Sioux Falls, South Dakota-based health system Sanford Health and Des Moines’ UnityPoint Health have signed a letter of intent to merge and create a new $11 billion integrated health system, the companies announced.
The combination would rank among the top 15 largest nonprofit health systems in the country and span 76 hospitals across 26 states and nine countries, employing 83,000 staffers and 2,600 physicians.
Bringing together the two health systems would create an even stronger Midwestern regional powerhouse with personalized primary care as a stated priority.
Details behind the most recent merger are still being worked out, but Sanford Health CEO Kelby Krabbenhoft will take over as president and CEO of the combined entity. UnityPoint CEO Kevin Vermeer will move to the position of senior executive vice president.
The governing board of the new organization would be made up of board members from both organizations and UnityPoint Health would recommend the inaugural Board chair. According to the companies both organizations would continue to operate their respective fully integrated medical groups.
“Sanford and UnityPoint are two successful systems intent on controlling our own destiny,” Krabbenhoft said in a statement. “We believe that in the very near future, fully integrated health systems will drive greater value through affordable options for high-quality health care to patients, governments and employers. The combination of Sanford and UnityPoint will help both organizations better meet this need, creating a new system positioned for continued growth across a broad geography.”
The merger will be subject to regulatory review and customary closing conditions, but the parties expect that the deal will be completed by the end of the year.
Sanford has been on a bit of a expansion tear in recent years, completing its merger with Good Samaritan Society earlier this year. However, an attempt to acquire with rival Mid Dakota Clinic ran into antitrust regulators who gained a federal court order to block the deal.
The rampant M&A activity is happening amid a wider backdrop of provider consolidation within the country’s healthcare system as declining reimbursement rates, regulatory burden and competitive pressures have pushed organizations toward together as a way to drive greater efficiency and cost containment through scale.
Research has shown, however, that hospital mergers also have the effect of raising prices for consumers as market competition decreases in more concentrated healthcare markets.
Photo: Natee Meepian, Getty Images