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Analysis

Sanford Health, Intermountain Healthcare to Merge

By Jack O'Brien  
   October 26, 2020

The merger is expected to close in summer 2021, pending federal and state approvals, according to a press release.

Sanford Health and Intermountain Healthcare announced plans to merge at a Monday afternoon press conference.

The executive board of trustees of nonprofit systems approved a resolution to support moving forward with the due diligence process on Friday.

The combined system will employ more than 89,000 people, operate 70 hospitals and 435 clinics across seven states, according to a press release. Additionally, the system will provide senior care and services in more than 360 locations across 24 states and insure 1.1 million people.

Related: Sanford Health Finance Exec on System's Preparations for COVID During Flu Season

Intermountain Health, the new organization, will be headquartered in Salt Lake City and have corporate offices in Sioux Falls, South Dakota.

Marc Harrison, M.D., president and CEO of Intermountain Healthcare, will serve as president and CEO of the new system, while Kelby Krabbenhoft, president and CEO of Sanford Health, will serve as president emeritus.

Related: Intermountain Telehealth: A Million Virtual Connections and Counting

“Intermountain and Sanford have a shared vision of the future of healthcare and have the aligned values needed to better serve more communities across the nation," Harrison said in a statement. “This merger enables our organizations to move more quickly to further implement value-based strategies and realize economies of scale. Through coordinated care, increased use of telehealth and digital health services, we will make healthcare more affordable for our communities.” 

“For more than two decades, we’ve been focused on good growth, with the goal of driving innovation and bringing more affordable and accessible healthcare to the communities we serve,” Krabbenhoft said in a statement. "Today we’re marking another major milestone in our long history of working to change the course of healthcare across the globe. By coming together with Intermountain Healthcare, we will improve the health and well-being of the communities we serve and strengthen our impact in healthcare delivery and value."

Related: Billionaire T. Denny Sanford Was Under Investigation for Child Pornography

Both organizations will continue to operate under their current names for the foreseeable future and the merger is expected to close in summer 2021, pending federal and state approvals, according to a press release.

The systems stated that a new executive committee of the board will be created with "equal representation from members" from both Intermountain and Sanford, with Gail Miller, the current chair of Intermountain Board, serving as board chair of the combined organization.

Related: Intermountain Healthcare to Cut 250 Admin Positions to Lower Care Costs for Patients

Jordan Shields, a principal at Juniper Advisory LLC, a privately held, Chicago-based investment banking firm that provides merger and acquisition advice for nonprofit hospitals, told HealthLeaders that Monday's announcement combines two strong provider organizations and follows in the ongoing consolidation trend among health systems.

Shields said that the Intermountain and Sanford executives benefited from analyzing these recent megamergers among provider organizations and rolling out their go-forward leadership plan.

"When you make your announcement with the CEO identified and your board chair identified, the likelihood of success and closing the transaction is significantly higher," Shields said. "Having [Krabbenhoft] stick around is a benefit for the system, he's an experienced, smart guy and having him around for three years will benefit the system as a whole."

He added that the impact on rural communities serviced by both Sanford and Intermountain likely won't be negatively impacted and will allow the new combined organization to have investment resources to address population health needs, calling it a "tipping point."

Editor's note: This story has been updated with commentary from Jordan Shields.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: Photo courtesy of Intermountain Healthcare


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