The Oregon Health Authority has granted Salem (Ore.) Health Hospitals & Clinics and Stayton, Ore.-based Santiam Memorial Hospital an emergency exemption that allows their proposed affiliation to proceed without a full state healthcare market review.
Eleven things to know:
1. OHA determined the transaction is urgently needed to protect patients and preserve Santiam’s solvency, according to a July 31 final determination. Without immediate relief, Santiam is projected to become insolvent during the third quarter.
2. The health systems initially submitted the transaction for review through Oregon’s Health Care Market Oversight program in April. They withdrew that filing July 3, ending the agency’s comprehensive review, and submitted a request for an emergency exemption the same day.
3. OHA received 336 comments during a two-week public comment period on the exemption request. The agency also evaluated financial statements, projections, contracts, agreements and internal and external communications provided by the organizations.
4. State regulators found that delaying the transaction could force Santiam to make immediate staffing cuts, reduce wages and terminate healthcare services to preserve cash for day-to-day operations.
5. Under the proposed affiliation, Salem Health, a two-hospital system, has committed to maintaining Santiam as a nonprofit, level 4 trauma and general acute care hospital. It also plans to maintain the hospital’s rural ambulance service, existing payer contracts and current medical, maternity, surgical, emergency, laboratory, radiology and pharmacy services.
6. Salem Health has also committed to expanding maternity services, aligning staffing with demand and creating care pathways connecting high-acuity mothers and newborns to Salem Hospital’s level 3 neonatal intensive care unit.
7. The system will assume about $22 million in Santiam debt and invest at least $61 million in the organization, according to the determination. The commitment includes $35 million in capital investments, funding for Santiam’s EHR transition and $10 million for urgent projects during the first year after the transaction.
8. Santiam previously said it sought expedited approval because its deteriorating financial condition threatened emergency, maternity and other services for more than 50,000 residents in Oregon’s Santiam Canyon. The 40-bed hospital operates 13 clinics, the region’s primary rural ambulance service and employs more than 750 people.
9. Oregon created the Health Care Market Oversight program in response to increasing healthcare consolidation and concerns that transactions were occurring without public input. Since the program launched in 2022, OHA has approved about 50 transactions, roughly one-third with conditions. The agency has not rejected a transaction following an HCMO review.
10. Because the affiliation received an emergency exemption, OHA cannot impose conditions or conduct follow-up reviews under current state law. The agency urged the health systems to address public concerns about the deal’s potential effects on healthcare affordability, quality and access.
11. The transaction still requires approval from the Oregon Justice Department’s Charitable Activities Section, which regulates charitable organizations in the state. The department has scheduled a public hearing for Aug. 5 and may impose conditions on the deal.
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.