The CEO of the Oregon Association of Hospitals and Health Systems navigates state Medicaid crises, regulatory uncertainty and industry realignment.
Before he turned 30, Andy Davidson had lived in a VW van in a Seattle parking lot, managed a Maryland Democratic congressman’s re-election campaign and purchased the Ben & Jerry’s franchise he’d seen advertised at a Grateful Dead concert.
Still, as the 1994 holiday season approached, Davidson was broke. So he took a job waiting banquet tables in Seattle. It didn’t go well.
“One night I was carrying a big tray of coffee service for a table of 12, and a woman backed up her chair as I was coming by. The whole tray just jettisoned and landed on the table,” recalls Davidson, now 52 and president and CEO of the Oregon Association of Hospitals and Health Systems (OAHHS).
“It made all this clang and noise, and everybody was looking. Five or six tables stood up and cheered. I held myself together and got that cleaned up. When I walked out that night, I said, ‘I never want to have to do this again.’”
“The bumper sticker in my world right now for my members is uncertainty — period. — Andy Davidson
For Davidson, that personal indignity opened doors into the intertwined worlds of health care and public policy that were always there for him to enter. He called the head of the Washington State Hospital Association, a friend of his father’s, who was then president of the American Hospital Association, for networking advice.
The next day, the Washington association’s Leo Greenawalt offered Davidson a six-month job developing a defensive strategy against possible cuts in Medicare funding threatened by House Republicans under the leadership of conservative firebrand Newt Gingrich.
“Six months later, I was running all the policy and advocacy shop, and I was having a blast,” Davidson says during a wide-ranging interview in his office in Lake Oswego’s Kruse Way.
Davidson’s long, strange trip took him to perhaps the top leadership position in Oregon’s health care industry in October 2005. Since then he’s battled for hospitals as they were transformed by the birth of the Affordable Care Act and Oregon’s vast Medicaid expansion.
Almost 500,000 Oregonians obtained health insurance through Medicaid expansion and the Affordable Care Act in recent years, with new money initially boosting profits for hospitals while setting the stage for ominous longer-term challenges.
Now Davidson is in the eye of unrelenting storms over the future of the Affordable Care Act, the political and financial crises of the Oregon Health Authority and the state Medicaid program, restive hospital employees, and the disorienting reinvention of the health care industry through new business alliances.
Some industry realignments are momentous: News emerged in December that the Providence health care system is discussing a merger with Ascension, the nation’s second-largest system, to create what would be the nation’s largest hospital system.
He’s not having a blast these days, but then neither are his members. “The bumper sticker in my world right now for my members is uncertainty — period,’” says the man on top, who sometimes looks at a painting of a forest scene above his office’s two computer screens for emotional relief.
Davidson leads OAHHS and its two affiliates: the for-profit research group Apprise Health Insights and the charitable nonprofit Oregon Association of Hospitals Research and Education Foundation. Together the organizations have a budget of almost $12 million and about 30 employees.
“I find him to be strategic. But he can also be tactical and get things done, and visionary enough to get past what’s right in front of him.” — Val Hoyle
The CEO draws an annual base salary of $529,000, but he’s also compensated with performance and retention pay. OAHHS says Davidson’s take home pay in 2016 was $697,000. Willamette Week reported last June that Davidson earned $1.24 million, but OAHHS says that number includes benefits not taken in 2016.
The Willamette Week article also raised questions about a $428,000 state management services contract with Apprise and a separate financial arrangement between hospitals and OAHHS for managing distribution of federal funds to hospitals.
The state canceled the Apprise contract following the article, although Davidson says the association is still providing information to the state at no cost. The hospital contracts remains in place.
Amid controversy and industry change, Davidson, who is married and has three adult children, positions himself as a behind-the-scenes player in a drama that affects the lives of every Oregonian and the livelihoods of tens of thousands of health care workers.
He’s dealing in politics on a grand scale in national and state policy, always looking out for his members while dealing with the intimate nature of healing the sick. It’s a tough balancing act with winners and losers.
Davidson admits to frustration that an indirect communication style he calls “Pacific Nice” can get in the way of finding that balance.
While attending college in New Hampshire, he recalls going to dinner in a rural area with a college friend. He wondered why farmers built fences so low that cows could walk right over them. His friend explained: “If Farmer Brown steps into your field he knows he’s crossing a line, but he made that choice.’”
“That has stuck with me,” Davidson says.
“Clear communication and demarcation of lines allows you to get to solutions a lot more quickly.”
Former State Rep. Val Hoyle, who worked closely with Davidson on state health funding as the Democratic house majority leader, says she shares Davidson’s cut-to-the-chase mentality. “I find him to be strategic,” she says. “But he can also be tactical and get things done, and visionary enough to get past what’s right in front of him.”
