The cross-market deal would extend Sanford's reach into Wisconsin and Michigan.
Sanford Health and Marshfield Clinic Health System are in talks on a merger that would give both operators a partner they’ve been seeking for some time.
The systems announced they’ve reached a nonbinding understanding to create a 56-hopsital system serving the Midwest, with the transaction expected to close by the end of the year, pending regulatory approval.
Under the proposed deal, Marshfield Clinic’s Wisconsin and Michigan facilities would become a region within Sioux Falls, South Dakota-based Sanford while maintaining regional leadership and branding. Sanford president and CEO Bill Gassen would lead the combined system, with Marshfield Clinic interim CEO Brian Hoerneman serving as president and CEO of the Marshfield region.
In addition to the hospitals, the resulting organization would consist of nearly 56,000 employees, 4,300 providers, two fully integrated health plans, speciality pharmacies, and research institutions.
Both sides have tried and failed to complete mergers in recent years. Sanford’s three attempts were with UnityPoint Health in 2019, Intermountain Healthcare in 2020, and Fairview Health Services in 2023. The first pursuit fell apart after UnityPoint’s leaders rejected the move, whereas the breakdown of the Intermountain deal came after former Sanford CEO Kelby Krabbenhoft abruptly resigned. Sanford eventually called off the merger with Fairview due to lack of support in Minnesota.
With Marshfield Clinic, Sanford hopes to write a new narrative.
“We are who we are today because of combinations with care delivery organizations in rural communities across America’s heartland,” Gassen said in the news release. “These opportunities have allowed us to follow through on our promise to deliver world-class health care to every patient we serve no matter their ZIP code, and we are eager to continue building on this track record with Marshfield Clinic Health System.”
For Marshfield Clinic, past failed unions came with Gundersen Health System in 2019 and Essentia Health earlier this year. The latter saw Essentia point to Marshfield’s turbulent financial situation as the primary factor for pulling out.
Marshfield Clinic reported operating losses of $250.8 million and $367.9 million for fiscal years 2023 and 2022, respectively. Combining with Sanford, which raked in $402.2 million in operating income last year, affords Marshfield necessary financial stability.
“Partnering with Sanford Health presents an incredible opportunity for our organizations to unify and establish the premier rural health system in the nation,” Hoerneman said. “Together, we will ensure sustainable access to exceptional care for our communities for years to come.”
Jay Asser is the contributing editor for strategy at HealthLeaders.
KEY TAKEAWAYS
After multiple failed merger attempts by Sanford Health and Marshfield Clinic Health System over the years, the two sides are planning to join forces by the end of the year.
The combined system would feature 56 hospitals and two integrated health plans under Sanford, with Marshfield Clinic maintaining regional branding and leadership.
A completed deal would give Sanford entry into new markets while providing financially troubled Marshfield Clinic a larger organization to lean on.