Stayton, Ore.-based Santiam Hospital & Clinics has warned that it faces “imminent insolvency” without expedited state approval of its proposed partnership with Salem (Ore.) Health Hospitals & Clinics, a two-hospital system.
The two nonprofit organizations said July 8 they have filed an emergency exemption request with the Oregon Health Authority’s Health Care Market Oversight program, arguing that Santiam’s financial condition has deteriorated rapidly since the organizations signed a definitive partnership agreement in January. Santiam said it chose Salem Health as a partner to “avoid insolvency.”
The health systems have asked the state to come to a decision by Aug. 1.
“Despite our commitment to preserving access to care, our financial outlook is expected to worsen, threatening rural healthcare for residents of the Canyon,” Maggie Hudson,president and CEO of Santiam Hospital & Clinics, said in a July 8 news release. “Santiam’s expenses are up, and revenue has not kept pace with these cost increases.”
Santium, a 40-bed nonprofit community hospital, said it has fewer days cash on hand than Bay Area Hospital in Coos Bay had when it received a $44 million state-backed financial lifeline from the Oregon Legislature.
The financial pressure is compounded by the impending termination of Santiam’s Epic EHR contract in 2027. The hospital said it must begin transitioning to a new EHR by September but lacks the capital needed for the project. Without completing the transition, Santiam said it would no longer be able to operate as a hospital.
Without a timely decision, Santiam said it would be forced to implement significant cost-cutting measures that could jeopardize access to emergency, maternity and other healthcare services for more than 50,000 residents in Oregon’s Santiam Canyon.
“Without Santiam’s services, Canyon residents, in some cases, will have to drive over an hour to the nearest hospital for emergency and maternity care,” Ms. Hudson said.
The hospital is also the region’s largest private employer, with more than 750 employees, and operates the area’s primary rural ambulance service and a network of 13 clinics, according to its website.
Salem Health and Santiam signed their definitive agreement Jan. 19 after Santiam called off a proposed merger with Corvallis, Ore.-based Samaritan Health Services in 2025. Under the proposed partnership, Santiam would join Salem Health while retaining a local governing board.
“The goal of this partnership and our mission remain the same — to ensure continued local access to care for the residents of the Santiam Canyon,” Cheryl Nester Wolfe, MSN, RN, president and CEO of Salem Health Hospitals & Clinics, said. “Salem Health is prepared to bring investment and operational support to the Canyon to prioritize patients now and into the future.”
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