But none of it is easy in dealing with the Legislature, a board of top hospital executives, restless employee labor unions, the Trump Administration and, of course, health care consumers.
“It’s not just herding cats, it’s herding flies,” Hoyle says of his job. “He’s taken on the challenge well, and he has really embraced it.”
Davidson’s father came to his career as a hospital association executive by accident — the kind of accident that puts you in a hospital.
Dick Davidson had been a high school civics teacher in Delaware, and he managed the swimming pool at the local Elks Lodge in the summers. On the annual family day, Dick would dress up like a clown and ride a bicycle off the pool’s high dive.
One year the stunt didn’t work: Dick crushed his back and wound up in the hospital. There he became friends with the hospital’s administrator, who encouraged Dick, who had a master’s from Columbia University, to use his skills in the medical field.
Dick took the advice, becoming the first president of the Maryland Hospital Association in 1970. He was recruited to run the American Hospital Association in 1991 and stayed there until retirement in 2007.
While health care and public policy became part of his world in his formative years, Andy Davidson also had a window into politics through his mother.
Janet Davidson spent 20 years as administrator for the Maryland State Senate in Annapolis. Davidson, the youngest of the couple’s three children, would ride a bus to the Capitol after school and soak up the public side of government. But when the family went out for dinner near the Capitol, Dick would tell his son who was at every table and what they were talking about.
“I was beginning to understand how the process really works,” Davidson says.
Davidson attended the University of New Hampshire, majoring in English and Irish literature. (“I got deep into Yeats,” he says.) His minor in political science gave him the textbook version of politics. “I sort of grew up on the streets of politics,” he recalls, “and here was the ivory tower.”
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After college Davidson landed a state job in Maryland, working with lawmakers on turning concepts into draft legislation. He chalked up another lesson:
“It gave me an appreciation of the power of words,” he says. “The difference between ‘may” ‘shall’ can have a life-changing effect on a piece of legislation. I really had to listen to what people wanted.”
The work wasn’t enough to keep him from hitting the road to Grateful Dead shows and other attractions of youth. (A full-blown Deadhead, he’d eventually attend 300 of the iconic band’s concerts.) Six months into a planned one-year trip with his girlfriend, their Volkswagen van broke down while visiting a friend in Seattle.
“We couldn’t afford to fix the van, so we lived in the parking lot of my friend’s apartment right on Lake Washington. It was a great deal.”
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Davidson fell in love with the Northwest. He spent two years driving Yellow Cab No. 214 and shuttling visitors in a Sheraton Hotel VIP town car before opportunity knocked on the East Coast. He decided in 1990 to take what looked to be a temporary stint working on Capitol Hill for Rep. Steny Hoyer, a Democrat who still represents Maryland’s 5th Congressional District.
Disillusioned with Capitol Hill politics after four years, Davidson headed west to Grateful Dead shows in Eugene.
Standing in line for Ben & Jerry’s ice cream, he noticed a 4-by-8 card offering the Ben & Jerry’s franchise for sale. The Vermont company was in its infancy with no physical stores, and the franchise included licensing rights for the entire Northwest.
Davidson and a college friend bought the franchise, tripling sales in one year. But the men made an early departure by selling the franchise in what he says was a deal too good to pass up.
Back in Seattle, Davidson needed a fresh start. But first he needed money. The job waiting tables at holiday banquets finally put him on a new career path. When those coffee cups came crashing down, he knew he wanted more than temporary restaurant work with a side order of personal humiliation.
In 1995 Davidson settled into the Washington State Hospital Association job, but he got restless again. At the height of what became known as the internet bubble Davidson left health care policy for a job with a health care technology startup that crashed nine months later.
He rebounded by going to work for a health care consulting firm, in which he traveled the country talking to potential customers about the company’s software products. Those conversations, he says now, were the beginning of his conscious effort to figure out “how you start to build a consensus around a single need or value.”
One day he was awaiting a flight at Denver International Airport’s Gate 83 when he got a call from Paul Janke, a hospital administrator who had moved from Washington to become CEO of Bay Area Hospital in Coos Bay. The Oregon hospital association (OAHHS) was looking for a CEO, Janke told him. Would he be interested?
He called Janke back the next day and eventually won the job.
“I left the tech world and came back to my roots,” he says.
Not long after he landed in the job, Portland and Multnomah County were struggling to find money for a “sobering station” for chronic alcoholics operated by the nonprofit Central City Concern. If the facility were to shut down, hospitals would need to admit up to 15,000 intoxicated patients a year simply to let them dry out. The agency needed another $300,000 to keep the place open for the year.
