- Sanford Health and UnityPoint Health are stepping away from their previously announced merger, according to separate statements from the two systems that signed a letter of intent in June.
- After "seriously" exploring a deal, the companies "will not be moving forward with a formal partnership," Iowa-based UnityPoint CEO Kevin Vermeer said.
- South Dakota-based Sanford CEO Kelby Krabbenhoft said the management teams worked diligently over 18 months preparing a merger recommendation for the boards. "We are disappointed that the UnityPoint Health board failed to embrace the vision," Krabbenhoft said in a statement.
Together, the two would have ranked among the largest nonprofit health systems in the country with annual operating revenue of $11 billion and a footprint spanning 26 states, mostly in the Midwest.
The two did not disclose specifics on why the deal fell apart. Martin Gaynor, an economist at Carnegie Mellon University and an expert on healthcare M&A, told Healthcare Dive, "It's not common for hospital mergers to be called off, but it's not unknown."
Mergers fall apart for all sorts of reasons, Christopher Garmon, a former economist with the Federal Trade Commission and assistant professor of health administration at University of Missouri-Kansas City, told Healthcare Dive.
"One party might find something in their due diligence of the other side that they don't like (e.g., debt levels, hidden liabilities); maybe they realize the corporate cultures won't fit; maybe they realize the costs of integrating are too high," he said. "I've seen deals fall apart for many reasons that have nothing to do with antitrust."
Hospital mergers have continued at a steady clip throughout this year, pacing ahead of last year's deal activity, according to a recent report from Kaufman Hall.
Even so, the deals have continued to face antitrust scrutiny as research shows prices tend to rise after competing hospitals merge.
Recently, California Attorney General Xavier Becerra blocked a deal between Adventist Health and St. Joseph Health. The two were seeking to form an operating company that would serve six counties throughout Northern California. Becerra's office said the deal was not in the public interest and had the potential to increase prices.
Becerra also recently took on Northern California giant Sutter Health, alleging anticompetitive practices. The antitrust case was watched closely by experts but the two settled just before heading to trial. Terms of the deal have yet to be disclosed.