Santiam Hospital, a rural health system in Oregon, is facing a financial crisis that could lead to its closure by fall if state officials do not approve its acquisition by Salem Health. The hospital’s leaders have warned that the facility’s finances have deteriorated rapidly, leaving it with less than 30 days of cash on hand.

Financial Woes

The hospital’s financial struggles are attributed to structural operational challenges that have persisted for over a decade. Despite achieving narrow positive operating margins in the last two years, the hospital’s finances have taken a turn for the worse due to rising inflation, federal Medicaid cuts, and wage increases.

Santiam Hospital’s rural health system includes a 40-bed hospital and 13 clinics, serving around 60,000 patients a year. The hospital is the largest private employer in the Santiam Canyon, with around 750 employees. Without the state’s approval for the acquisition, the hospital would have to lay off staff, cut wages by 15%, and eliminate maternity and intensive care service lines.

Acquisition Proposal

Salem Health has proposed acquiring Santiam Hospital, which would involve investing $61 million in the hospital, including $35 million within 10 years of closing. The acquisition would also include paying $12 million for a new records system. The hospital’s leaders believe that the acquisition is the only way to ensure Santiam’s survival and prevent service reductions and eliminations.

The Oregon Health Authority is reviewing the acquisition proposal and has opened a public comment period. The authority can grant an exemption from the standard review process if there is an urgent need to protect healthcare services and consumers.

Original reporting: Salem Reporter — read the source article.