Sanford-Fairview Marriage Off, But Essentia-Marshfield Clinic Deal Proceeds

July 28, 2023
“Without support for this transaction from certain Minnesota stakeholders, we have determined it is in the best interest of Sanford Health to discontinue the merger process,” says Sanford CEO Bill Gassen

A merger proposal that was announced last October between Essentia Health and Marshfield Clinic Health System is moving ahead. Meanwhile, however, the proposed marriage between Sanford Health and Minnesota-based Fairview Health Services is off.

“The significant benefits we identified for a combined system with Fairview Health Services compelled us to exhaust all potential pathways to completing our proposed merger,” said Bill Gassen, president and CEO, of South Dakota-based Sanford Health, in a statement. “However, without support for this transaction from certain Minnesota stakeholders, we have determined it is in the best interest of Sanford Health to discontinue the merger process.”

Sanford Health, the largest rural health system in the United States, has 47 medical centers and 2,800 Sanford physicians and advanced practice providers.

Last November, Sanford Health and Fairview Health Services announced that they intended to merge in 2023. Fairview Health Services is based in Minneapolis and has approximately 31,000 employees and 11 hospitals, mostly in the Twin Cities.

In 2020 Sanford also engaged in merger talks with Utah-based Intermountain Health, but those conversations did not lead to a deal.

In its most recent session, the Minnesota Legislature passed a law that would require a state review of some proposed mergers of hospitals or healthcare systems – and allow them to be blocked if they are deemed detrimental to the public or would lead to reduced health outcomes for Minnesotans, which may have complicated the deal.

Meanwhile, Duluth, Minn.-based Essentia and Wisconsin-based Marshfield Clinic have entered into an agreement to form a new integrated regional health system serving rural and mid-urban communities across four states.

The agreement is the latest step in the process that keeps the organizations on track to come together formally by the end of this year pending regulatory approval, they said. Their merger would combine their resources in Wisconsin, Minnesota, Michigan’s Upper Peninsula and North Dakota. The organizations said the new regional system would bring greater access to primary, specialty and hospital care through a network of 3,800 providers and 150 sites of care, including 25 hospitals.

“We are both physician-led organizations with an unwavering commitment to the health of rural communities,” said Essentia Health CEO David Herman, M.D., in a statement. He will serve as chief executive officer of a new parent company. “Our complementary capabilities will allow us to learn and share with one another to better achieve our collective mission.”

“Discussions the past few months have made it clear that this is an incredible opportunity to enhance both health systems, solidify our futures, and take patient care and services to an even higher level,” added Susan Turney, M.D., who previously announced plans to step down as Marshfield Clinic Health System CEO this fall. “It represents an opportunity to expand access to care, diversify the services we provide and deepen our community-based work.”