of fixing.

The building needs millions of dollars in repairs and seismic upgrades, says Portland Parks spokesman Mark Ross. But there’s no money to do it (see “Grand Canyon,” page 12).

“Portland Parks & Recreation has been significantly underfunded for decades, and the public assets which comprise the parks system are aging,” he noted.

The Children’s Museum closed for good in 2021, after a two-decade run in its new location high up in the West Hills. And the outlook for its former building in Lair Hill Park isn’t any better. Without new funding, a fifth of PP&R’s assets will be “removed or closed” within the next 15 years, Ross says. LUCAS MANFIELD.

Every week, WW examines one mysteriously vacant property in the city of Portland, explains why it’s empty, and considers what might arrive there next. Send addresses to newstips@wweek.com.

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