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How Grande Ronde Hospital’s Individual Profit Model Fails Union County

An Analysis for the Residents, Policymakers, and Health Advocates of Union County, Oregon

April 2026

I. The Quiet Extraction
Union County, Oregon, is home to roughly 25,000 people spread across the Grande Ronde Valley and the Blue Mountains — a landscape of working ranches, small towns, and a regional university. For more than a century, one institution has stood at the center of this community’s health: Grande Ronde Hospital.

Founded in 1907 and located at 900 Sunset Drive in La Grande, GRH is a 25-bed Critical Access Hospital — the only hospital in Union County. It is the county’s largest private employer, with more than 800 employees. It operates 21 primary and specialty clinics. It records over 200,000 patient encounters each year. By any measure, Grande Ronde Hospital is the dominant healthcare institution in this region, and for many residents, it is the only option.

That dominance comes with extraordinary financial support from the federal government. As a designated Critical Access Hospital, GRH receives Medicare reimbursement at 101% of its reasonable costs — not the lower, fixed rates that most American hospitals receive under Medicare’s prospective payment system. Congress created this cost-based reimbursement specifically to sustain healthcare access in rural communities like ours, where the economics of running a hospital are genuinely difficult and where closure would be catastrophic.

The question Union County must confront is simple: Is Grande Ronde Hospital using those generous public resources to build health across this community — or is it running a profit-maximizing operation dressed in nonprofit clothing?
This is not a question about whether GRH provides medical services. It clearly does. The question is whether the model under which it operates — what we call the individual profit model — is the right framework for a publicly subsidized, nonprofit institution serving a rural community with significant unmet health needs. And whether an alternative — the whole resource model — would better honor the purpose of the Critical Access Hospital program and the needs of Union County’s residents.

II. What Is the Individual Profit Model?
The individual profit model is a framework — sometimes explicit, often implicit — where a hospital evaluates each service line, each procedure, and each patient encounter primarily through a revenue lens. Under this model, institutional resources flow toward services that generate the highest reimbursement. Lower-margin services — even those that address the community’s most pressing health needs — are deprioritized, underfunded, or absent entirely.

In a for-profit hospital, this is expected. But when a nonprofit Critical Access Hospital operates under this framework, something goes wrong. The institution captures the financial benefits of its nonprofit and CAH status — tax exemptions, cost-based reimbursement, community trust — while internally organizing itself around the same revenue-maximization logic as a for-profit enterprise.

The individual profit model manifests in specific, identifiable ways:

Specialty clinic expansion — Resources concentrate on high-reimbursement specialty services (cardiology, oncology, surgical services, dermatology) while community-based primary care and prevention receive proportionally less investment.
Cost inflation under cost-based reimbursement — Because Medicare reimburses CAHs at 101% of “reasonable costs,” every dollar spent becomes a dollar reimbursed — plus a penny. This creates a structural incentive to increase allowable costs rather than control them.
Swing-bed revenue maximization — CAHs can use their beds for “swing-bed” services similar to skilled nursing facilities, but at dramatically higher reimbursement rates. The HHS Office of Inspector General found that Medicare could have saved up to $7.7 billion over six years if CAH swing-bed payments had been aligned with skilled nursing facility prospective payment rates — evidence that cost-based reimbursement creates perverse incentives across the CAH system.
Neglect of population health — Services that don’t generate strong revenue — behavioral health integration, community health workers, food security programs, transportation assistance, chronic disease prevention — are treated as charitable extras rather than core mission.
The Medicare Payment Advisory Commission (MedPAC) has quantified the financial advantage: the average Critical Access Hospital receives approximately $4 million more per year than it would under prospective payment system rates. For context, that $4 million in additional payments is far larger than the average CAH’s net profit of approximately $1 to $2 million. In other words, for many CAHs, the entirety of their profitability — and then some — comes from the premium Medicare pays them specifically because they serve rural communities.

When a hospital’s entire profit margin is derived from a program designed to protect rural access, and that hospital then deploys those resources primarily toward high-revenue service lines rather than community health needs, we must ask: whose interests are being served?
III. What Is the Whole Resource Model?
The whole resource model represents a fundamentally different framework — one in which the hospital views all of its Medicare revenue, staffing, facilities, and community relationships as an integrated resource pool deployed to maximize community health outcomes, not individual service-line profits.

