Sanford Health to Merge with Marshfield Clinic, Creating $10 Bn Nonprofit Network in US

Together, the merged entity will employ nearly 56,000 people, including 4,300 providers, and manage two fully integrated health plans serving over 435,000 members.

Midwest healthcare systems Sanford Health and Marshfield Clinic Health System have planned a merger to create a nonprofit entity with 56 hospitals and $10 billion in revenue in the US.

This merger marks a significant move in the healthcare sector, aiming to offer integrated care and enhanced population health efforts across the American Midwest.

Sanford Health, headquartered in Sioux Falls, South Dakota, will act as the parent company, integrating Marshfield Clinic’s Wisconsin and Michigan facilities into its structure.

Together, the merged entity will employ nearly 56,000 people, including 4,300 providers, and manage two fully integrated health plans serving over 435,000 members. Additionally, they will operate specialty pharmacies and research institutions.

Commenting on the same, Bill Gassen, president and CEO, Sanford Health, said, “We are who we are today because of combinations with care delivery organizations in rural communities across America’s heartland. 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.”

Organizational Impact

The merger would place Marshfield Clinic’s interim CEO, Brian Hoerneman, MD, as the president and CEO of the Marshfield Clinic Health System region, while Gassen would remain at the helm of the new organization.

They have signed a nonbinding memorandum of understanding and expect to finalize the deal by the end of the year, pending regulatory approval.

“Partnering with Sanford Health presents an incredible opportunity for our organizations to unify and establish the premier rural health system in the nation. Together, we will ensure sustainable access to exceptional care for our communities for years to come,” Hoerneman said.

Financial Context

Marshfield Clinic has faced financial difficulties recently, reporting a $250.8 million operating loss in 2023.

In the last two years, the organization lost $367.9 million and $60.2 million, respectively, leading to workforce reductions. However, the clinic reported a narrow $12.6 million operating gain for the quarter ending March 31.

Sanford Health, on the other hand, reported $7.2 billion in revenues and a $402.2 million operating gain in fiscal 2023, more than doubling its previous year’s $192.3 million.

Sanford highlighted its $1.5 billion investment in its South Dakota, North Dakota, Minnesota, and Iowa communities over the past decade and plans to invest at least half a billion into the new partnership over the next five years.

The combined entity aims to leverage its resources to advance population health, value-based care, and innovative care delivery methods. They also intend to expand clinical trial access and enhance workforce training and recruitment.

“This partnership is a win-win for the patients and communities we serve, and for our organizations that have had a long tradition of innovation, physician leadership, and dedicated caregivers,” Lauris Molbert, chair of Sanford Health’s board of trustees, remarked.

Despite the optimistic outlook, the merger comes after several failed attempts by both organizations to combine with other health systems. Sanford Health’s previous merger plans with UnityPoint Health, Intermountain Healthcare, and Fairview Health Services fell through due to various challenges, including regulatory scrutiny and internal disagreements.

Marshfield Clinic also faced hurdles with past merger attempts, including a failed merger with Gundersen Health System in 2019 and a called-off deal with Essentia Health earlier this year, primarily due to financial instability and regulatory concerns.