Cottage, Sansum May Fuse

About 100 South Coast doctors met at Cottage Hospital last week to discuss the possibility of Cottage Hospital absorbing Sansum Medical Clinic. Talks have been underway for nearly a year for Cottage Health Systems to become the parent company for Sansum. Cottage CEO Ron Werft explained that Cottage, through economies of scale based on its size and buying power, could save Sansum considerable overhead costs. Werft noted that Cottage saved $3.5 million in expenses when it took over the Rehabilitation Institute last year without any loss of direct service positions. Werft said recent studies show that the number of specialists in Santa Barbara is declining and that the South Coast’s high cost of living is making it tougher to recruit replacements. Especially hard hit are the primary care physicians. “It’s not a real problem now,” he said, “but it could become one in five to 10 years.” Werft said Cottage has traditionally left the recruitment of doctors to clinics like Sansum because by state law, hospitals are not allowed to hire doctors directly. But by working with Sansum, he said, Cottage hopes to address the shortage.

Many independent physicians not affiliated with Sansum worry they may be shut out if such a realignment occurs. Werft said Cottage recognizes the importance of independent physician groups and is seeking to structure ways Cottage can reduce their overhead as well. He acknowledged that some regard other Cottage takeovers with alarm, but in all instances, Werft said, Cottage has helped keep open the doors of struggling healthcare institutions that might otherwise go dark.