A planned merger between Santiam Hospital & Clinics (SHC) and Samaritan Health Services came down to the need for sustainable growth, according to local hospital officials.
During a town hall meeting at Santiam Hospital, June 18, SHC President and CEO Maggie Hudson said the proposed transition would allow services to expand without becoming too large to manage.
She told a packed auditorium of local residents that rising costs for medical supplies and wages, and increased difficulties collecting from insurers, threaten Santiam’s business model and the broader healthcare system. She said hospitals already operate on thin margins, and they would need “more horsepower” financially to remain viable.
“The healthcare cost drivers are putting pressure on us as an organization… at a rate we cannot sustain, and really a rate the system cannot sustain,” said Hudson.
Similar town halls were held June 26 in Turner and June 27 in Mill City.
What will be gained?
The SHC Board of Directors has signed a non-binding letter-of-intent with Samaritan, and in July they plan to finalize a definitive agreement to submit to the Oregon Health Authority. If OHA signs off, SHC would become part of Samaritan April 1, 2025.
Hudson said June 18 the merger “will enhance our ability to provide healthcare, not take away” and Samaritan’s goal is “not to come and change and cut services.”
Under Samaritan, SHC would have greater access to capital, said Hudson, for pending projects such as a medical office building, urgent care clinic and increased parking.
She said recent capital projects have been funded largely by donations, such as the new emergency room, and this is not sustainable long-term. She also said the hospital cannot leverage additional debt at this time.
Hudson said the hospital has already grown significantly, from 50 employees when it opened in 1953 to almost 650 today. She said continued growth is expected as more people move away from the Portland area and into regions like the Santiam Canyon, and SHC facilities must be able to keep up.
SHC is also expected to pay less for medical supplies and equipment with the Samaritan merger, said Chief Operating Officer Dr. Tiffanie Pye. She said Samaritan deals in larger quantities than SHC and can negotiate better pricing.
These cost reductions would be coupled with “economies of scale” in departments such as IT, human resources, and finance, said Hudson.
There also would be a larger pool of specialists available from Samaritan’s other locations in Corvallis, Albany, Lebanon, Lincoln City and Newport. Hudson said Santiam has struggled to find specialty doctors. SHC patients could use Samaritan’s specialists either at existing clinics or with specialists keeping hours locally.
What will be cut?
One of the biggest changes would be that United Healthcare and Kaiser Permanente would no longer be accepted at SHC, as these insurers are not accepted by Samaritan. The change would not be immediate. SHC would continue to accept these insurers through the end of 2025, said Hudson.
She said it is not surprising Samaritan does not take United Healthcare adding SHC struggles itself to receive payments from the insurer. Because most United Healthcare patients use it as part of Medicare Advantage, she said one solution will be for these patients to find an alternative during open enrollment.
Hudson said SHC is prepared to help community members find the right alternative, possibly bringing back open enrollment workshops for Medicare Advantage recipients.
In regard to Kaiser, Hudson said SHC’s contract with the insurer was hard-fought and limited. She does not envision Samaritan reaching an agreement with Kaiser. She said they do not have “a definitive answer” for Kaiser patients. That solution will depend partly on the state of the local insurance market going forward.
SHC is also expected to lose some of its independence, as it would begin operating under the policy and fiscal decisions of Samaritan’s Board of Directors. Hudson said SHC would retain its own board and that a member would serve on the Samaritan board. Decisions such as hiring and the management of specific programs would remain local.
She also said the goals and culture of Samaritan align closely with SHC, such as engaging with communities and supporting the business models of small hospitals. She said they “feel very confident that we’ll be able to maintain the feel and the culture that we have developed over the years” after the merger.
What will remain?
SHC Chief Medical Officer Dr. Steve Vets said they don’t intend to lose any clinicians or medical staff in the merger.
“Our goal is to maintain 100 percent of the medical staff that we have,” he said.
Vets said each department has been approached for feedback about the proposed partnership and that most staff members are “enthusiastic and positive about the opportunity.” He said they look forward to having a larger group of colleagues and a deeper set of subspecialties to draw from.
The Service Integration Team, which became an indispensable resource for local residents amid recovery from the 2020 wildfires, is expected to continue operating. Melissa Baurer, director of integrated health and outreach, said Samaritan is using SHC’s team as a model for its other hospitals such as in Lincoln City. She said this is an example of the two group’s goals aligning.
“I’m excited for the future of what our community engagement can look like,” she said.
Pye said SHC’s ambulance program is also being used as a model for Samaritan, which is interested in learning about ways to improve its ground transportation.
Pye also said patients could continue accessing their medical charts through Epic Systems, and said they will simply use Samaritan’s version of the program.
SHC Board Chairman Victor Kintz said, if the merger is successful, patients should largely notice no difference at all in services.
Hudson added that they understand hospitals in small communities are “anchor institutions” and that they plan to approach the merger with a sense of “great responsibility” and public accountability.
“This is a conversation,” she said of the proposal. “We will be transparent as the transaction continues.”