Under the whole resource model, the governing question is not “Does this service generate revenue?” but rather:

“Does this community need this service, and are we the best positioned to deliver it?”
This is not charity. This is not utopian idealism. This is, in fact, the operating logic that the Critical Access Hospital program was designed to enable. Congress did not create cost-based reimbursement so that rural hospitals could run specialty clinics at generous margins. Congress created it so that rural communities would not lose access to essential health services.

A whole resource model would organize the hospital around the following priorities:

Preventive care and wellness programs — Proactive investment in keeping people healthy, not only treating them when they are sick.
Behavioral and mental health integration — Services scaled to meet actual community need, not limited by reimbursement attractiveness.
Chronic disease management — Addressing the community’s number one identified health priority with sustained, systematic programs.
Social determinants of health — Deploying hospital resources to address housing instability, food insecurity, and transportation barriers that directly drive health outcomes.
Community health workers and outreach — Bringing care into the communities where people live, not waiting for them to drive to La Grande.
Transparent governance with genuine community input — Accountability structures that ensure the community’s voice shapes resource allocation.
The distinction is stark:

Individual Profit Model Whole Resource Model
Treats Medicare as a revenue stream to capture Treats Medicare as a community trust to steward
Measures success by financial margin per service line Measures success by community health outcomes
Expands services that generate the most revenue Expands services that address the greatest unmet need
Community benefit is a reporting requirement Community benefit is the operating mission
Governance is internally focused Governance is community-accountable
IV. The Evidence in Union County
We do not need to speculate about whether Union County has unmet health needs. Grande Ronde Hospital’s own 2024 Community Health Needs Assessment, approved by its Board of Trustees on April 23, 2025, lays the evidence bare.

The CHNA, based on surveys of Union County adults conducted from October through November 2024, found:

Key Findings from the 2024 Union County Community Health Assessment

16% of Union County residents needed medical care in the past 12 months but did not get it.
15% of adults did not have a personal healthcare provider.
6% of adults experienced food insecurity in the past year.
5% of adults experienced transportation barriers to accessing care.
63% of residents went outside Union County for health care services.
10% of adults were uninsured, with inability to afford premiums cited as the top reason (48%).
Based on this data, GRH’s Community Benefit Subcommittee identified three priority areas:

Chronic Disease (prevention and wellness)
Social Determinants of Health
Mental/Behavioral Health
Let that sink in. The county’s sole hospital — with more than 800 employees, 21 clinics, and over 200,000 patient encounters per year — conducted its own assessment and found that one in six residents could not get the medical care they needed. Nearly two-thirds of residents leave the county to get healthcare. And the top priorities are chronic disease prevention, social determinants, and mental health — precisely the areas that the individual profit model systematically underfunds.

If the whole resource model were operating, the hospital’s resources would be actively deployed against these gaps — not just documented in a triennial report filed to satisfy an IRS requirement.
Consider the questions that the CHNA data demands but does not answer:

Of GRH’s 21 clinics, how many are specialty revenue centers versus community health access points? A review of their public clinic listings reveals clinics for cardiology, dermatology, hematology and oncology, pulmonology, otolaryngology (ENT), and neurology — alongside primary care. What is the investment ratio between specialty expansion and community-based prevention?
How much of GRH’s Medicare cost-based reimbursement flows back into addressing the social determinants its own CHNA identifies — food insecurity, transportation, lack of providers?
Why do 63% of residents leave the county for care when the county’s hospital operates 21 clinics? What services are residents seeking elsewhere, and why?
What percentage of the hospital’s operating budget is allocated to preventive care and population health versus acute and specialty services?
These are not hostile questions. They are the questions any community should ask of an institution that receives extraordinary public subsidy to serve that community’s health needs.

V. The Structural Problem: Cost-Based Reimbursement Without Accountability
The Critical Access Hospital designation was Congress’s direct response to a crisis. Beginning in the 1980s and accelerating through the 1990s, rural hospitals across America began closing at alarming rates. Between 2005 and 2023 alone, 146 rural hospitals closed or stopped providing inpatient services, according to the USDA Economic Research Service — with 81 shutting down completely. More recent tracking from the UNC Sheps Center puts the total at 195 closures and conversions since 2005. The Center for Healthcare Quality and Payment Reform identifies 734 rural hospitals currently at risk of closing, with 309 at immediate risk.

