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Cottage Health System, Sansum Clinic Announce Plan to Merge

CEOs Ron Werft and Kurt Ransohoff say the move would allow for greater collaboration to improve patient care and modernize facilities

Cottage Health System and Sansum Clinic announced a merger Tuesday that would combine the three hospitals and 23 ambulatory clinic sites.

Cottage Health System CEO Ron Werft and Sansum CEO Dr. Kurt Ransohoff spoke with Noozhawk on Tuesday afternoon about the proposed changes.

They said that even though their partnership hasn’t been this official, Sansum and Cottage have worked together for decades.

“The benefit really is that it allows us to create an integrated health delivery system,” Werft said.

He said there has been a lot of collaboration and consolidation between hospitals and medical group physicians in recent years, partly due to changes coming with health-care financing and the Patient Protection and Affordable Care Act.

“Hospital and physician integration is really nothing new, it’s just … we haven’t had the opportunity here for the last few years,” Werft said.

Cottage’s hospitals — in Santa Barbara, Goleta and Santa Ynez — would be able to get involved in more than patient hospital stays, he said, with more collaborative work with doctors for prevention, discharge and patient management. Sansum would continue to focus on specialized outpatient care.

“The reason we’re doing this, the driver, is the opportunity to further improve the quality of patient safety. We can really link our information technology systems and make improvements in patient safety and improve affordability,” Werft said. “There are some economies of scale that come from combining the support for these two organizations.”

For Sansum, Ransohoff said, the merger would bring more access to capital to modernize and build new facilities.

“Cottage has a much better capacity at getting access to that kind of capital,” he said. “We combined with the Cancer Center of Santa Barbara and want to build a new cancer center; it’s one of the things we’ll be able to do more assuredly and more rapidly because of this.”

Sansum Clinic's facility on Pesetas Lane in Santa Barbara would be among the facilities to combine as part of Cottage Health System, if the planned merger goes through. (Tom Bolton / Noozhawk photo)
Sansum Clinic’s facility on Pesetas Lane in Santa Barbara would be among the facilities to combine as part of Cottage Health System, if the planned merger goes through. (Tom Bolton / Noozhawk photo)

Sansum is structured as a nonprofit community benefit corporation, a medical foundation, that is governed by local volunteers. It’s a community-owned asset, but in this case, Cottage would become its sole member and ultimately would become responsible for the well-being and obligations of Sansum, Ransohoff said.

“We are the only (medical foundation structured this way) that has been independent throughout its whole life,” he said, “the others have all been married to hospitals.”

The two entities are still working on the organizational model and governance issues, but Sansum would continue to have its own leadership structure, Werft said. Both Cottage and Sansum would keep their own boards of directors and there would be some overlap, according to Werft and Ransohoff.

They hope that the process can be finished by October and are working on paperwork now, with each side evaluating its assets and liabilities. Cottage also needs to be approved for a status change in becoming the sole member of Sansum Clinic.

This merger would consolidate most of the health-care facility systems in Southern Santa Barbara County. The Public Health Department and Santa Barbara Neighborhood Clinics provide primary care facilities, mostly for low-income residents, but they often make referrals to Sansum Clinic and Cottage for specialty care.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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