PORTLAND — Oregon Health & Science University pumped $50 million into struggling insurer Moda Health Plan Inc. in what turned out to be a risky move.
The secret loan issued last year was the largest in OHSU’s history, the Oregonian reported Thursday.
OHSU officials say they made the loan in part because Moda accepted people gaining access to insurance under President Barack Obama’s health care law.
“Moda, like OHSU, stepped forward and played a critical role in the rollout of the Affordable Care Act,” said Lawrence Furnstahl, OHSU chief financial officer. “We were very proud that they did that. They didn’t sit on the sidelines until the thing sorted itself out.”
The patients, however, turned out to be much costlier than expected. Moda took another financial hit this fall, when the federal government drastically cut into the millions of dollars it was expected to send Moda to help with Affordable Care Act expenses.
Last week, Moda announced it was pulling out of the Washington and California health care markets.
Moda officials declined to talk in detail with the Oregonian about the loan and said the company is not in financial jeopardy and will repay the debt.
Meanwhile, the Affordable Care Act has proved a financial boon for OHSU. Furnstahl said the university brought in $70 million more than expected in 2014 and 2015 largely because more of its patients were covered by insurance, which reduced the amount of charity care.
OHSU, which is funded in part with tax money, has never loaned its investment funds before. It previously made seven investments in outside companies, none near the size of the Moda deal.
The largest was a $7.8 million equity stake in Life Flight, the air ambulance company.
The OHSU board of directors unanimously approved the loan to Moda, which is unsecured and has few strings attached, at a December meeting closed to the public. OHSU officials said minutes weren’t taken.
OHSU transferred the $50 million to Moda on Dec. 15.
Moda is to make quarterly payments of $500,000 over 10 years, and has remained current on the debt. The next payment is due Dec. 15.
Furnstahl said that in recognition of the risky nature of the transaction, OHSU, for accounting purposes, considers the Moda loan now to be worth $33.5 million — a loss of about $16.5 million. He said, however, OHSU still expects full repayment.
The motivation for the loan was less about investment returns and more about health care transformation, university officials said.
