Dive Brief:
- Gundersen Health System and Marshfield Clinic Health System in the Upper Midwest have called off their proposed merger after seven months of talks.
- The merger would have created a 13-hospital system operating in Wisconsin, Iowa and Minnesota with 19,000 employees overall.
- The pairing of the two systems was also seen as a way for Gunderson's many rural hospitals and clinics to move forward in a difficult operating environment.
Dive Insight:
When Gundersen Health and Marshfield Clinic in Wisconsin announced they were exploring a merger last May, Gunderson CEO Scott Rathgaber said "this opportunity to unite promises the potential to magnify our impact and bring our care model to even more communities."
It didn’t quite work out that way. The two healthcare systems announced on Thursday that talks to explore a merger were off. No specific reasons were provided by either Gundersen or Marshfield, but such deals are often scuttled because the corporate cultures or overall goals didn’t mesh. Also, antitrust concerns have sunk other deals, including NorthShore University HealthSystem and Advocate Health Care’s proposed merger in 2017.
"We are thankful to Gundersen for coming together with us to have these discussions. Bringing two entities together of our size and scope is an incredibly complex process, and first and foremost in that process is making sure it was the best path forward for our patients, staff and communities," said Marshfield CEO Susan Turney. "While we mutually decided to remain independent, we will continue to execute our strategy of smart growth as we look for opportunities to ensure residents across rural Wisconsin have access to excellent healthcare close to home."
Marshfield reported $2.4 billion in revenue in fiscal 2018; Gunderson reported $1.3 billion in operating revenue.
Meanwhile, the 2020 forecast for non-profit hospital operators such as Marshfield and Gundersen remain upbeat. Moody’s Investors Service and Fitch Ratings recently upped their forecasts for non-profit operators from negative to stable, citing strong potential revenue growth from both Medicare and commercial health plans.