Salem Health, OHSU close to striking deal
Salem Health and Oregon Health & Science University will sign a letter of intent in early May to form a clinical and financial affiliation, officials said Wednesday.
The two organizations have been in talks since last March. Salem Health had asked a handful of organizations to submit affiliation proposals, and landed on OHSU.
The letter of intent will put in place a structure of the partnership, Salem Health's board chairman Bob Wells said. The details of the partnership will be worked out for the final agreement, which could be signed by the end of this year.
According to Wells' description of the letter of intent:
— Salem Health and OHSU will integrate their clinical and financial functions. OHSU's education and research missions are not included.
— The two organizations will retain independent governing boards, but they will work collaboratively.
— Employees of each organization will remain separate, also.
— The deal does not involve a transaction of finances or assets, but once the integration is complete, the two hospitals will share financial risks and rewards at the end of each quarter.
— A management company will be formed and it will have a CEO and other executives who will oversee the integration of financial and clinical functions of the two organizations. It will report to both boards.
— The term is 40 years.
Salem Health spokeswoman Sherryll Hoar said the management company will make this affiliation the first of its kind.
While it's unclear what the partnership will mean for patients' care and experience, Wells pointed to the hospital's existing partnership with OHSU's Knight Cancer Institute, which allows more cancer patients to receive treatments in Salem.
OHSU could help Salem Health build capacity in specialty care. Salem Health could also take less complicated patients, while allowing OHSU to focus on the most challenging cases. Wells said he expected lots of discussions on the most effective care setting for patients.
Peter Rapp, executive director of OHSU health care, said he hopes to find efficiencies by focusing on what each facility does best. Because Salem Health's costs are lower for the same quality, more middle-acuity patients could be seen in Salem, he said. That would free OHSU to treat patients with the most complicated conditions.
"It's early, but we feel that there probably are patients who are treated at OHSU who should be and can be treated in Salem," Rapp said. "And with additional support, some of the services we have here and are not available in Salem, we could organize differently so they could be done in Salem."
Salem Health's move to affiliate with OHSU is part of an ongoing trend for standalone hospitals who are bracing for increasing pressures to reduce costs of care, Wells said.
"You're looking for partners to more efficiently deliver patient care at a reduced cost," he said.
Silverton Health began talks with Legacy Health for a potential affiliation in March.
Dr. Bud Pierce, a hematology oncology physician and board member of WVP Health Authority, said Salem's doctors are excited about the hospital's move to affiliate with OHSU.
Besides the high level of expertise Salem doctors will have ready access to, the intellectual rigor of OHSU would help doctors practice medicine at a higher level, he said.
"This is a big positive for Salem because we really couldn't affiliate with a better partner in Oregon than OHSU, and I'm happy the administration and board chose this route," Pierce said. "It's a win for us."
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About OHSU
Total patient visits: 987,098
Total patients: 267,475 (includes medical and dental clinics)
Licensed beds: 576
Staffed beds: 528 (145 for pediatric patients)
Employees: 14,616
Annual operating budget: $2.2 billion projected
Percentage of total budget from state general fund: less than 2 percent
About Salem Health
Total patient visits: 352,364
Total patients: 124,309
Licenses beds: 454
Staffed beds: 428
Employees: 4,206
Annual operating budget: $629 million