High Hospital Costs in Santa Barbara County - Health Access
Problem: Santa Barbara’s High Health Care Prices Limit Residents’ Ability to Afford Basic Necessities Health Care Affordability in Santa Barbara County Santa Barbara County has immense income inequality with the second highest poverty rate of all counties in the state when cost of living and safety net programs are accounted for. This inequality limits residents’ […]
Problem: Santa Barbara’s High Health Care Prices Limit Residents’ Ability to Afford Basic NecessitiesHealth Care Affordability in Santa Barbara CountySanta Barbara County has immense income inequality with the second highest poverty rate of all counties in the state when cost of living and safety net programs are accounted for. This inequality limits residents’ ability to afford basic necessities like medical care, rent, and groceries. In the county, 48,000 residents (15%) have problems paying medical bills for themselves or members of their households, with nearly half of those 48,000 residents reporting that they were unable to afford basic necessities due to medical debt. Hospital prices are a significant driver of these high health care costs, which translate into higher health care premiums and cost-sharing for residents. Of the seven “high cost hospitals,” identified by the Office of Health Care Affordability (OHCA), one is in Santa Barbara County: Santa Barbara Cottage Hospital. Hospital prices at this hospital outpace its peers. This hospital is paid three times what Medicare pays for the same hospital care. Goleta Valley Cottage Hospital was also on the list of high cost hospitals but was later taken off because of its small size. Table 1. Hospitals in Santa Barbara CountyName of HospitalType of CareNumber of BedsCategorySanta Barbara Cottage Hospital*General and acute519NonprofitMarian Regional Medical CenterGeneral and acute286NonprofitGoleta Valley Cottage Hospital*General and acute48NonprofitLompoc Valley Medical CenterGeneral and acute170DistrictSanta Ynez Valley Cottage Hospital*General and acute11NonprofitSanta Barbara Psychiatric Health FacilityPsychiatric16City/countyNote: data for Table 1 are from Department of Health Care Access and Information;iii*Indicates part of Cottage Health SystemFigure 1. Commercial Rates for Hospital ServicesNote: Data for Figure 1 are from the Department of Health Care Access and InformationivKey Points on Hospitals in Santa BarbaraCottage Health hospitals in both Santa Barbara (which is paid 305% of Medicare as commercial hospital price) & Goleta (which is paid 383% of Medicare as commercial hospital price) exceed both regional and state benchmarks, with these high prices resulting in strong profits. vSanta Barbara Cottage Hospital was identified as one of the seven high cost hospitals in the State by OHCA, the only hospital on the list in Southern California. The only other hospital within a 15-mile radius is another cottage hospital in Goleta Valley Cottage Hospital which is small with only has 48 beds. This means that the only two hospitals near each other are part of the same system which gives them market power to maintain higher prices. When going to the hospital, consumers choose whatever is closer, not knowing that they may be going to a more expensive hospital. In a medical emergency, residents either go to the nearest hospital and incur medical debt or delay care knowing any hospital bill will destabilize their finances. Cottage Health is a health system serving Santa Barbara, Ventura and San Luis Obispo Counties. The system has 3 hospitals in Santa Barbara County, and locations including primary care and specialists. Cottage Health is also expanding its geographic reach with a network of outpatient facilities. ivIncreasing access to care at outpatient facilities increases access to primary care and preventive services and is lower cost than going to the hospital. However, hospital outpatient facilities often charge higher prices than independent physician practices and may also charge facility fees—increasing access, but at a higher cost to the patient. vii,viiiSanta Barbara Cottage Hospital and Marian Regional Medical Center have the largest market shares in the county; Marian accounts for the northern market, and Santa Barbara County accounts for the southern market as well as part of Ventura County. Cottage Health has gained market share in Los Olivos recently, and lost market share in Ventura County. When it comes to visiting emergency departments, most patients in the northern part of the county go to Marian Regional Medical Center, patients in the southern part of the county go to the three Cottage hospitals. Communities in Lompoc usually go to Lompoc Valley Medical Center. ixGoleta Valley Cottage Hospital has the majority market share for Goleta and Isla Vista areas for emergency department visits. Goleta and Isla Vista are home to UC Santa Barbara, meaning students in an emergency situation must go to one of two higher cost hospital emergency