Ed Blackburn, Central City Concern’s executive director at the time, remembers Davidson’s role in breaking the impasse. Naturally, Portland hospitals didn’t want the down-and-out alcoholics showing up at their emergency-room doors, so Davidson had a vested interest in solving the funding problem.
Still, Blackburn was impressed when Davidson cut to the chase by asking, “What would it take to keep it going?” and then talking to his members.
“He raised the money within a few weeks,” Blackburn said. “By the next year, the city and county had figured it out. I saw him as a man of action.”
“They are big players. They have social responsibility.” Rep. Mitch Greenlick
A dozen years later, Davidson still needs to be a man of action to tackle much more difficult problems facing his industry.
The association’s 62 members, representing every hospital in the state, reflect Oregon’s diversity. They range in size from Washington-based Providence Health & Services, with seven Oregon hospitals and 66,000 patient discharges annually, to Morrow County Health District’s 21-bed Pioneer Memorial Hospital in Heppner with just 52 patients a year.
Rural and urban hospitals struggle to attract skilled care providers and support staff, and labor tensions can run hot as workers press for higher wages. Labor unions and some legislators point to Davidson’s salary and the profitability of nonprofits to press for higher employee wages and increased spending on charity care, called “public benefit.”
Rep. Mitch Greenlick, a Portland Democrat and a former Kaiser Permanente hospital official, says the hospital industry continues to do well financially even if profits are down from a year ago.
“I tend not to listen to their sob stories,” he says. “Some are struggling but many are sitting on a big pile of cash.” He believes they can contribute more to charity care, and he hopes to come up with a specific “public benefit” mandate that would be acceptable both to labor unions and hospitals. “They are big players. They have social responsibility,” he says.
Carol Bradley, Legacy Health’s chief nursing officer and incoming chair of the OAHHS board of trustees, says Davidson is constantly challenged to find common ground for his diverse constituency, made difficult when a member on occasion goes “off the reservation and is negotiating something opposite the association’s point of view,” she says.
“Andy’s job, as impossible as it may sound, is to make sure hospitals have a way to pay for care in a reasonable way. He’s in a position to nudge and encourage people along in their thinking about how health care will be organized in the future.”
The industry’s most immediate concern is how to sustain the state Medicaid expansion that has helped to all but eliminate Oregon’s once-huge pool of uninsured residents.
Oregon is struggling to come up with Medicaid funding to fully tap the federal government’s three-to-one match, so the Medicaid program is expected to run $900 million short of current levels over the state’s next two fiscal years. And because Medicaid covers only 68% of actual costs, hospitals must come up with more money from their own budgets and charity funds.
“If we could figure out how to deal with the poverty issue in Oregon — and I don’t think that’s pie-in-the-sky — fewer people will need Medicaid.” — Dave Underriner
Finances will worsen if voters approve a referendum on Jan. 23 that would block new assessments on hospitals and health care insurers that the Legislature approved in 2017. OAHHS and others in the health care industry support the yes vote on the tax.
Jim Mattes, president and CEO of Grande Ronde Hospital in La Grande and immediate past president of the OAHHS board of trustees, says the health care industry is on a collision course with financial reality.
“A reduction in costs inevitably has to happen in order to make Medicare and Medicaid sustainable,” he fears.
“We really can’t afford the industry that’s been developed, and we can’t afford the benefits that have been promised to people.”
Dave Underriner, Providence Health & Services Oregon CEO and an OAHHS trustee, says the industry needs to broaden its thinking beyond the nuts and bolts of health care reimbursement.
“If we could figure out how to deal with the poverty issue in Oregon — and I don’t think that’s pie-in-the-sky — fewer people will need Medicaid,” he says.
That’s the idea behind a collaborative partnership between Central City Concern and six health care organizations, including Providence, to invest $21.5 million of health care dollars into housing and social services to keep people healthy.
Davidson, who joined the Central City Concern board in 2011, downplays his behind-the-scenes role in securing the funding. But the program resonates emotionally for him for personal reasons.
Often his father would end business-related conversations by asking his son, “What did you do today to make a patient’s life better?” The question was slightly off base, since Davidson he didn’t work directly with patients. But he understood its meaning.
During a visit with his father in Annapolis, Maryland on Easter Sunday in 2016, Davidson talked about the Central City Concern program. This time, Dick Davidson’s conversation closer had a different twist.
“He said, ‘You know that question I always ask you? You just answered it.’”
Later that night, his father died of a sudden heart attack. He was 79. “It’s one of the last things he said to me,” Davidson says. What he was really saying is, ‘I’m really proud of you. You are focused on the right thing.’”
A version of this article appears in the January 2018 issue of Oregon Business magazine.