Dive Brief:
Approximately half a year after announcing plans to merge, Wisconsin-based Marshfield Clinic Health System has joined South Dakota-based Sanford Health.
The deal creates a 56-hospital integrated nonprofit health system with operations across seven states: South Dakota, North Dakota, Minnesota, Wyoming, Iowa, Wisconsin and Michigan, according to a Jan. 2 press release.
Marshfield will now operate as a region of Sanford Health. The clinic’s interim CEO Brian Hoerneman will remain on as president and CEO of the operating region.
Dive Insight:
The health systems reported they were in nonbinding merger discussions in July and signed a definitive agreement to combine in October.
The completed deal was one of the largest provider tie ups announced last year. It is a “mega merger,” according to consultancy Kaufman Hall, where the annual revenue of the smaller party exceeds $1 billion.
Under the terms, Sanford will invest $500 million into capital improvements at Marshfield over the next five years and update Marshfield’s electronic health record, according to a release from Juniper Advisory, an investment bank that advised Marshfield during the transaction.
Patients will see no immediate impact to their care and will continue to see their providers, Sanford said in the Jan. 2 press release.
Sanford is a larger and healthier system compared to Marshfield, boasting 45 hospitals and approximately 43,000 employees pre-merger.
Marshfield, meanwhile, has struggled financially in recent years. Last year, Marshfield shuttered its Park Falls Home Health and Hospice facility due to resource constraints, received a ratings downgrade from S&P Global Ratings due to “heightened and ongoing” operating losses and conducted layoffs.
The system’s tenuous finances caused Essentia Health to call off a proposed merger last January, according to reporting from the Duluth News Tribune.
Both systems saw opportunity in the current deal. Sanford has been eyeing a chance to expand into a new service areas, and the merger offers the health system an entrance into Wisconsin, where it has no facilities.
Sanford and Marshfield have had proposed mergers frustrated in the recent past. Sanford tried and failed to merge with UnityPoint Health in 2019, Intermountain Health in 2020 and Fairview Health Services in 2023.
