Bay Area Hospital in Coos Bay was on the brink of catastrophe until an unlikely duo teamed up

By BETSY HAMMOND/The Oregonian/OregonLive

The only large hospital on Oregon’s coast, situated in the heavily Republican district encompassing Coos Bay, received a financial lifeline from the Legislature this month.

The deal was clinched by progressive Portland-area Democrats representing districts more than 200 miles away.

Bay Area Hospital is the only medical center within a two hour-drive of Coos Bay where a patient can deliver a baby, receive advanced cardiac care or undergo chemotherapy. And it was at serious risk of being forced to shrink to 50 beds and no longer offer specialty care, due to its previously shaky finances and the resulting high anxiety at its sole lender, a Canadian bank.

Over the past several months, an unlikely pair of lawmakers teamed up to try to save high-level hospital care for Oregon’s entire south coast: Rep. Boomer Wright, a conservative 77-year-old Reedsport Republican in his final year in the Legislature, and Rep. Rob Nosse, a 58-year-old liberal Democrat from Southeast Portland.

On the final day of the five-week session, they triumphed — without a single vote to spare.

It takes 16 votes to pass a bill in the 30-member Oregon Senate, and House Bill 4075 passed the Senate 16 to 12. One fewer “aye” vote would have killed the bill and potentially doomed the hospital. The bill has passed out of the Legislature and awaits the signature of Gov. Tina Kotek.

Securing the bailout required a financial as well as political feat. Nosse and Wright resorted to an unconventional and controversial source for a $44 million state loan guarantee: unclaimed property held in trust by the state. By law, interest on those funds goes to the Common School Fund to help the state’s 197 school districts.

Taking money from schoolchildren to help a single rural hospital drew notable opposition — even though fiscal experts estimate the hit to schools will be roughly $19 million over the coming two decades, a period when state funding for schools will total perhaps $150 billion.

Nevertheless, the precedent of tapping Common School Fund resources was anathema for some lawmakers, as passionate floor testimony in both the House and Senate showed.

But a majority of lawmakers insisted they won’t make a practice of diverting money designated for schools for health care needs that are all but certain to arise. Instead, in often deeply emotional testimony, they cast their “yes” votes as akin to legislators coming together as a statewide family in a one-off decision to prevent grievous harm to one family member.

“Are we a state or are we a series of communities?” Rep. Paul Evans, a Monmouth Democrat, asked. “If we are a state … then we take risks for each other. … This is one thing we can do to try to prevent a hospital from collapsing. … It’s not pretty, but right here in this moment, I choose family.”

If Bay Area Hospital were forced to shrink to 50 beds, down from the current 172, it would likely cause at least 180 preventable deaths per year, according to hospital officials, citing research about the impacts of care delays from two-hour ambulance rides to a fully staffed trauma center.

“This is a very important project for the state of Oregon, when you look at … where the hospital is, the folks they serve and the type of care,” said Rep. Greg Smith, a Heppner Republican whose district lies 400 miles from Coos Bay.

Sen. Democratic Leader Kayse Jama of east Portland called his “yes” vote “a values-based vote.”

“If I wouldn’t have voted for it,” he said, “that bill would have died.”

Nosse, who took the lead in pushing the bill through to passage, called it “my best accomplishment from the 2026 session and maybe among my best accomplishments of over 10 years of service,” even though it has tenuous ties to his identity as a southeast Portland lawmaker.

“In a moment when people are so cynical and mistrustful of politicians — and honestly who can blame them — my honest answer about why I helped pass that bill is because it was the right thing to do,” Nosse told The Oregonian/OregonLive.

What created the need for a bailout

Rural hospitals in Oregon and nationwide are struggling, in large part because the vast majority of their patients are on Medicaid or Medicare, which pay less for care than private insurance policies do.

Much of Bay Area Hospital’s additional financial distress traces back to a single decision: It secured a high-interest private-sector loan to make needed upgrades to its IT systems, including for electronic health record-keeping.

Although the hospital has never missed its monthly $400,000 payment on that loan, now held by the Bank of Montreal, it has not been able to meet another requirement — that it have $50 million in cash reserves, hospital Chief Financial Officer Patrick Banks told lawmakers.

The hospital, which lost tens of millions of dollars a year in the wake of the pandemic, launched what its new CEO Gretchen Nichols called “an aggressive turnaround plan” late last summer. It began operating in the black three months ago and is on track to keep doing so, Banks said. But it has no path to build its reserves back to $50 million any time soon, he said.

That means the Canadian bank could require the hospital to repay the loan at any time — and it has sent strong signals that it plans to do so soon, Banks said. If that were to happen, the hospital would have to relinquish its property for sale, he said. And any new buyer would inevitably opt to operate the facility as a so-called Type B hospital, which is limited to 50 beds. Type B hospitals are able to charge Medicaid higher rates than a large hospital like Bay Area can — so the result would be that Oregon and the federal government would pay the hospital higher reimbursements to provide less care, he said.

That is why the hospital now plans to refinance its debt with a different, yet-to-be chosen financial institution, Banks said. But to qualify for a loan and secure a competitive interest rate the hospital must “borrow somebody else’s credit rating,” in this case the state’s, Banks said.

Securing a new loan and getting free of immediate pressure to sell the hospital or downgrade its services will provide vital breathing room to right the hospital’s books, Banks said.