The CAH program was designed to prevent exactly this. By guaranteeing reimbursement at 101% of reasonable costs, Congress ensured that rural hospitals would not be forced to close simply because they could not survive on the same fixed payment rates used for urban and suburban facilities. This was a lifeline — a recognition that rural healthcare access is a public good worth subsidizing.

But a lifeline is not supposed to be a profit engine. And the CAH program’s design contains a fundamental flaw: it provides generous reimbursement with minimal requirements to demonstrate that those resources actually improve community health outcomes.

The accountability gap operates at multiple levels:

Cost-based reimbursement rewards spending, not outcomes. When every allowable cost is reimbursed at 101%, the incentive is to increase costs — more facilities, more equipment, more specialty services — not to achieve better health results. The HHS OIG’s finding that swing-bed payments alone could have saved Medicare $7.7 billion over six years illustrates how this incentive structure operates nationally.
The nonprofit designation adds a second layer of unaccountability. GRH is classified as a “Voluntary non-profit — Private” institution. Nonprofit hospitals receive tax exemptions in exchange for providing community benefit. But when the operating model mirrors for-profit revenue maximization, “community benefit” becomes a reporting exercise — a section in the annual filing — rather than an operational mission. The IRS requires a CHNA every three years, but it does not require hospitals to demonstrate that they meaningfully addressed the needs they identified.
CAH designation itself lacks ongoing rigor. Many CAHs were designated as “necessary providers” under criteria that no longer apply or have never been re-evaluated. The MedPAC analysis found that 87 of 100 sampled CAHs were within 35 miles of an alternative facility that could have provided similar skilled nursing care. The question of whether a CAH is still genuinely the sole access point for its community is rarely revisited.
Federal policymakers have noticed the problem. MedPAC has repeatedly examined whether CAH payments are calibrated correctly, finding that the average $4 million annual premium above PPS rates — which constitutes roughly 10% of the average CAH’s $40 million in total all-payer revenue — often exceeds the hospital’s entire net profit. Congressional committees have raised concerns about whether some hospitals may be leveraging Medicare classifications for financial benefit rather than access preservation.

The result is a system where public money flows generously into rural hospitals — and then those hospitals face no meaningful obligation to demonstrate that the money improved the health of the communities it was meant to serve.
VI. What Would Change Under a Whole Resource Model
Imagine Grande Ronde Hospital operating under a whole resource model. This is not a fantasy. It is a concrete vision of what a publicly subsidized, nonprofit, sole community hospital should look like when it takes its mission seriously.

Community Health Workers Across Union County
Under the whole resource model, GRH would not confine its care delivery to clinic buildings on Sunset Drive in La Grande. Community health workers would be embedded in Union, Elgin, Cove, Imbler, North Powder, and Summerville — the communities GRH claims to serve in its own mission statement. These workers would connect residents to care, manage chronic conditions in the home, and identify social needs before they become medical emergencies. When your CHNA tells you that 16% of residents couldn’t get the care they needed, the answer is not to build another specialty clinic in La Grande. The answer is to go to where the people are.

Mental Health and Substance Use Services at Scale
Mental and behavioral health was identified as one of the top three community priorities. Under a whole resource model, this would not mean a referral list. It would mean integrated behavioral health services — embedded in primary care, accessible without a three-month wait, and scaled to the actual burden of need in this community. It would mean substance use treatment accessible in Union County, not a two-hour drive away.

Food Pharmacy and Nutrition Programs
Six percent of adults experienced food insecurity. For a county of 25,000, that is approximately 1,500 people whose health outcomes are being shaped by hunger. A whole resource hospital would operate a food pharmacy — prescribing food alongside medication for patients with diabetes, hypertension, and other diet-sensitive conditions. It would partner with local food banks, farms, and community organizations to make nutrition a clinical intervention, not an afterthought.

