The Evangelical Lutheran Good Samaritan Society's members approved a plan to merge with Sanford Health this week, folding its long-term care services into Sanford's portfolio.
Good Samaritan operates more than 200 senior care facilities—including skilled nursing, home health and senior living—across 24 states and has nearly 20,000 employees. Those facilities would join Sanford's 44 hospitals and close to 300 clinics across nine states under the health system.
The deal is expected to close on Jan. 1, pending regulatory review.
David Horazdovsky, CEO of Good Samaritan, said at a press conference Tuesday that the union would allow for more holistic care over a patient's lifespan and would foster innovation in that care.
"We step forward into an exciting new future, a future I don't think we could accomplish with, respectively, what each organization could do alone," Horazdovsky said.
Horazdovsky said that the deal would not only allow Sanford and Good Samaritan to improve the care they offer the communities they serve, but it could also allow both organizations to expand their reach further—even potentially beyond the U.S.
The governing board for each organization approved the deal late last year, and leaders on both sides have spent the past several months crafting a complete plan before bringing it to Good Samaritan's membership.
Both providers are headquartered in Sioux Falls, South Dakota, so the deal would also unite two of the state's largest employers.
We’re live for a special announcement with @goodsam. https://t.co/heFYMw5ML1
— Sanford Health (@SanfordHealth) June 26, 2018
The healthcare industry has yet to slake its thirst for mergers, and the deal between Sanford and Good Samaritan is the latest example of a growing interest in vertical integration. In a horizontal deal, a hospital or health system would snap up a direct competitor, while in a vertical one that organization would purchase a group at another point on the care continuum.
A similar deal was announced in April, when ProMedica Health System in Ohio revealed it would acquire HCR ManorCare, the country's second-largest post-acute care provider, in a deal that also included investment trust Welltower.
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Vertical mergers have also cropped up in the insurance sector, particularly in the pharmacy benefit management market. The planned megadeals between CVS and Aetna and Cigna and Express Scripts exemplify the trend.
Health policy experts have warned that consolidation in the industry could have significant financial downsides for patients. Healthcare organizations pursuing mergers, however, argue that these deals will allow them to build scale and ultimately cut costs.