Salem Health, Santiam Hospital will seek state approval for merger
Tens of thousands of patients in the Santiam Canyon and greater Salem area would get care through Salem Health if state regulators approve its merger with Stayton-based Santiam Hospital & Clinics.
Leaders of both health systems said Tuesday they had agreed to move forward with the deal and hoped to secure a green light from the Oregon Health Authority by Sept. 30.
The Stayton nonprofit serves around 60,000 patients annually across its Santiam Canyon operation which includes one independent, 40-bed rural hospital and 12 outpatient clinics in Stayton, Aumsville, Mill City and Sublimity.
During a Tuesday press conference, Santiam CEO Maggie Hudson said “independence is not the likely future for Santiam and partnership was the pathway forward.” She said the merger was “necessary” due to federal Medicaid cuts, declining reimbursement rates in Oregon and increasing wages and benefits.
Hudson said Santiam was in search of a “stronger financial partner.”
She said Santiam would not close clinics.
“It’s our intention to maintain our footprint as it is in place and actually grow rather than decline,” she said.
Salem Health and Santiam will merge their assets, with Salem Health adding capital into Santiam, according to Hudson.
Salem Health, a nonprofit founded in 1896, is the largest private employer in Marion County with over 6,000 employees. Salem Hospital has 644 acute care beds and saw 95,000 patient visits in 2024. The Salem network also includes 21 outpatient clinics in Marion and Polk counties and West Valley Hospital in Dallas, which Salem Health acquired in 2002.
Salem Health has lost money on its operations in recent years, reporting a $52.4 million loss on its 2024 tax filings. But the health system has about $900 million in net assets, filings show.
After the merger goes through, Santiam’s board of directors will become an advisory board, Hudson said. Two of their board members will sit on the Salem Health board and have voting power.
“We still have input and can make recommendations representing the Santiam Canyon,” Hudson said.
Patients won’t see immediate changes to insurance coverage or clinical care, Santiam officials said.
Hudson said Santiam is contracted with Regence BlueCross BlueShield until 2027. That insurance has been out-of-network at Salem Health since January 2025.
Officials at both hospitals previously confirmed the intent to merge with Salem Reporter in December. The hospitals first signed an internal letter of intent to partner in July 2025.
“Our partnership is grounded in the belief that by joining forces, we can expand access to care, enhance quality health care, and ensure the long term sustainability of local, nonprofit health care for the residents of the Mid-Willamette Valley and the Santiam Canyon,” Salem Health CEO Cheryl Nester Wolfe said during the conference.
The proposed merger would make Santiam Hospital, one of Oregon’s last remaining independent hospitals, the third hospital in the Salem Health system, alongside the flagship Salem Hospital and West Valley.
The merger would leave Marion County with one hospital outside the Salem Health umbrella, the Legacy Silverton Medical Center.
Tax returns show Santiam Hospital has generally broken even or taken in more than it spent in recent years. The hospital system had a net income of $14.4 million in 2024, but lost about $6.3 million in 2023.
Santiam employs over 700 people. In December, Santiam spokeswoman Melissa Baurer said Santiam was committed to retaining their staff through the merger.
The hospitals have yet to file for state approval, which is required for hospital mergers. They expect to file in the next two to three weeks, Nester Wolfe said during the conference.
The Oregon Health Authority oversees deals between health care entities through the Health Care Market Oversight program.
The program has reviewed four other similar dealings between hospitals in Oregon. Reviews are scheduled to last 180 days, but can be extended if the state requests additional information from one of the hospitals. Such requests can pause the review clock indefinitely until hospitals respond.
At the end of the review period, the program can approve transactions, approve them with conditions or nix them altogether.
Public comment will be accepted 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.
The oversight program reviewed another proposed partnership from Santiam earlier this year. That deal between Santiam and Samaritan Health in Corvallis fell through when the hospitals withdrew the application on May 29, 2025, after six months of review.
Samaritan told the state at the time it would support Santiam financially and fund needed upgrades, according to a summary of the failed deal.
The internal letter between Salem Health and Santiam was signed on July 11, 2025, according to Baurer, a couple of months after the Samaritan deal was withdrawn.
Have a news tip? Contact reporter Hailey Cook: [email protected] .
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Hailey Cook joined Salem Reporter in 2025, following the completion of an internship through the University of Oregon’s Charles Snowden Program for Excellence in Journalism. She works as a reporter and photojournalist, with a focus on business and entertainment, among other topics.
3 Comments
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So Salem Health takes over and quality of services will go down. They say not, but they will. Many of my friends go to Santiam because Salem wait time for care is too long. The care they receive at Santiam has been really great. We all grieve the loss of independent hospitals – sacrificed for big corporate care and $$.
Agreed! I am a Blue Cross customer and obviously already pretty upset that my local hospital is out of network (they waited last year to announce this until AFTER open season). My partner has had to use Salem Hospital recently and no one seems to be able to communicate or know what other practitioners are thinking. They err on the side of staying longer and charging more for their own inefficiency which is infuriating and has cost my partner tens of thousands of dollars for relatively simple procedures. I wish Salem Hospital would focus on bettering their own space before taking on more. I can’t imagine it will be good for staff, who are already overworked.
Salem Health and Regence parted ways last year leaving over 30,000 area residents without a near-by hospital to go to (beyond emergency room care). The nearest hospital accepting Regence was Santiam Hospital 30 miles away. Google AI states the merging contract between Salem Health and Santiam H&C agreed to accept Regence insureds “well into 2027”. Will Salem Health/Santiam cover Regence insureds after the “well into 2027” date runs out? If not, many more Salem (and Santiam) area residents (particularly the elderly with chronic conditions like Parkinson’s) could be without in-hospital coverage or desirable coverage as these two corporations work overtime to make sure their stockholders get wealthy. Contact the Oregon Healthcare Marketplace Oversight Program to share your concerns. Email: [email protected] Phone: 503-945-6161.