Transportation Solutions
Five percent of adults faced transportation barriers to care. In a county that spans more than 2,039 square miles, this is not surprising — but it is solvable. A whole resource hospital would invest in medical transportation, telehealth infrastructure for remote communities, and mobile health services. The hospital already conducts 200,000+ patient encounters per year. How many more encounters should be happening but aren’t, because people cannot get to La Grande?

Transparent Financial Reporting
Under a whole resource model, GRH would publish clear, accessible reports showing exactly how its Medicare reimbursement is allocated across service lines. The community would know how much flows to specialty expansion versus primary care, how much goes to executive compensation versus community health workers, and how much is reinvested in addressing the priorities identified in the CHNA. This is not proprietary information. This is public money.

Genuine Community Governance
A whole resource model demands more than a Board of Trustees. It demands community accountability structures — advisory councils with real authority, public budget hearings, community health scorecards with measurable targets. The residents of Union County — who depend on this hospital, who subsidize it through their taxes and their Medicare premiums — deserve a genuine voice in how its resources are deployed.

From Treatment to Prevention
The most fundamental shift is this: a whole resource hospital would measure its success not by how many patients it treats, but by how many it doesn’t need to treat — because it invested in prevention, early intervention, and the social conditions that produce health. Chronic disease prevention and wellness was the number one priority in the 2024 CHNA. A whole resource model would make that priority the organizing principle of the institution, not a line item in an implementation strategy.

VII. A Call to Action
Union County deserves a hospital that treats Medicare as a community trust, not a revenue stream.

The whole resource model is not utopian. It is what the Critical Access Hospital program was designed to enable. It is what the nonprofit tax exemption is supposed to guarantee. And it is what the residents of Union County — who live with the consequences of the current model every day — have a right to demand.

We call for:

Community oversight of Medicare resource allocation — An independent community health advisory council with meaningful authority to review and influence how GRH deploys its Medicare reimbursement and other revenues.
Transparent financial reporting tied to community health outcomes — Public disclosure of service-line revenue, Medicare cost reports, executive compensation, and community benefit spending, presented in plain language alongside measurable community health indicators.
A shift from individual profit metrics to population health metrics — GRH should be evaluated not by its operating margin, but by whether Union County’s health is improving. Are fewer people going without needed care? Are chronic disease rates declining? Are social determinants being addressed? These are the metrics that matter.
Advocacy for federal policy reform — The CAH program needs accountability mechanisms. Cost-based reimbursement should be tied to demonstrable community health investment. Congress should require that CAHs show how their Medicare premium translates into improved access and outcomes — not just higher costs.
Genuine engagement with the CHNA priorities — The 2024 assessment identified chronic disease, social determinants, and mental health as the top needs. The implementation strategy must be more than a compliance document. It must be a binding commitment with measurable targets, public reporting, and consequences for failure.
The Bottom Line

Grande Ronde Hospital receives extraordinary public resources — cost-based Medicare reimbursement, nonprofit tax exemptions, and the community trust that comes with being the sole hospital in a rural county. These resources carry an obligation: to serve the whole community, not just the patients who walk through the door for high-reimbursement services.

The individual profit model treats that obligation as optional. The whole resource model treats it as the mission.

Union County is not asking for something radical. We are asking for what was promised: a hospital that uses public resources to build public health. A hospital that sees the 16% of residents who couldn’t get care, the 6% who went hungry, and the 5% who couldn’t get a ride — and reorganizes itself to reach them.

The money is already here. The question is whether it will be used to build health — or extract wealth.
Sources and References: This analysis draws on data from the 2024 Union County Community Health Assessment (approved April 23, 2025); Grande Ronde Hospital’s public organizational disclosures; the HHS Office of Inspector General report on CAH swing-bed costs (Report No. A-05-21-00018); MedPAC June 2025 Report to Congress, Chapter 7; USDA Economic Research Service data on rural hospital closures (February 2025); UNC Cecil G. Sheps Center for Health Services Research rural hospital closure tracker; CMS Critical Access Hospital program documentation; and the Center for Healthcare Quality and Payment Reform rural hospital risk analysis (January 2026).

This document represents the analysis and opinion of community health advocates in Union County, Oregon. It is intended to inform public discussion about healthcare resource allocation and does not constitute legal advice or a formal regulatory complaint.