Santiam Hospital could go under by the fall if state officials don’t allow Salem Health to buy it, hospital leaders warned in a recent state filing.  Salem Health and Santiam Hospital Clinics leaders are asking state regulators to urgently approve the acquisition by Aug. 1, bypassing the stan dard review process and future oversight. They argue the accelerated approval is “the only way to ensure Santiam’s survival.” The state first began reviewing the deal in April and later extended its deadline by up to 5 months to allow for more exhaustive review. That inquiry has since ended as regulators eye the hospitals’ July 3 request for an emergency exemption from review. Early on, hospital leaders positioned the acquisition as a way to grow Santiam’s infrastructure and services, including its maternity department. But now, they’re sounding the alarm, saying the rural hospital’s finances have taken a turn for the worse.  “Financial conditions at Santiam have deteriorated rapidly,” the 15-page document said. “This has turned the affiliation from a long-term strategic imperative into an acute emergency.” READ IT: Emergency Exemption Request Santiam’s rural health system includes the 40-bed Stayton hospital and 13 clinics. It sees around 60,000 patients a year and is the largest private employer for the Santiam Canyon with around 750 employees. Its hospital is one of three in Marion County, and the only one serving the rural canyon population. Santiam ended last year with 64 days of cash on hand, meaning it could sustain itself for that long without new revenue. Those dollars have nosedived since the start of this year, with “conservative projections” showing Santiam will have less than 30 days of cash on hand by September – a threshold that signals an imminent risk of closure, the request said. “A hospital is in a solvency crisis when it has less than 45 days cash on hand, and is effectively insolvent when it has less than 30 days cash on hand,” the request said. “At 30 days cash on hand, a hospital no longer has liquidity sufficient to reliably meet its monthly payroll obligations or fund its day-to-day operations.” Santiam spokeswoman Melissa Baurer did not elaborate on why Santiam’s finances have deteriorated so suddenly.  “The emergency filing has no immediate impact on patient care,” she said in an email Friday. “Timely approval is needed to protect local access to care and allow Salem Health to help preserve Santiam in the future.” A financial meltdown Santiam decided it needed a partner in 2023 to ensure its “long-term survival,” the request said.  Before Salem Health came into the picture, Santiam pursued a deal with Samaritan Health, a Corvallis-based healthcare system. That transaction was withdrawn from the state’s consideration in May 2025, in a decision Santiam CEO Maggie Hudson said was “mutual.”  On its own, Santiam has been able to just keep its head above water for years, but a financial breakdown was a long time coming.  “This solvency crisis arose suddenly, but is the result of structural operational challenges that have persisted for more than a decade. Over the last decade Santiam has been operating on break-even margins that make it impossible for Santiam both to build cash reserves and to make needed capital investments,” the request said. “This has left Santiam in a structurally weak position that make it susceptible to a solvency crisis such as the one it currently faces.” The Oregon Health Authority is taking public comment on the emergency exemption request. Those can be made by email to [email protected], voicemail at 503-945-6161 or online public comment form. Commenters should mention “Santiam” in their responses, along with their thoughts. The deadline for comment is July 24. Tax records show Santiam saw positive margins in 2024, with a net income of $14.4 million, but lost $6.3 million the year prior. In 2025, it had an operating income of $9.3 million.  Hospital leaders say they made profit in the past by the skin of their teeth. Now up against rising inflation, federal Medicaid cuts and wage increases, the hospital can’t continue on its own, according to the request. “Though Santiam has achieved narrow positive operating margins in the last two years, such margins have only been possible by unsustainably suppressing certain operating costs—a strategy which is no longer available,” the request said. Santiam would need to find $35 million to keep itself running. The hospital estimates it could muster $32 million from cuts over the next year-and-a-half – $3 million short of what it would need to achieve stability on its own. Without the state’s green light, Santiam would have to lay people off, cut wages by 15% and eliminate maternity and intensive care service lines. Santiam leaders would begin weighing those options immediately, the request said. Those reductions, if taken, could be the beginning of the end for Santiam. “Executing such cuts would risk putting Santiam into terminal decline,” the request said. “Cutting staff and service lines leads to fewer services and lower revenue; fewer services and lower revenue makes it more difficult to achieve positive operating margins; without positive operating margins, Santiam would need to make further cuts to staff and services.” The state’s review The Oregon Health Authority was nearly three months into reviewing the Salem Health-Santiam deal when the emergency exemption request came in.  In that time, state officials collected hundreds of public comments, with several employees and patients from both hospitals, state representatives and local leaders writing in support of the deal.   Comments in opposition shared concerns over Regence BlueCross BlueShield insurance coverage, competition in local healthcare and increased consolidation by Salem Health. Regence is accepted at Santiam until at least June 2027 but out of network at Salem Health. In an April letter, the insurer asked state regulators to nix the deal. The health authority is tasked with allowing and overseeing healthcare business dealings like acquisitions, mergers and other transactions in Oregon.  It can grant an exemption when there is a situation that immediately threatens healthcare services, a need to keep a facility solvent and an urgent need to protect consumers. The health authority has granted only one such request before to keep a chain of Corvallis-area clinics afloat. OHA spokeswoman Franny White did not immediately respond to Salem Reporter’s questions about when a decision could come down or how the state will verify Santiam’s financial status. Along with concerns over possible insolvency, Santiam leaders worry the hospital won’t be able to meet outstanding loan obligations. If acquired, Salem Health would take on Santiam’s debts, which amount to $22 million. Santiam also needs to begin transitioning to a new multi-million dollar records system by September – something it can’t afford on its own. Without a system for patient records, Santiam can’t operate as a hospital. “Together, these pressures are placing Santiam’s operations at risk and creating an urgent need for OHA approval,” Baurer said. Under the deal, hospital officials assured Salem Health would maintain and grow Santiam’s services.  Salem Health would pay Santiam a minimum of $61 million, with about $35 million of that being invested into Santiam within 10 years of closing. It would pay another $12 million for the new records system at Santiam, according to Baurer, helping the hospital start the transition in time. “The transaction is the only mechanism available to prevent the service reductions and eliminations that are otherwise inevitable as a direct consequence of Santiam’s financial crisis,” the request said. “The relevant question before OHA is not whether this transaction risks reducing services, it is whether denying or delaying this transaction guarantees it.” Contact reporter Hailey Cook: [email protected] . “My go-to source every morning for accurate, local news.” Make Salem Reporter your trusted source for independent local reporting – every day. Stay informed and connected. Subscribe today. The post ‘An acute emergency’: Santiam describes financial woes in new filing appeared first on Salem Reporter. ...read more read less