Almost all of Oregon’s independent rural hospitals have joined forces to contract with a for-profit company and pool their resources in a new network to improve patient outcomes and increase the health insurance payments they receive.

Eleven Oregon hospitals and health districts have asked the state for approval to create a “clinically integrated network” that would involve working together while remaining independent. They’ve already created a nonprofit to oversee the network and are working with a South Dakota-based company, Cibolo Health, that’s set up similar rural hospital networks in 10 other states.

The hospitals would retain their own CEOs and leadership while working together through the newly created nonprofit corporation, Cascades Rural High Value Network, on sharing resources, overseeing patient outcomes, negotiating insurance contracts and seeking public funding.

The plan comes as rural hospitals in particular are struggling with rising costs and stagnant reimbursements amid a trend nationwide towards consolidation — a trend that is increasing due to health care changes spearheaded by congressional Republicans that will significantly reduce coverage and raise hospital costs.

The trend has hit Oregon as well: Santiam Hospital in Stayton and Salem Health are finalizing a merger, and state officials just approved the takeover of Corvallis-based Samaritan Health Services by MultiCare in Washington state. Bay Area Hospital in Coos Bay has struggled to stay independent, and in 2023, Mid-Columbia Medical Center in The Dalles became part of Portland-based Adventist Health.

The proposed deal will be considered by the state office that reviews major healthcare transactions, called the Health Care Market Oversight program. Part of the Oregon Health Authority, it was set up by lawmakers in 2021 to ensure deals don’t increase costs, hurt patient care or undermine working conditions for employees. It accepts public comment on deals.

While supporters of Cibolo’s work with networks say they increase efficiencies, a 2020 report by the Rand Corporation said such arrangements could conceivably drive higher prices.

New network would span Oregon

The new proposal involves most of the remaining independent hospitals in rural Oregon: Bay Area Hospital District, Blue Mountain Hospital District in John Day, Coquille Valley Hospital District, Curry Health District in Gold Beach, Grande Ronde Hospital in La Grande, Harney District Hospital in Burns, Lake Health District in Lakeview, Lower Umpqua Hospital District in Reedsport, Morrow County Health District in Heppner, Southern Coos Health District in Bandon and Wallowa County Health Care District in Enterprise.

Landon Dybdal, CEO of Lake Health District and chair of the newly created Cascades Rural High Value Network, said the idea is a “no brainer.”

“It allows hospitals to remain independent,” he told The Lund Report in an interview. “It helps them provide good care to their communities. And it helps them stay financially viable as well, which is a concern for most smaller, independent organizations.”

Under the arrangement, the hospitals would continue to be run by the same management. That means they would make their own decisions about care, services and staffing, Dybdal said. At the same time, they would work with Cibolo Health on shared health initiatives, technology and insurance contracts.

Nathan White, CEO of Cibolo Health, said the network would allow hospitals to buy technology they would not be able to afford individually. As an example, he said, they could buy software to track patient outcomes in all of the hospitals.

On its own, Lake District has about 5,000 patients. As a group, the network would have about 300,000, meaning it could operate on a larger scale.

“It’s scale that we’re trying to achieve here,” White said.

That bigger pool of patients can help obtain funding and contracts for value-based care, which involves payment for outcomes not services. In a fee-for-service contract, providers are paid for procedures and visits. Value-based care pays providers for achieving certain metrics with their patients, for example, by having them undergo regular cancer screenings and controlling their chronic illness.

While fee-for-service contracts used to be the norm, an increasing number of insurers and the federal government are moving toward value-based arrangements, White said.

“In the fee-for-service world, we get paid when patients show up and we do the work, and there’s a fee for the service provided. We aren’t incentivized to financially close gaps in care,” White said. “In the value-based care setting, they’re actually paying us to close those gaps in care.”

The bigger the patient population, the better chance healthcare entities have of negotiating value-based care contracts. But they have to track metrics. One way Cibolo Health helps hospitals manage that is by getting them to form clinical committees that meet monthly.

“What we’re doing monthly is digesting that information, understanding where we’re performing well and not performing, and then learning from each other on how we can improve our scores,” White said.

Approval needed

Hospital leaders in eastern Oregon have been talking about ways to pool resources for some time, Dybdal said. At a conference in 2025, a few were introduced to the rural networks set up by Cibolo in Minnesota and North Dakota. Talks followed between a small number of hospital CEOs and Cibolo leaders about setting up a network in Oregon.

The idea gained steam in late 2025 with the creation by the federal Centers for Medicare and Medicaid Services of the Rural Health Transformation Program. Congress dedicated $50 billion in funding over five years to the program, with the first awards already announced. The program is giving Oregon receiving more than $197 million for the first year.

The hospitals stepped up talks with Cibolo and worked with the Oregon Office of Rural Health on creating the network.

It’s not yet applied for funding but likely will, White said.

First the network needs a green light from the Health Care Market Oversight program. Program officials, who can take months to make a decision, review major healthcare mergers, acquisitions and other transactions to ensure they won’t harm patients. Oregon law also bars corporate owners from controlling some nonprofit healthcare entities. Though Cibolo Health is a for-profit company, it will not be involved in the individual management of the hospitals, the application states.

Dybdal said that before moving forward with the network, he researched Cibolo, including talking to the chair of the Minnesota network and to a member of the board of the Montana network.

“We should definitely be moving forward with this,” Dybdal said. “I would be very disappointed if it did not get approved. I think it would be, as I said, a huge disservice to rural Oregonians.”

The arrangement would leave only two remaining independent and unaffiliated rural hospitals in Oregon: Good Shepherd Health Care System in Hermiston and Sky Lakes Medical Center in Klamath Falls. Columbia Memorial Hospital in Astoria is also an independent, rural hospital but it has a clinical partnership with Oregon Health & Science University.

Good Shepherd and Sky Lakes were included in some talks, and Good Shepherd almost signed on, Dybdal said. They both could always join later, he added.

The Lund Report is a nonpartisan nonprofit news site focused on health care news in Oregon and southwest Washington. It emphasizes high-quality journalism that promotes awareness and understanding of pressing issues while holding government and industry accountable.