February 3, 2023
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Dubroff: Fork in the road for region’s health care delivery system


Henry Dubroff

Henry Dubroff

By almost any standard, Cottage Health and Sansum Clinic are two of the most successful nonprofits on the Central Coast.

They’ve got deep roots in the community, they’ve carved out vast amounts of market share in their respective fields and they are successful, some might say relentless, fundraisers.

But does it make sense for them to merge? That’s the multi-million dollar question federal regulators have taken nearly half a decade to decide, as the clock ticks down on whether the dominant physician practice and the only hospital operator in South Santa Barbara County will be allowed to combine.

As Alex Kacik writes in the current issue of the Business Times, many questions about the merger revolve around cost and access to care. The South Coast already has relatively high costs and a reputation as a tough place for insurers to negotiate favorable terms.

But the issues surrounding this particular merger make it more complex than a simple thumbs up or thumbs down decision.

Clearly, the Affordable Care Act wants to see costs spread across larger populations and larger organizations and part of the impetus for the merger was anticipating how the ACA was going to impact the health care delivery system. A single system eases the flow of data about patient outcomes and patient records across several platforms.

From a strategic standpoint, the merger has many implications. Allowing it, as critics suggest, could allow independent doctors to lose flexibility and it will certainly give Sansum/Cottage a big competitive advantage in attracting new doctors to the area.

But forcing the two organizations to remain independent is not risk free. UCLA Health has made serious inroads into Ventura County, to the annoyance of independent physician groups. Kaiser Permanente has a substantial footprint in Ventura County and has been seen by many as a potential partner for Sansum over time.

If Sansum affiliates with a competitor, Cottage might be forced to find its own partner with a domino effect of unintended consequences ahead.

Health care is to the Central Coast what manufacturing once was to the Midwest — a stable source of head-of-household jobs that allows families to own homes and provides some degree of upward mobility. A reputation for quality health care allows UC Santa Barbara and area tech firms to attract talent and it keeps wealthy donors attracted to the region as a retirement center.

So the dilemma for the Federal Trade Commission, which is expected to rule by the end of the summer, is whether the South Coast’s health care system is better with a Cottage/Sansum combination or better with each going its separate way into an uncertain future.

Since this is Major League Baseball’s All-Star Game week, it seems a bit of wisdom from that great health care analyst Yogi Berra is in order. “When you come to a fork in the road, take it,” was his advice about making strategic decisions.

It appears that with the Cottage-Sansum merger, federal regulators, boards of directors of both organizations and our communities, we have come to that fork in the road. Whatever the decision, health care on the South Coast will never be the same.

• Reach Editor Henry Dubroff at hdubroff@pacbiztimes.com.