A proposed merger between Salem Health and Santiam Hospital & Clinics requires emergency approval to prevent insolvency, according to a letter sent to regulators by a group of Oregon lawmakers. The transaction, which would combine the state’s largest hospital system with a smaller rural provider, faces a fast-approaching deadline set by the health systems as financial conditions rapidly deteriorate.
Legislators Press Oregon Health Authority for Emergency Approval
State lawmakers are urging the Oregon Health Authority to bypass its normal review timeline and grant an emergency approval for the merger. According to a letter sent to OHA interim director Fariborz Pakseresht, the lawmakers argue that extraordinary circumstances require timely action to protect the long-term viability of the Santiam health system. The signatories include state Rep. Ed Diehl, a Republican from Stayton who serves on the Santiam Hospital & Clinics oversight board and as vice chair of the House Committee on Health Care, and state Rep. Rob Nosse, a Democrat from Southeast Portland who chairs the same committee.
“We recognize that the Oregon Health Authority has an important responsibility to carefully review health care transactions to ensure they serve the public interest,” the lawmakers wrote in the letter. “At the same time, extraordinary circumstances sometimes require timely action. Based on information provided by Santiam Hospital and the public record, the hospital is facing significant financial and operational challenges that place its long-term viability at risk.”
The lawmakers characterized the deal as a thoughtful, locally focused solution designed to preserve health care in the region rather than undermine it. When asked about the letter, OHA spokeswoman Amy Bacher stated that the agency appreciates the lawmakers’ attention and takes emergency exemption requests seriously. According to Bacher, the agency is working to analyze the information provided by the health systems to issue a quick determination.
Financial Claims Versus Audited Statements
Santiam Hospital & Clinics has informed regulators that it is on the brink of insolvency and could fail unless the merger with Salem Health is approved within days. The small health system runs a hospital and several clinics off Highway 22, serving roughly 60,000 unique patients each year. In contrast, Salem Health serves more than 445,000 patients annually.
According to the Santiam system, years of operating on small break-even or negative margins have prevented the organization from building adequate cash reserves. The system argues that joining Salem Health is necessary to shore up its finances for the long haul. However, Santiam’s own audited financial statements tell a different story, indicating the organization earned more than $10 million in profit in each of the past two fiscal years while producing solid operating margins.
Did you know? Regulators describe the Santiam system as a provider of crucial access to health care for rural communities in and around Santiam Canyon, where residents would otherwise need to travel to Salem or Bend for acute care.
Regulatory Concerns and Approvals Timeline
Reviewing the proposed transaction is the responsibility of the OHA’s Health Care Market Oversight program. Since 2022, the program evaluates health system mergers to determine if they serve the public interest. Researchers have previously found that health care market consolidations can lead to higher prices despite being pitched as efficient cost-saving measures.
In a preliminary review, regulators noted that both Salem Health and the Santiam system operate in areas with already-high market concentration. The agency also received concerns from local residents worried the merger might force them to secure new health insurance. Consequently, OHA announced in May that the transaction would undergo a comprehensive review lasting many months.
That timeline was upended when Santiam Hospital & Clinics and Salem Health filed an emergency petition. According to the filing, financial conditions at Santiam have deteriorated rapidly since the definitive agreement was executed in January 2026. “Simply put, Santiam is on the verge of insolvency,” the parties told regulators. “If OHA does not approve this transaction by Aug. 1, 2026, Santiam would have to take immediate and drastic steps to preserve operating cash.” The systems warn that such measures would threaten the hospital’s survival and cause irreparable damage to health care access in the Canyon.
It remains unclear whether the August 1 deadline is realistic. The Oregon attorney general, who must also approve the merger, has scheduled a public forum for August 5 following an influx of written public comments.
Frequently Asked Questions
What is the proposed merger involving?
The transaction would combine Salem Health, which runs the largest hospital in Oregon, with Santiam Hospital & Clinics, a smaller rural health provider serving the Santiam Canyon area.
Why are the health systems seeking an emergency approval?
According to Santiam Hospital & Clinics, financial conditions have deteriorated to the point of near-insolvency, requiring an OHA decision by August 1, 2026, to avoid drastic cost-saving measures that could threaten the hospital’s survival.
Who is reviewing the merger?
The transaction is being reviewed by the Oregon Health Authority’s Health Care Market Oversight program, with final approval also required from the Oregon attorney general.
What do critics and regulators say about the deal?
Regulators noted that both systems serve areas with high market concentration and expressed concern over potential impacts on health insurance coverage, prompting an initial plan for a multi-month comprehensive review before the emergency filing was submitted.
Have thoughts on this developing story? Share your perspective in the comments below, or subscribe to our newsletter for ongoing updates on Oregon health care policy.
Related reading