rooms to receive care (Santa Barbara Cottage Hospital is the second highest market share for the area). Santa Barbara Cottage Hospital does not deliver higher quality care than some comparable hospitals that are not on the high cost hospital list. For example, Cedars-Sinai Medical Center is not on the high cost hospital list and received a 5 star Medicare quality rating compared to Santa Barbara Cottage Hospital’s 4-star. x,xiHowever, Santa Barbara Cottage Hospital has the highest quality rating of hospitals in the county. Higher prices cannot be explained by the hospital providing more charity care or being in financial distress. Santa Barbara Cottage Hospital is a high cost hospital, but provides less charity care as a percentage of revenue and has more reserves than its county market counterpart, Marian Regional Medical Center and the state average. Table 2. Comparing Days Cash on Hand by HospitalEntityDays Cash on HandState average75. 4“extremely strong liquidity”xii275Santa Barbara Cottage Hospital321. 7Marian Regional Medical Center88. 4Note: Data for Table 2 are from 2026 Q 1 for Large Santa Barbara County HospitalsxiiiSanta Barbara High Cost Hospital ProfileCottage Health Systemspends 4. 5% of its total expenses on executive compensationspends over two times as much on executive compensation as it does charity care for patients at their hospitalsFigure 2. Charity Care in Proportion to Net Patient RevenueNote: Note: Data for Figure 2 are from Hospital Financial Data Interactive Series: Hospital FinancialsxviSanta Barbara Cottage Hospital (part of Cottage Health System):is a nonprofit hospital in the city and county of Santa Barbarahas 519 beds, general and acute care providedis paid 305% of Medicare rates as their commercial hospital price for the same service (the average commercial price of hospital services across the state is 287% of Medicare)xviihad $956. 4 million in operating revenue in 2024had $123 million in investment income and $133 million in nonoperating revenue in 2024xvii,xixprovided $4. 8 million, or 0. 5% of $777. 9 million in net patient revenue, in charity care in 2022xxhad $1. 2 billion in Cash and Investments in 2024had total assets of $2. 4 billion and net assets of $1. 7 billion in 2024xxihad 322 days cash on hand (this is considered more than extremely strong liquidity—275 days—according to S&P Global)xxii,xxiiihad 322% cash-to-adjusted debt ratio as of September 30, 2025, up from 296% end of 2024—considered to be extremely strong, even compared to other high cost hospitals like Stanford (213%)xxiv,xxvhad 4-star Medicare quality ratingxxvisees less patients proportionately in the Emergency Department than the statewide average and Marian Regional Medical Center, the other large nonprofit hospital (which is 73. 5 miles/1 hour 11 minutes away in Santa Maria)sees more patients in ambulatory surgery and inpatient from the emergency department than state and Marianserves majority White patients (56 percent White patients, and 35% Hispanic), compared to Marian Regional Medical Center which serves majority Hispanic patients (62% Hispanic, and 31% White) and Santa Barbara County which has a patient population that is 45% White and 45% Hispanicserves older population (68% of their patients are over 35 years old) than Marian Regional Medical Center (53% of their patients are over 35 years old) and the state average (61% of patients are over 35 years old)xxviiserves less patients with Medi-Cal and Medicare Managed Care for both inpatient and outpatient care than the state average, and more patients with commercial and Medicare fee for service coverage than the state averagexxviiiFigure 3. Cottage Health Spending—Charity Care v. Executive CompensationFigure 4. Cottage Health Executive Compensation BreakdownNote: Data for Figure 3 and Figure 4 are from Form 990 – Cottage Health (Department of the Treasury, Internal Revenue ServicexxixSanta Barbara County OverviewSanta Barbara County is both rural and suburban—nearly half of the land is government-owned and primarily federal, and 47% is dedicated to agriculture. Most of the residents live in its cities and 30% live in unincorporated areas. The University of California, Santa Barbara is in the unincorporated communities of Goleta and Isla Vista along the coast. The largest of the County’s eight cities are Santa Maria, Santa Barbara, and Lompoc. The county has significant income inequality. Median incomes in Goleta ($118,039), Solvang (113,420), Carpinteria (119,509) and Santa Barbara (107,542) outpace the county median ($95,977), and the lowest median income in the county is ($71,653) in Guadalupe. xxxThis income gap has widened in the last decade. According to the Public Policy Institute’s California Poverty Measure, which considers cost of living and safety net programs, Santa Barbara has the second highest poverty rate amongst California’s counties with nearly 70,000 residents making less than or equal to $41,750 a year. Nearly one in six adults and one in five children are below the poverty line in an area known for its movie stars, wineries, and multi-million dollar homes. xxxiThe economy is primarily driven by agriculture, wine, food, and tourism. Services in recreation, accommodation, and wineries make up 15% of the local economy. xxxiiCoastal counties including Santa Barbara have seen population decline, likely due to the high cost of housing and migration inland. The median price to buy a home in the county is $1. 