Salem Health and Santiam Hospital Clinics have asked the state to approve a $61 million deal that could merge the nonprofit hospital systems by fall. The mid-Valley hospitals publicly announced their intent to merge on Monday, Jan. 19. They signed an internal letter to seek partnership last summ er, Salem Reporter previously reported. They filed their request with the state on Wednesday, Feb. 11. The move will allow Santiam to invest in health care for patients in the rural region outside Salem, said Santiam’s Chief Executive Officer Maggie Hudson. “This is more about positioning ourselves to the future to thrive, as opposed to just getting by year after year,” she said. The state oversees transactions between hospitals through the Oregon Health Authority’s Health Care Oversight Committee. If approved, this would be the second hospital merger cleared by the program since Adventist Health’s 2023 acquisition of the Mid-Columbia Medical Center in The Dalles. Leaders at the hospitals hope for approval by Sept. 30 or earlier. If approved, Santiam’s name will become Santiam Hospital, Salem Health Hospitals Clinics, marking the loss of its independent status. It is one of few independent acute care hospitals left in the state. The state accepts public comment before and during the review process. Those can be made by email to [email protected], voicemail at 503-945-6161 or an online public comment form. Hospital leaders are attending town halls and other outreach events around the canyon and in Keizer, Dallas and Monmouth to share information and answer questions about the merger. A calendar of those events can be found here.  Santiam operates 12 medical clinics in the Santiam Canyon region, in addition to their 40-bed Stayton hospital. They serve around 60,000 patients annually – about 64% of whom live in the canyon, while 22% come from Salem and 14% from outside the area.  Tax records show Santiam had a net income of $14.4 million in 2024, but lost $6.3 million the year prior. Still, Hudson said the hospital system has been able to keep its head above water, and could have continued to do so without a partner.  “This is a strategic, long term decision. We could get by and we’ve gotten by for decades. We live on really thin margins, and so we do not have the ability to grow our cash reserves to be able to invest in our infrastructure into the future,” Hudson said.  Salem Health will pay the Stayton-based health system to acquire its 40-bed rural hospital and its 12 clinics.  That sum will include taking on Santiam’s $22 million in debt, the majority of which comes from the construction of their four-story patient tower that opened in 2013. Salem Health will also invest $10 million into Santiam in the first year, followed by another $25 million infused over the following 5 – 10 years, according to Santiam spokeswoman Melissa Baurer. Four million dollars will go toward implementing an electronic health records system at Santiam, which will combine the record systems between the hospitals. Hudson said obstetrics and gynecology is one of the first areas Salem Health will help grow in the Santiam Canyon, which could include expanding the team of providers. Cheryl Nester Wolfe, chief executive officer of Salem Health, said the hospitals have discussed creating an urgent care clinic in the canyon, which currently doesn’t have one. Decisions about how the money will be used have not been finalized yet, she said.  The merger will help Salem Health expand the number of patients it can care for, Nester Wolfe said. Oregon has the second lowest number of hospital beds per person in the country, according to the Oregon Hospital Association.  Salem Health has 669 hospital beds between Salem Hospital and West Valley Hospital for patients from across five counties. That count includes 150 beds Salem Hospital added to its campus in summer 2022, which made the hospital the largest in the state with 644 beds. Salem Health took over West Valley in Dallas in 2002. It had 6 beds when Salem Health acquired it, and now has 25 after an expansion in 2023. The Salem-based system also includes 22 outpatient specialty and primary care clinics in Marion and Polk counties.  Santiam’s 40 beds were totally filled a combined four months of last year, Bauer said. How the partnership developed Salem Health and Santiam are among many hospitals in Oregon facing financial challenges.  Salem Health has lost money in the past few years, according to tax returns. It reported a $52.4 million loss on its 2024 tax filings. That same year, the hospital reported $1.1 billion in revenue and $904 million in assets.  Nester Wolfe said Salem Health could support itself for 300 days on reserves alone, while Santiam could only do 70 days.  The Oregon Hospital Association sounded the alarm in a report last year that showed 45% of hospitals in the state spent more money than they earned in 2024. It attributed these losses to rising costs for care, insufficient insurance payments to hospitals, delayed discharges and certain state policies. “If half of the hospitals in the state are losing money, what does that tell you? There’s something wrong with the system,” Hudson said. “It’s not just small, independent hospitals. Health care is struggling in our country.” Federal Medicaid cuts, declining reimbursement rates and increasing wages and benefits for staff motivated Santiam’s search for a “strong partner,” Hudson said in a Jan. 20 press conference. Santiam had been internally discussing partnership with another hospital for around five years, Hudson said. Its leaders previously sought to merge with Samaritan Health in Corvallis. That deal fell through in May 2025 just over 6 months after it was filed with the state.  Hudson said that happened because Samaritan wanted to partner with a larger health system, though she said the decision was “mutual.”  “Samaritan was very transparent in their desire to affiliate with a bigger system,” she said. Samaritan spokesman Mark Ylen said the hospitals “carefully explored all aspects of affiliation and mutually decided not to move forward.”  The Corvallis-based health system is now pursuing partnership with MultiCare, a Pacific Northwest nonprofit operating hundreds of clinics and 13 hospitals. Salem Health and Santiam signed a letter on July 11, 2025, to pursue partnership less than two months after the Samaritan deal ended.  Nester Wolfe said she initiated the communication with Hudson that led to the partnership between the hospitals.  If the deal goes through, Hudson said definitively that there will be no cuts to Santiam’s workforce of over 750 people. Salem Health currently employs over 6,400 people. Santiam employees will be moved to the Salem Health pay scale. Nester Wolfe said that would mean pay increases for some, and those who are matching or exceeding Salem Health’s scale won’t see pay changes. Nurses are not unionized at either hospital. Santiam would lose decision-making power in the deal, with its board of nine becoming an advisory board. Two of its members would join the Salem Health board of about a dozen and have voting power. The state oversight program has publicly reviewed four hospital-hospital transactions since 2022. These include Adventist Health’s acquisition of the Mid-Columbia Medical Center and proposed merger between Oregon Health Science University and Legacy Health that was later withdrawn. The remaining two are Samaritan’s, including the ongoing deal with MultiCare and the previous one with Santiam.  It could take two to three months for the state to make the filing public, Nester Wolfe said.  The transaction will be published on the program’s website after the state reviews it for completeness. The program’s initial review process is scheduled for 30 days, followed by a 180-day comprehensive review, though it could take longer. Previous coverage: Salem Health, Santiam Hospital will seek state approval for merger Salem Health in talks to acquire Stayton hospital  Have a news tip? Contact reporter Hailey Cook: [email protected] . LOCAL NEWS DELIVERED TO YOU: Subscribe to Salem Reporter and get all the fact-based Salem news that matters to you. 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