Sansum Medical Clinic of Santa Barbara County has entered into exclusive negotiations to “enter into a strategic partnership” with Sutter Health, a leading not-for-profit health care enterprise with 24 acute care hospitals in Northern California, Sansum CEO Kurt Ransohoff announced Friday. , 33 foot surgery centers and multiple clinics employ 52,000 people and generate $14 billion in annual revenue. In plain language, Ransohoff said Sutter would effectively become Sansum’s new owner, although Sansum, he said, would continue to manage itself.
In an interview Friday afternoon, Sansum explained that 15 years ago, he began looking for a partner to gain a stronger financial footing. At the time, Sutter recalled that it was the first organization Sansum had contacted. Both Sansum and Sutter pointed out that they are nonprofit health care providers. The Great Recession of 2008 put an end to these talks. At that time, Sansum and Cottage pursued a partnership twice, but the federal government refused to approve the agreement.
Since Sansum first approached Sutter 15 years ago, the economics of independent, nonprofit clinics like Sansum’s — truly the only ones of their kind in the state — have grown. The pandemic left Sansum in financial straits, although a last-minute influx of federal revenue made Sansum’s financial reports look false and overly bright. Based on the clinic’s financial reports in 2021, one would think Sansum made money. In fact, Ransohoff said, he lost money.
When inflation took its toll, Sansum’s Medicare premiums went down, not up. And Medicare accounts for 40 percent of Sansum’s business, Ranschoff said. On top of that, UCLA moved into the Santa Barbara health care market, leaving Sansum to provide low-cost but absolutely essential primary care services.
Ransohoff Sansum said he fully expects Sutter to bring in more primary care doctors. Because Sutter operates many hospitals, they employ medical residents. Once they complete their medical residencies, Ransohoff said, they will need to significantly add applicants to primary care vacancies, which are now in the double-digits, which are very difficult to fill.
With more resources Sutter can carry, Ransohoff said, Sansum patients don’t have to wait as long to see appointments.
“Nobody wants these wait times,” Ransohoff said.
Sutter has already implemented online scheduling, Ransohoff added. He also pointed out that Sutter’s heft should help as Sansum fights with insurance providers who struggle to pay clients’ bills.
Ransohoff added that the deal – should it be completed – would offer economies of scale, but stressed that those would not happen until “down the road”. “It’s still too early to talk about what departments will be cut,” he said. Last year, 17 positions were lost.
“I’d say we’ve been skating really well, figuratively speaking, but we’ve been skating on thinner ice than we should,” Ransohoff said. “We have to skate in this community, given who we are and what we do. In short, it allows us to do that,” Sutter said, noting that he has publicly committed $800 million to expand outpatient services and care.
News of these negotiations has been a source of much public outcry and speculation. The official confirmation is when Sansum turns 100.Th A year of working as a non-profit service for 125,000 patients.
The federal government must approve any transaction involving a purchase price of one dollar or more. Ransohoff indicated that the purchase price would be lower than that, based on federal regulatory experience prior to Sansum.
Barring an unexpected objection from the state attorney general — who would have to approve the deal — Ransohoff said Sansum and Sutter would have to sign off on the deadline within six months. He said the operation’s name will change to reflect Sutter’s new ownership as well as Sansum’s identity. Ransohoff expressed his belief that there would be no reason why he would not be the attorney general.
“We are two organizations with similar values and history. Neither of us is for profit. And they bring the wealth into the community as opposed to taking it out.