OHSU Hospital in Portland, pictured on Monday, April 17, 2023. Sean Meagher/The Oregonian

Oregon Health & Science University and Legacy Health have abandoned their plans to merge, ending a high-stakes proposal that figured to reshape the state’s health care landscape.

“After careful consideration of the evolving operating environment, the organizations have determined that the best way to meet the needs of the communities they serve is to move forward as individual organizations,” OHSU said in a statement Monday.

OHSU, a state-operated institution, announced plans to acquire the nonprofit Legacy in August 2023, setting off a long regulatory review — one delayed by months as OHSU and Legacy honed the specifics of their plan.

The deal’s fate appeared to rest in the hands of the Health Care Market Oversight Committee, an Oregon Health Authority regulatory body that scrutinizes health care mergers and acquisitions through a consumer lens. A consumer group convened by regulators had unanimously recommended that state health officials reject the merger, but the oversight committee itself hadn’t made a decision before Monday’s announcement.

The health systems’ proposal sparked concern among consumer advocates and health care experts who warned that such mergers are generally bad for consumers, often resulting in rising costs and fewer places to turn for care.

The health systems, two of the largest in the state with 10 hospitals between them, argued a merger would make the combined health system more competitive and strengthen both institution’s finances. As part of the deal, OHSU had agreed to spend $1 billion on upgrading Legacy’s properties.

Both health systems have faced financial headwinds in recent years, losing money against the rising costs of supplies and labor. In April, OHSU reported that it was on track for a $95 million deficit by the end of its fiscal year in June, having lost $75.1 million in the prior nine months. As of the end of March, OHSU had 136 days cash on hand. Meanwhile, Legacy recently touted that it ended last year with 182 days of cash on hand.

OHSU leaders also argued that its hospital beds were over capacity, while Legacy had beds that were understaffed. Hospital leaders said unifying their systems would increase access to specialists, reduce wait times and improve the quality of care.

Both health systems have faced financial headwinds in recent years, losing money to rising costs and inflation. In April, OHSU reported an operating loss of $44 million in the nine months leading up to the end of March.