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Analysis

Sanford Health CEO Faults UnityPoint Health for Failed Merger Talks

By Steven Porter  
   November 13, 2019

The leader who had been in line to helm the post-merger entity said his potential merger partner's board 'failed to embrace the vision.'

There seems to be some finger-pointing between Sanford Health, based in Sioux Falls, South Dakota, and UnityPoint Health, based in Des Moines, Iowa, after talks of a major potential merger between the two Midwestern health systems flatlined.

The two nonprofits had been exploring a plan to combine their operations and form a 76-hospital system with $11 billion in annual revenue and operations across 26 states. When they announced their letter of intent last June, they said the deal would form one of the nation's 15 largest health systems.

But each acknowledged in separate statements Tuesday that their merger would not come to fruition.

Sanford Health President and CEO Kelby Krabbenhoft blamed the leaders of UnityPoint Health for the outcome.

"We were excited at the opportunity our combination would have provided to create a new health system of national prominence," Krabbenhoft said in a statement. "The executive management teams and physicians worked diligently for 18 months to provide a merger recommendation to the boards."

"We are disappointed that the UnityPoint Health board failed to embrace the vision," he said. "Our focus now is on the patients and communities we serve and the 50,000 people working tirelessly to support them."

Krabbenhoft had been expected to serve as president and CEO of the post-merger organization, while UnityPoint Health President and CEO Kevin Vermeer had been expected to serve as senior executive vice president.

Vermeer said UnityPoint decided to walk away from the deal after carefully considering its potential.

"Our organization concluded we can most effectively fulfill our mission by maintaining our existing corporate structure," Vermeer said in a statement released to HealthLeaders. "As a leader in the delivery of value-based care, UnityPoint Health remains strong and competitively positioned for the future."

The statement says UnityPoint has "great respect for Sanford Health and the relationships we've developed."

In a letter to Sanford employees, Krabbenhoft said the parties were each scheduled to vote separately Tuesday on the deal but UnityPoint met a day earlier and voted 13–6 against the merger, as Melanie Evans reported for The Wall Street Journal.

Spokespeople for Sanford and UnityPoint didn't immediately respond Wednesday to questions from HealthLeaders about the timing of UnityPoint's vote.

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

The merger would have created one of the nation's 15 largest health systems.

The party that backed out cited a desire to maintain its existing corporate structure.

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