Sansum, Sutter Health in talks to merge
Santa Barbara-based Sansum Clinic, one of the largest health care nonprofits in the Tri-Counties, said May 5 that it entered into exclusive negotiations for a possible combination with Sutter Health, a Sacramento-based organization that operates a network of hospitals and clinics in Northern California.
Sansum and Sutter said in a combined statement to community stakeholders that it entered into a “nonbinding letter of intent” to explore a combination of the two nonprofit organizations.
In an interview with the Business Times, Sansum CEO Dr. Kurt Ransohoff said that Sutter and Sansum had talked about a combination 15 years ago but those talks were derailed by the Great Recession. “We’ve long admired Sutter,” he said adding that both share a comprehensive approach to patient care. he said adding that the lack of geographic overlap should ease regulatory concerns.
In addition to the earlier Sutter talks, over the past decade, a proposed merger between Sansum and Cottage Health was abandoned after regulators raised questions about the resulting concentration of services. Ransohoff said that concentration should not be an issue this time and that Sansum expects to continue to contract for services with Cottage if the merger is approved and insurance carriers agree.
Sansum, founded in 1921, was one of the first physician practices to convert to a nonprofit model in the 1970s. Two other pioneering nonprofits, Gould Medical Center and Palo Alto Medical Center are now part of Sutter, Ransohoff said. Coincidentally, Sutter Health was also founded in 1921.
“Sansum and Sutter share common values and a not-for-profit mission of providing exceptional care across our communities,” the statement said.
In the statement, Sansum acknowledged the health care industry faces “financial headwinds, from increasing labor and supply costs to caring for an aging population.” Those problems will likely be easier to address as part of Sutter, which has more than 200 clinics and 24 acute care hospitals.