If Bay Area Hospital manages to pay off the loan, as it intends to do, the money Oregon sets aside to guarantee it would go back to the unclaimed property fund, with the interest sent on to schools. If the hospital were to default on the loan, the new lender would first claim its liquid assets, then look to the state to pay off the remaining balance. The state would then have the right to recoup its losses from the hospital’s remaining assets, including its land, buildings and equipment, Banks said.

Sen. Kate Lieber, a Portland Democrat and one of two powerful lawmakers who control the state budget, said she has serious doubts the unconventional state bailout will succeed. Other lawmakers also expressed skepticism.

Time will tell if Bay Area Hospital can hold out as its leaders hope.

“We are deeply grateful for the legislative support,” Nichols, the CEO, told The Oregonian/OregonLive. “It will help stabilize the hospital and support its recovery.”

Other options were limited

For a time, the publicly owned hospital’s board of directors explored selling the medical complex to a new owner. But potential purchasers all said they would downgrade the hospital to Type B, eliminating the advanced care not available within more than 100 miles, Banks said.

Community members balked at that option, citing the thousands of patients who would have to travel to faraway hospitals in Springfield, Medford or Roseburg for advanced care and the 180 or so deaths a year that could result.

Bay Area Hospital officials asked state lawmakers about the possibility of a short-term cash bailout or higher Medicaid reimbursement rates. Both were a no-go, Banks said.

The state loan guarantee appeared to be the only feasible option.

“If this doesn’t happen, people will die. They will die,” said Sen. David Brock Smith, a Port Orford Republican who lives an hour’s drive from the hospital. “This is literally the only … hospital where my folks in Brookings can get cancer treatment” without driving two hours to Grants Pass and two hours back.

Money earmarked for schools

Sen. Lew Frederick, a Portland Democrat who chairs the Senate Education Committee, voted against the hospital bailout, both in committee and on the Senate floor.

He said he wanted to rescue health care for people on the coast but only if lawmakers found another path, such as drawing from the state’s rainy day fund. He said he was “less than impressed” with taking $1 million a year from the state’s $6 billion-plus yearly infusion for schools.

Sen. Courtney Neron Misslan, a Wilsonville Democrat and former teacher, also spoke out forcefully against the bailout plan. “This move is just another part of the death by a thousand cuts” to school funding, she said.

Rep. Susan McClain, a Hillsboro Democrat and retired teacher, said Nosse and Wright’s plan “will strip funding from education without any guarantee of what will happen in the future to education, this fund and any other precedent that we set.”

Supporters showed passion, emotion

For Boomer Wright, the retiring Reedsport lawmaker, saving Bay Area Hospital is personal. A retired principal and school superintendent, he has faced his share of health problems and has spent many days and nights there, undergoing two knee replacements and extensive testing and surgery for internal bleeding.

But it’s the health of the greater Coos Bay area, not his personal needs, that led him to devote countless hours to find a legislative lifeline for the facility, he said. With nearly 900 full-time equivalent workers on its staff, the hospital is one of the area’s largest employers.

“Keeping a full-service hospital protects local jobs, keeps health care workers in the community and ensures that when someone’s child, their parent or their spouse needs care, that care is available close to home,” he said as he championed the bill on the House floor. “The coast is an attractive retirement region from Florence to Brookings, Powers to Coquille. Our aging population needs health care and services. The hospital is the only hospital on the Oregon coast to service our older population.”

Nosse, the Democratic Portland lawmaker and primary promoter of the rescue plan, noted he had only been to Coos Bay twice during his 35 years living in Oregon when he was asked to help save the hospital.

But the former labor negotiator for the state nurses union was relentless in urging fellow lawmakers from both parties to approve the “admittedly novel approach” to bailing out the publicly owned health care facility.

“The state caring about health care enough to take action, save a critical public resource and prevent all the negative consequences we’ve discussed … is an example of the Oregon way. … It prevents the transfer of patients to other geographies that would be extremely costly, both in terms of dollars and impact on health systems and ultimately human life.”

Other Democratic House members who gave passionate floor speeches in support of helping a hospital more than 200 miles from their districts included Rep. Travis Nelson, a North Portland nurse, Rep. Ricki Ruiz of Gresham and Rep. Daniel Nguyen of Dunthorpe. Ruiz, who noted his mother found it difficult to drive to Oregon Health & Science University for regular cancer treatments, called it “heartbreaking” to think of south coast residents traveling two hours each way to undergo chemo.

Nguyen, a small business owner, talked up the economic development impact of maintaining an advanced care hospital on the south coast as well as the moral obligation to help an ailing region far from his district.

“When your neighbor’s house is on fire, you don’t haggle about the price of your garden hose or water rates,” Nguyen said. “You help put out the fire. Colleagues, our south coast neighbor’s house is on fire. It’s time to grab a bucket.”

Rep. Cyrus Javadi, a Tillamook Democrat and dentist, called modern hospitals “miracle machines,” given their track record of safely delivering babies, preventing heart attacks, stabilizing people who’ve suffered traumatic brain injuries and helping people survive cancer.

“A community without health care declines the same way a patient without treatment declines. And in Oregon, just like in every other state in this country, hospitals aren’t just bending. They’re about to snap … especially in our rural areas.”

If Bay Area Hospital were to shrink to 50 beds, he said, “the costs will be financial, emotional and physical. So the real question is, are the tradeoffs worth it?” He said he is confident the answer is yes.

• This story was originally published on March 18, 2026 by The Oregonian/OregonLive.