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Cottage Health-Sansum Clinic merger proposal withdrawn

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By Thursday, May 11th, 2017

Story updated at 5:20 p.m. May 11:

The proposed merger between Cottage Health and Sansum Clinic is dead.

Both parties agreed to withdraw the application after nearly four years of awaiting approval from the Federal Trade Commission.

“As we approach the four-year mark, we have decided together to withdraw the proposal so we can better move forward with long-term planning at each of our non-profit organizations,” Cottage Health said in a statement. “We’ll continue to work together through less formal partnerships. With ongoing uncertainty about future changes in health care on a national and state level, this ability to plan for our local organizations is essential.”

Cottage and Sansum officials both said that despite the failed merger, they will continue to collaborate.

“While we are disappointed that we are unable to move forward with a formal affiliation after years of working with the FTC toward this goal, together we are committed to ongoing collaborations and partnerships to improve the health of our community,” said Cottage Health President and CEO Ron Werft and Sansum Clinic CEO Kurt Ransohoff.

Both organizations said they intend to continue working together on clinical programs, recruitment of physicians, research and support for the Santa Barbara Neighborhood Clinics and the Cancer Center of Santa Barbara.

Werft told the Business Times that the failed merger won’t slow the hospital’s efforts to work collaboratively with Sansum. Still, waiting for FTC approval took its toll.
“This has just gone on so long that both organizations came to the conclusion that we need to withdraw the application,” Werft said. “There never was a ‘no.’”
He said waiting for approval had a big impact.
“There was not a cost financially to the hospital related to the waiting other than we were putting significant time and energy from our leadership team,” Werft said. “There was a tremendous investment of time and energy and legal fees.”
The FTC’s primary concern was that a merger would prevent competition among medical groups, but Werft and Ransohoff said that the opposite is true.
“There has been a trend of hospitals and physicians working more closely together,” Ransohoff told the Business Times. “It allows for the development of different programs. When we started out we thought that by combining we would be able to offer new programs.”
Ransohoff said doctors just starting out want an integrated system where the physician’s group is paired with a hospital.
“A lot of doctors are looking for those environments to practice,” Ransohoff said. “Those integrated systems are very common in California.”
It certainly can create “recruitment challenges,” Ransohoff said. “It is difficult when you are thinking about moving across the country and you are not sure if you are going to merge with the hospital.”
Werft said there was too much uncertainty and that was serving as a distraction.
“We will continue to seek other ways we can work together across the continuum of care,” Werft said.

• Contact Joshua Molina at [email protected].