Salem Health, OHSU, nearing deal

Two of state’s largest health organizations may integrate clinics into one system.

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Salem Health and Oregon Health & Science University are nearing a deal that would combine their clinical operations, creating one integrated system.

Negotiations began in March and are expected to conclude in early May, the Statesman Journal reports.

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.

“To get to cost and quality goals requires a high degree of coordination among providers to act in the most efficient way possible,”  executive director of OHSU Healthcare Peter Rapp said in a story by Elizabeth Hayes of Portland Business Journal. “The services they provide in Salem, a lot are complementary.”

Rapp said there would be no economic disincentive to sending a patient to Salem from OHSU. For more complicated procedures, a Salem patient could be sent to OHSU and then back to Salem for ongoing care.