Dive Brief:
- Sanford Health’s acquisition of North Memorial Health closed on Tuesday after the systems reached a 10-year oversight agreement with the Minnesota attorney general’s office.
- The agreement requires Sanford to invest $600 million in North Memorial over the next decade, including $500 million to expand Maple Grove Hospital and $100 million for Robbinsdale Hospital. Sanford also agreed to maintain Robbinsdale’s Level 1 trauma center and other core services for at least a decade.
- North Memorial will become a subsidiary of Sanford and anchor the South Dakota-based health system’s new Twin Cities region. North Memorial CEO Trevor Sawallish will lead the region, while Sanford CEO Bill Gassen will continue to oversee the combined nonprofit.
Dive Insight:
The deal gives Sanford a long-sought foothold in the Minneapolis-St. Paul market while providing a financial lifeline to North Memorial, which has struggled with persistent losses in recent years.
Sanford and North Memorial announced the planned combination in May. Sanford has pushed to expand across the Midwest, but deeper growth in Minnesota has proved difficult: The system abandoned two previous attempts to merge with Minneapolis-based Fairview Health Services after political and regulatory pushback in the state.
Minnesota’s attorney general’s office does not formally approve healthcare transactions. Instead, the office agreed not to challenge the deal as long as Sanford and North Memorial comply with the oversight agreement.
In addition to the investments, regulators are requiring Sanford to preserve core services at Robbinsdale, honor North Memorial’s existing collective bargaining agreements and retain employees in good standing who meet Sanford’s standard hiring criteria. Sanford also agreed to maintain Medicare and Medicaid participation, charity care, and existing air and ground emergency transportation services in Minnesota.
Sanford leaders will meet quarterly with the attorney general’s office and submit annual compliance reports throughout the 10-year oversight period. The attorney general will also meet annually with Sanford’s board of trustees.
The $500 million Maple Grove investment is intended to expand emergency, inpatient, surgical, cardiology, specialty and outpatient services, with construction set to begin no later than the first quarter of 2027. Sanford committed another $100 million to maintenance, infrastructure, technology, equipment and emergency medical services at Robbinsdale, including $25 million within the first three years.
Separately, Sanford will invest $15 million over three years into a new initiative supporting small and independent rural health care providers in Minnesota. The attorney general’s office said the combined organization would create the state’s first fully integrated provider spanning the Minneapolis-St. Paul metropolitan area and greater Minnesota.
