Samaritan Health Services, even as it proposes to take on more debt to buy a financially troubled health system in Stayton, is having debt problems of its own, and is considering the option of being acquired by a yet larger partner themselves.
Also, this may seem backwards or at least sideways, but in today’s healthcare industry, Samaritan can likely be seen as simply trying to navigate best that it can.
All of this came out in March 20 reporting from The Lund Report, a respected Oregon healthcare industry watchdog.
They are reporting that, “In a Feb. 25 letter to U.S. Bank, Daniel B. Smith, Samaritan’s chief financial officer, wrote that Samaritan’s final 2024 income likely won’t meet its debt-service terms with the bank, and that would constitute “a nonpayment related default.””
Samaritan has hired Warbird Healthcare Advisors of Atlanta, a firm that can analyze a healthcare group’s productivity but also works negotiating sales of client organizations. Samaritan CEO Doug Boysen confirmed to Lund that the healthcare organization needs to look for economies of scale that may include purchasing smaller groups, or being acquired itself by a larger group.
Samaritan has reported losses at its Corvallis flagship hospital for the last two years. The hit was $7.6 million last year and $28.5 million the year before that.
The forces hitting Samaritan are at play nationwide. Industry observers have been warning that inflationary pressures combined with stagnant Medicare and Medicaid reimbursements rates would prove to be challenge – now rural hospitals nationwide are feeling the pinch from private insurers too.
“I believe that health care is unsustainable right now in the state of Oregon,” Samaritan CEO Doug Boysen told Lund. “I do believe if it continues on this track in five to 10 years, the configuration of how health care systems are made up in the state are going to change dramatically.”
Samaritan makes moves, weighs all options
Reporting from a variety of sources indicate Samaritan has shed about 200 jobs in recent months and reduced executive pay. And they are looking the Oregon healthcare industry. Statewide, several hospitals and healthcare systems have merged themselves with larger partners in the last few years.
“We believe that it’s our duty to be thinking about that and talking about that,” said Samaritan CEO Doug Boysen to Lund.
Conversely, Samaritan could find economies of scale by making its own acquisitions of smaller systems.
We reported last year that Samaritan was seeking to acquire Santiam Hospital & Clinics, a nonprofit system based in Stayton, Oregon. They operate 11 clinics serving the Santiam Canyon in Marion and Linn counties. Santiam Hospital & Clinics serves more than 40,000 residents and employs more than 600 staff, including 70 medical staff. The deal hasn’t been finalized yet.
Lund reports, the terms include a $10.5 million capital infusion into the smaller system’s hospital from Samaritan, plus the assumption of $25 million in debt. Samaritan also committed to building a new $15 million medical building in Stayton if the deal goes through.
Boysen told Lund that no specific merger for Samaritan with a larger partner is being considered or discussed at present. We reported last October that Boysen had said he would be leaving Samaritan sometime this year.
By Mike Suarez
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