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Analysis

Sanford Health, Good Samaritan Complete Merger

By John Commins  
   January 03, 2019

The deal, announced in mid-2018, creates one of the largest not-for-profit health systems in the nation, with more than 50,000 employees and a presence in 26 states.

Senior care services provider Evangelical Lutheran Good Samaritan Society and Sanford Health formally combined this week to form a $5 billion non-for-profit health system with operations in 26 states, the two Sioux Falls, South Dakota-based providers announced.

Financial terms were not disclosed for the deal, which was made public in June, shortly after the membership at Good Samaritan voted their approval.

"With the affiliation complete, leaders can begin the exciting work of exchanging knowledge and developing ideas to better serve our patients and residents," Sanford Health CEO and President Kelby Krabbenhoft said in a media release.

"The shared heritage of Sanford and the Society will guide the transformation of both organizations as a leader in providing care through the life span," he said.

The Good Samaritan Society acquisition makes Sanford Health one of the largest health systems in the United States. The combined system generates more than $5 billion in annual revenue, and includes 44 medical centers, 482 clinics, more than 200 senior living facilities, 190,000 Sanford Health Plan members, and more than 12,000 clinicians.  

For Good Samaritan, the deal provides some relief from a declining patient census and budget deficits.

David Horazdovsky remains CEO of the Society and has joined Sanford Health's corporate leadership team. Randy Bury has transitioned to president of the Society from his previous role as Sanford Health's CAO.

Sanford said it will continue to use the Good Samaritan Society name because it "has enormous value in post-acute and senior care."

The Society's membership voted in favor of the affiliation in June 2018, which cleared regulatory review before the deal closed.

Mid Dakota Acquisition on Appeal

On other fronts, Sanford's attempts to acquire Bismarck, North Dakota-area rival Mid Dakota Clinic remains bogged down amid objections raised by state and federal regulators.

A federal magistrate judge in North Dakota in 2017 issued a preliminary injunction blocking the proposed acquisition of by Sanford Health, and the case is now before the 8th Circuit Court of Appeals.

The suit was brought by the North Dakota Attorney General's Office and the Federal Trade Commission, which contend that the acquisition would adversely affect competition in the Bismarck service area and increase the cost of healthcare for consumers.  

Mid Dakota Clinic employs 61 physicians and 19 advanced practice practitioners and operates six clinics in Bismarck, a women's health center, and an ambulatory surgery center. The proposed merger was announced in June 2017 and immediately drew the attention of state and federal regulators. 

The FTC and state officials contend that the acquisition would create a physician group controlling at least 75% to 85% of market for adult primary care, pediatrics, and obstetrics and gynecology services. The merged clinic also would be the only physician group offering general surgery services in the area, and could stifle efforts by other providers to enter or expand in the service area, the complaint states.

Sanford and Mid Dakota said the complaint fails to consider the leveraging power of Blue Cross Blue Shield of North Dakota, the region's largest commercial payer, which would preclude anticompetitive effects that might result from the acquisition.

“The shared heritage of Sanford and the Society will guide the transformation of both organizations as a leader in providing care through the life span.”

John Commins is a senior editor at HealthLeaders.


KEY TAKEAWAYS

Sanford Health has a footprint in 26 states and nine countries with the acquisition.

For Good Samaritan, the deal provides some relief from a declining patient census and budget deficits.


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