Final state approval allows the affiliation to move toward closing, with Salem Health committing at least $61 million to Santiam and assuming about $22 million in debt.
Salem Health and Santiam Hospital & Clinics have cleared the final regulatory hurdle for their planned affiliation, putting the two health systems on track to close the transaction as soon as this week.
Oregon Attorney General Dan Rayfield approved the merger Aug. 7 without conditions, following an expedited state review prompted by Santiam’s rapidly deteriorating financial condition. The Oregon Health Authority had already granted the transaction an emergency exemption from its Health Care Market Oversight review July 31.
The approval does not mean the transaction has formally closed. In a joint statement following Rayfield’s decision, Salem Health and Santiam said they still had a few remaining closing steps to complete before beginning the work of integrating their systems. State filings say the organizations anticipated closing on or before Aug. 14.
Once that happens, Salem Health will become the sole member of Santiam Hospital and the Santiam Hospital and Clinics Foundation. Salem Health will assume Santiam’s liabilities, including approximately $22 million in debt, while committing at least $61 million to the Stayton-based health system.
That commitment includes at least $35 million in capital investment over 10 years, with $10 million designated for urgent projects during the first year. Salem Health also plans to fund Santiam’s transition to its Epic electronic health record system, a project that state filings say must begin by September.
The affiliation also brings immediate implications for Santiam employees and patients. All current Santiam leaders and staff are expected to be offered employment under Salem Health’s compensation and benefits structure. Employee tenure and accrued paid time off will be honored, while Santiam-employed physicians and advanced practice providers are expected to receive compensation at or above their existing levels for at least two years.
For patients, Salem Health has committed to continuing Santiam’s general hospital, maternity, surgical, emergency, pharmacy and rural ambulance services. Existing payer contracts are expected to remain in place at closing, keeping Santiam in-network with insurers it currently accepts. Salem Health has also committed to expanding some services, including maternity care.
The accelerated timeline followed warnings that Santiam was approaching a financial crisis. In its emergency application, the hospital projected it would have fewer than 30 days of cash on hand by September without outside support, putting payroll, staffing and health care services at risk. Santiam serves approximately 60,000 rural patients annually.
The next milestone is now the closing itself. Until Salem Health or Santiam confirms that step has occurred, the organizations remain approved to complete the affiliation but have not publicly announced that the transaction is finished.
