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After an emergency petition, state officials are letting a major mid-Willamette Valley hospital system skip a full regulatory review as it assumes control of a nearby smaller one.
Under the deal, Salem Health, a major hospital system in Polk and Marion counties, would assume control of Santiam Hospital & Clinics, which runs a small hospital and several clinics off Highway 22.
The institutions argued the deal would allow Santiam to invest in infrastructure and services and offer more competitive wages for workers. They said Santiam would maintain local “advisory governance” after the transaction, and they expect Santiam’s management to remain in place.
The Oregon Health Authority had originally flagged the proposed takeover for full review in part because of concerns about the consolidated market power it would give Salem Health in the area—power that research shows can lead to higher prices, though health care industry dealmakers sometimes assert otherwise.
Some Santiam patients also worried they might have to switch health care plans because Salem Health has no contract with Regence, the big health insurer.
This summer, the health systems filed an emergency petition saying they should be exempt from scrutiny because it would take too long and the financial situation of the Santiam system was dire. Though its own financial reports show it has made money on its operations lately, Santiam said it wasn’t enough, and that the system was on the brink of insolvency, particularly because of an impending need to update its electronic medical records system.
Public comments poured in. And state lawmakers of all stripes intervened, urging regulators to let the merger go through.
OHA acceded on July 31, saying it had “determined the current situation immediately threatens health care services and the proposed transaction is urgently needed to protect health consumers.”
It noted that it had a legal mandate to use the emergency exemption process to “provide some flexibility when there is a verifiable emergency.” And it said it determined that this was so by evaluating 300-plus responses it received during a two-week public comment period, as well as a variety of documents from the health systems, like financial reports, contracts and agreements, and internal and external communications.
This left one final figure who might block the deal: Oregon Attorney General Dan Rayfield, who had floated the possibility of holding it up via the authority of the Oregon Department of Justice’s Charitable Activities Section.
But after a town hall on the matter, Rayfield said on Friday he too would let the deal go through.
The saga is the latest chapter for OHA’s Health Care Market Oversight program, which since 2022 has been charged with assessing whether health system mergers are in the public interest. Since then, OHA says it has never blocked any deals, but it has approved about a third of the transactions it reviewed with conditions.
