- Nonprofit health systems UnityPoint Health and Sanford Health signed a letter of intent to merge in a deal that would create an $11 billion system, the two providers announced Friday morning. If completed, the deal would create an integrated health system spanning the Midwest and the Upper Great Plains.
- The combined company would rank among the 15 largest nonprofit systems in the U.S., employing more than 83,000 staff members and 2,600 physicians operating across 26 states and nine countries.
- The transaction is subject to customary regulatory reviews, but the two systems are aiming to complete it by the end of this year.
Health systems of all types are pursuing mergers and acquisitions in 2019 in a bid to expand reach and cut costs, although the pace of consolidation has slowed somewhat this year.
However, there's little evidence M&A helps patients. The Center for American Progress found provider consolidation fails to improve care coordination and actually leads to higher healthcare prices for the consumer.
Still, that hasn't stopped providers claiming patients will be better off and costs will come down.
The two companies said the goal of the merger is to deliver targeted population-level health and personalized primary care, broaden care access and deliver innovative medical solutions in rural America and across the world.
"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," Kelby Krabbenhoft, president and CEO of Sanford Health, said in a statement. "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."
Krabbenhoft will serve as president and CEO of the new company while UnityPoint Health President and CEO Kevin Vermeer will come on board as senior executive vice president. The integrated system will establish a new governing board made up of representatives from both companies and unaffiliated members who have industry experience, with UnityPoint recommending the inaugural board chair.
Des Moines, Iowa-based UnityPoint operates in Iowa, western Illinois and southern Wisconsin, while Sioux Falls, South Dakota-based Sanford Health has a presence in 26 states and nine countries.
UnityPoint had operating income of almost $41 million on revenue of $4.4 billion last year, up from a $21.5 million operating loss on revenue of $4.2 billion in 2017.
Sanford Health completed a merger with senior care services provider Evangelical Lutheran Good Samaritan Society earlier this year, growing the system to more than $5 billion in annual revenue.
Correction: A prior version of this story mischaracterized the value of deal.