Sanford and UnityPoint Look to Merge Into $11B Health System

The two Midwestern health systems say their union would form a combined system with more than $11 billion in annual operating revenue.

Two nonprofit health systems say they are exploring a possible merger to form one of the 15 largest health systems in the country.

Sanford Health, based in Sioux Falls, South Dakota, and UnityPoint Health, based in Des Moines, Iowa, announced plans Friday to combine their operations together into a single health system with hospitals, clinics, health plans, and more across 26 states.

The combined company would have more than $11 billion in annual operating revenue and employ more than 83,000 staffers and 2,600 physicians, the organizations said. Although the details are still being worked out, the parties intend to close on the deal by the end of this year, pending regulatory reviews.

Sanford Health President and CEO Kelby Krabbenhoft, who is expected to become president and CEO of the post-merger company, said in a statement that Sanford and UnityPoint are already successful but that combining forces will empower them to serve not only individuals but also major health plan sponsors across a broader swath of the country.

"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," Krabbenhoft said. "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."

UnityPoint Health President and CEO Kevin Vermeer, who is expected to become senior executive vice president of the post-merger company, said in the statement that the merger will open new doors to value-based care, potentially with more downside risk.

"Working together, we will find new ways to broaden access to care—beyond the traditional settings—and take greater responsibility for the health of the populations we serve," Vermeer said.

In a memo to UnityPoint stakeholders, Vermeer said the merger isn't just about scaling up.

"The opportunity to partner with Sanford represents an opportunity to get bigger, but not for the sake of growth alone," Vermeer said. "If we get bigger in terms of geography, it's so we can do better, on your behalf."

"We are not being sold or acquired—we're intentionally shaping a new path forward, so we can continue to be your partner in health," he added.

If the deal is finalized, the post-merger company would establish a new governing board, with representatives from each of the two organizations, plus unaffiliated board members who have experience and expertise with the national industry, according to the announcement.

The announcement comes a decade after Sanford merged with MeritCare, based in North Dakota, and it comes after Sanford merged last year with the Good Samaritan Society, which provides senior care, as the Sioux Falls Argus Leader's Jonathan Ellis and Tony Leys reported.