It’s Time to Privatize OHSU

We often fail to realize that “privatize” is not a dirty word.  In order to understand this, we must first understand what it means for a public university to privatize. Next, we must come to terms with the reality that private institutions are often highly esteemed compared to their public counterparts. Lastly, there needs to be a good reason for a public university to privatize if people are going to support such an action.

After diligent research, I believe that there is a very convincing case to privatize the Oregon Health & Science University (OHSU).

Quick history of OHSU

The Oregon Health & Science University (OHSU) was originally part of Willamette University in Salem. Eventually, it moved to Portland and merged with the University of Oregon’s medical school — the only medical school in Pacific Northwest at the time. At this time, it was part of the public university system. Over time, it became the University of Oregon Health Sciences Center, and then turned into a public corporation (like Amtrak) under the name we know it to be today. OHSU is now a medical powerhouse with amazing potential.

What does it really mean to privatize?

When a public university privatizes, it establishes even more of its own governance. It also won’t receive state appropriations (state funding), which often means that students pay higher tuition. However, we often forget what comes with public universities: Public employee benefits, union membership, and retirement. When universities privatize, these benefits don’t necessarily go away; they would be fully responsible — just as a private company would — for providing benefits and retirement packages instead of relying on taxpayer funding.

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Elliot Hall, Reed College (Dale Cruse/Flickr)

American society secretly favors private universities

What do people really think about private institutions? Have you ever heard of anyone reacting negatively upon receiving an acceptance letter to the following schools?

  • Brown University
  • Columbia University
  • Cornell University
  • Dartmouth College
  • Harvard University
  • University of Pennsylvania
  • Princeton University
  • Yale University

Chances are that you know the reputation of most of these schools, all of which have something in common: They’re all part of the Ivy League. If you’re an Oregonian, you know we have several private schools, including:

  • Lewis & Clark College (Portland)
  • Reed College (Portland)
  • Willamette University (Salem)
  • Linfield College (McMinnville)
  • George Fox University (Newberg)
  • Northwest Christian University (Eugene)

The list goes on. While not all of these private schools are well known, Reed College is practically an Ivy Leave of the West Coast along with Stanford in California. In fact, Forbes’ 2017 list of top colleges ranks Reed, Willamette, Lewis & Clark, and even the University of Portland above the University of Oregon. In other words, the top public institution ranks fifth after four private schools. It’s safe to say that society clearly prefers privatized higher education institutions.

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Oregon Health & Science University, Marquam Hill Campus (Cacophony/Flickr)

The case for a private OHSU

The reason why Oregonians should support privatizing OHSU relates to our problem with PERS, our public retirement system. According to the Oregonian, the highest paid 15 PERS recipients are overwhelmingly retired from higher education. Only two were from public K-12 education, one was from Lane Community College, another from Portland State, two are from the University of Oregon, and eight were from OHSU. That’s right: More than half of the top 15 PERS recipients are from one college. Additionally, the smallest pension among the group is more than $22,000 per month.

According to the 2017 financial report, OHSU received $35.56 million from the State of Oregon (state appropriations) and its total operating revenue was $2.847 billion. State funding to OHSU is less than 2 percent of its operating budget. The university gets most of its funding from patient services, (after all, it is hospital). It also earns investment income and certainly benefitted from the stock market rally under the Trump administration. On page 29 of the financial report, OHSU’s investment valuation was at $8.6 million in 2016. That valuation skyrocketed to $111.56 million the very next year.

Why is an institution with such a negligible amount of state funding earns the right to be “public”? If it is effectively 98 percent private, why should Oregon taxpayers be responsible for millions in Cadillac pensions for a handful of retirees when their children lose up to a year of high school instruction time compared to Washington schools? The PERS problem has gotten so bad that the Chair of the Oregon Investment Council said it was “becoming a moral issue.” She’s absolutely right. Even while the state gives big budget increases to its schools, cuts in staff and other programs are still being made. Where is the Governor and her majority in the Legislature?

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Oregon Senate Chamber (Cacophony/Creative Commons)

Legislature, Governor distracts from the problem

The Oregon Legislature passed Senate Bill 1529 and Senate Bill 1566, which look nice on the campaign trail. But they don’t really do much other than use money towards PERS that won’t even make a dent in the unfunded liability. House Bill 4046 makes public higher education employees unable to calculate things like book sales and grants into their pensions. This sounds great until one reads that the Legislative Fiscal Office issued a statement of “No Expenditure Impact,” meaning this doesn’t really save anything.

It’s clear that the majority in the Legislature doesn’t really care about meaningful PERS reform. After all, it allowed House Bill 4070 to die in committee. One thing is clear: We need to get this under control one way or another. If that means reviewing which schools should be phased into private institutions, then so be it. It is my professional opinion that a private OHSU would not only stop some of the fiscal hemorrhaging taxpayers seek relief from, but will also allow the university even more freedom to excel in modern medicine as well as add another layer of accountability.

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