1 million. The Santa Barbara-Santa Maria region has the fifth highest housing costs in California, leaving the majority of residents precariously housed. More than half of renters spend over 30% of their income on housing, and 29% are spending over 50%. This disproportionately impacts Latino and other people of color in the county. With housing costs driving migration, this is leading to shortages of essential workers. xxxiiiThe county is majority Hispanic or Latino (49. 5%) and White (39. 3%). xxxivLow incomes and high cost of living limit residents’ ability to pay unexpected medical bills. Nearly 15% of Santa Barbara County residents said they had problems paying their medical bills, and more than 45% said this meant they were unable to afford basic necessities. One in three county residents are enrolled in Medi-Cal, including 33,000 people with unsatisfactory immigration status. Due to H. R. 1 and state budget actions, the U. C. Berkeley Labor Center projects that 46,000 people will lose this coverage in the county. xxxviSanta Barbara Cottage Hospital provided 0. 5% of their revenue in charity care to consumers eligible for assistance on their hospital bills. Marian Regional Medical Center provided 1. 5% of their revenue in charity care. As H. R. 1 policies are implemented, and health care prices rise, more residents will need financial assistance to prevent crushing medical debt. Santa Barbara Cottage Hospital’s high prices are likely caused by the profound lack of competition in the southern half of the county and hospital market power amplified by the geography, and growing market share (with three Cottage Health System hospitals in the county), giving hospitals immense leverage to negotiate higher prices with insurers. While Marian Regional Medical Center (part of Dignity Health), has market power in the northern part of the county, they did not make the high cost hospital list and provide a higher percentage of their revenue in charity care to residents. Solution: Consumer Advocacy for AffordabilityThe state established the Office of Health Care Affordability to respond to state’s health care affordability crisis causing nearly 6 in 10 Californians to skip or delay care due to the cost. Health care costs have risen fast than wages and inflation, making it harder and harder to afford care, and stagnating wages for workers. One of OHCA’s first and paramount tasks in its first years was establishing its state cost growth target which has its first enforceable year in 2026. The OHCA Health Care Affordability Board did so after two years of deliberations, including hearing from a broad range of stakeholders. Consumers, labor organizations and businesses purchasing health care for their employees showed up to support a cost growth target of 3% aligned with median income growth over the last 20 years. This was under the premise that health care spending can no longer outpace workers’ wages, and limiting this growth from 6% (spending without limits) to 3% will lead to less of workers’ wages going to health care over time. Consumer advocates, groups representing communities of color, business organizations of large employers; groups such as the National MS Society and Blood Cancer United; as well as labor unions supported this historic first limit on spending growth in California. Nearly 400 comment letters were submitted to the Board from stakeholders, the majority supporting the target based on consumer affordability measures. xxxviiThe state approved a phased cost growth target starting at 3. 5% growth in 2026. Responding to stakeholder concerns about persistently high hospitals costs in some parts of the state, the Board voted to establish a specific cost growth target for “high cost” hospitals after eight months of monthly public meetings, including 100 comments from consumers sharing their challenges affording care in their region. xxxviiiOnly seven (out of more than 400 hospitals in the state) high cost outlier hospitals were adopted— those with higher commercial prices and commercial revenue than 85% of other comparable hospitals. Research shows that higher prices are not attributed to higher quality care or better-quality outcomes, reinforcing the logic of lowering cost growth at these hospitals, to increase access, and without a detriment to quality. What OHCA is Doing About the High Price of Health Care in Santa Barbara CountyIn 2025, the OHCA Health Care Affordability Board set a lower cost growth target for the seven high-cost hospitals including Santa Barbara Cottage Hospital. Goleta Valley Cottage Hospital was on the proposed high cost hospital list, but eventually removed due to its small size. Santa Barbara Cottage Hospital is the only hospital in Southern California on the high cost hospital list. These hospitals will have cost growth target half of the statewide target. While the rest of the state’s hospitals are required to meet a target of 3. 