The Oregon Legislature has passed a bill providing a $44 million loan guarantee to Bay Area Hospital, allowing the Coos Bay facility to comply with the terms of a large loan from the Bank of Montreal.
Although Bay Area Hospital is able to make its monthly payments on the $47 million loan, the hospital has not been able to hold the $50 million in reserves that are part of the agreement. That means the Canadian bank could require Bay Area to pay back its loan immediately. In that scenario, the hospital would be forced to cut its beds from more than 170 to 50.
Coos Bay resident Tracy Sweely has led community efforts to keep the hospital operating at its current level, including fighting a deal for a private equity firm to operate the facility. She praised the unique solution from legislators after a bill to give the hospital $10 million failed last session.
“We're just really proud of the legislators and thrilled that they were willing to do it,” Sweely said.
The closest large health care facility is hours away.
“Hospital sustainability clearly allows the residents in the area who live here to feel much more secure that their chronic and urgent medical needs will be able to be met locally without having to travel two hours,” she said.
Sweely also praised the recently elected members of the hospital’s board. That election was seen by Sweely as a referendum on a deal with Quorum Health.
“Oh my gosh, we could not be more thrilled,” she said.
Sweely said she has been regularly attending board meetings since 2023.
“It was always so depressing when we would leave those meetings before the board changed,” she said.
Democratic Rep. Rob Nosse of Portland joined Republican colleagues to support the loan guarantee.
“You would think that maybe, you know, a liberal Democrat from Southeast Portland wouldn't really care about Coos Bay, especially because I've only been there twice in my life,” Nosse said. “Being chair of the house health care committee, I felt an obligation to try to look out for the whole health care ecosystem of the state of Oregon.”
The bill did have its detractors. The money for the guarantee comes from interest on unclaimed state property, usually reserved for education. If the hospital defaults, the state must pay back the lender.
“There was definitely objection. And the approach to guaranteeing that loan is quite novel, and figuring that out in a five-week session is very hard,” Nosse said.
The loan guarantee will help the hospital stabilize its finances, said Bay Area Hospital CEO Gretchen Nichols.
“Over the past six months, the organization executed an aggressive turnaround plan with great success, achieving breakeven status,” Nichols said. “This legislation allows us to refinance our debt while continuing to carry out our mission as a regional referral center for the Southern Oregon Coast.”