5% in 2026, the seven high cost hospitals will have to meet a target for 1. 8% cost growth in 2026 decreasing to 1. 7% in 2027 and 2028, and 1. 6% in 2029. xxxixBecause these hospitals have prices sometimes double that of other hospitals, even after accounting for cost of living, OHCA determined a target half that of statewide was necessary to ensure that communities with high hospital prices experience relief. Without this lower target, hospital prices in Santa Barbara County and other high cost hospital communities would start at a higher baseline and continue to rise higher than other parts of the state. EndnotesIn Wealthy Santa Barbara, Poverty Rate Among Highest in the State (Santa Barbara Independent, 2025)Paying the Price: Californians Struggle with the High Cost of Care (California Pan-Ethnic Health Network, 2026)Facility Finder (Department of Health Care Access and Information)February 2025 Health Care Affordability Board Meeting Presentation (Office of Health Care Affordability, 2025)February 2025 Health Care Affordability Board Meeting Presentation (Office of Health Care Affordability, 2025)33Health Systems with Boosted Outlooks (Becker’s Hospital Review, 2025)Outpatients Hospital Prices are Higher Among System-Affiliated, For-Profit, and Urban Hospitals (Health Care Cost Institute, 2025)From Check-Ups to Cha-Ching: Consumers’ Exposure to Facility Fees (Georgetown University Center on Health Insurance Reforms, 2025)Facility Market Share and Patient Origin – Santa Barbara Cottage Hospital and Marian Regional Medical Center (Department of Health Care Access and Information)Care-Compare – Cedars-Sinai Medical Center (Medicare. gov)Care-Compare – Cedars-Sinai Medical Center (Medicare. gov)Criteria: Governments: U. S. Public Finance: U. S. and Canadian Not-For-Profit Acute Care Health Care Organizations (S&P Global, 2018)HCAI Hospital Data – Q1’2026Form 990 – Cottage Health (Department of the Treasury, Internal Revenue Service)Form 990 – Cottage Health (Department of the Treasury, Internal Revenue Service)Hospital Financial Data Interactive Series: Hospital Financials (Department of Health Care Access and Information, 2025)“% of Medicare” is a unit of measurement for the cost of health care. 100% of what Medicare pays is seen as a “baseline. ” The average rate charged to commercial insurers by California hospitals is 200% of Medicare. Medicare accounts for cost of living. Nonoperating revenue includes investment income, rental revenue, retail operations, transfers from restricted funds for non-operating expenses, gains from sale of property, and unrestricted contributions. Financial and Utilization Reports (Department of Health Care Access and Information, 2024)Hospital Financial Data Interactive Series: Hospital Financials (Department of Health Care Access and Information, 2025)Santa Barbara Cottage Hospital (Propublica 2024)Criteria: Governments: U. S. Public Finance: U. S. and Canadian Not-For-Profit Acute Care Health Care Organizations (S&P Global, 2018)HCAI Hospital Data – Q1’2026Fitch Revises Cottage Health, CA’s Outlook to Positive, Affirms ‘AA-‘ Ratings (Fitch Ratings, 2025)Stanford Hospital and Clinics, California (Fitch Ratings, 2025)Care Compare – Santa Barbara Cottage Hospital (Medicare. gov)Patient Characteristics by County and Facility (Department of Health Care Access and Information, 2023)Hospital Profile – Santa Barbara Cottage Hospital (Department of Health Care Access and Information, 2024)Form 990 – Cottage Health (Department of the Treasury, Internal Revenue Service)State of the County – Santa Barbara (County of Santa Barbara, 2025)In Wealthy Santa Barbara, Poverty Rate Among Highest in the State (Santa Barbara Independent, 2025)Economic Information (Santa Barbara County)Housing Affordability: Philanthropic Solutions for Santa Barbara County (Santa Barbara Foundation, 2022)QuickFacts: Santa Barbara County (United States Census Bureau, 2025)Paying the Price: Californians Struggle with the High Cost of Care (California Pan-Ethnic Health Network, 2026)Projected reduction in Medi-Cal Coverage due to Federal H. R. 1 and 2025-26 State Budget, by county, 2028 (UC Berkeley Labor Center, 2026)This represents written public comments to the Board as attached to OHCA Board public meeting invitations between April 2023 and July 2025. Additional written public comment was solicited for draft proposals, specifications, etc. but is not included in this count. Health Care Affordability Board Meeting (Office of Health Care Affordability, April 2025)Updated to Draft Motions Presented – April 2025 (Office of Health Care Affordability, 2025)