Minnesota-based nonprofits HealthPartners and Essentia Health have announced plans to combine, setting the stage for an integrated 22-hospital system spanning multiple Midwest states.
The organizations have an affiliation agreement approved by their respective boards and are anticipating a Jan. 1, 2027 effective date for the deal pending regulatory review and approvals.
Combining, they said, will help address the rising costs of and demand for care. Joining together will also allow the organizations to accelerate and scale their complementary integrated care delivery investments, boosting clinical quality and the rollout of tools like remote monitoring and large-scale data analytics.
Both systems have bolstered struggling operating performances within the past few years, and would be combining in the wake of other high-profile provider consolidation deals that are transforming the Minnesota healthcare market. And for Essentia, the announcement is the latest in a handful of partnership announcements that so far have failed to pan out.
“HealthPartners and Essentia Health share a belief that everyone deserves access to high-quality care and coverage, close to home and centered on their needs,” HealthPartners President and CEO Andrea Walsh said in a statement. “Together, we can build on the strengths of both organizations to improve health, expand access and create a stronger future for the communities we serve.”
Financial terms for the prospective deal were not disclosed, though the organizations said their proposed combination will operate under the HealthPartners name with Essentia facilities retaining their brand through the integration. Walsh is also slated to head the combined entity, with Essentia CEO David Herman, M.D., serving as president of combined clinical care group operations.
The systems, in an accompanying FAQ, said there will be no changes to patients’ care through the process. The 1.6 million members of HealthPartners’ medical and dental plans also shouldn’t face any interruptions to coverage or benefits, with the organizations adding they “expect to maintain strong relationships with contracted providers across the five-state region and, through Cigna, nationwide.”
For the 45,000 people (including over 6,000 clinicians) employed by the pair, the FAQ outlines broader career pathways and academic partnerships that are expected from the deal. HealthPartners and Essentia also said they are "committed to working in good faith with labor organizations," which includes honoring existing collective bargaining agreements’ terms and conditions and continued negotiations on currently open agreements.
Bloomington, Minnesota-based HealthPartners employs 28,000 people across eight hospitals, over 80 other clinics and a health insurance business than spans five states and 1.6 million members. It reported $9.3 billion of operating revenue and an operating loss of $95.9 million (-1.0% operating margin) in 2025.
However, S&P Global recently revised its outlook from negative to stable, citing multiple years of margin improvements and a 2026 performance that’s so far ahead of expectations, writing in its rating activity notice that its payer business has grown (outside of the winddown of a joint venture in Iowa with UnityPoint Health), claims trends are performing favorably and patient care volumes are also rising. The organization has notched a 2.5% operating margin as of the midpoint of this year (though that’s expected to decrease somewhat in H2) with revenue rising between 6% and 8% to nearly $10 billion across 2026, S&P wrote.
S&P did note that HealthPartners’ future performance could be hampered by rising competition in the Minnesota healthcare market, where other local providers like North Memorial Health and Allina Health are merging with out-of-state players and parts of health plan UCare have been divvied up to Medica.
“We could raise our ratings in the next 12-24 months if HealthPartners' competitive position improves significantly,” S&P added.
Duluth, Minnesota-based Essentia Health, meanwhile, runs 14 hospitals, 78 clinics and several other post-acute care facilities serving parts of its home state plus Wisconsin and North Dakota. It employs more than 16,500 people, and in the fiscal year ended June 30, 2025 reported $3.3 billion total revenue and a $71.6 million operating income (2.2% operating margin).
It also received a ratings upgrade in recent months, with Fitch adjusting its outlook from stable to positive in recognition of year-to-year operational improvements, robust volumes, “very strong” growth and a leading position in its markets.
Notably, the system has opened multiple talks in recent years to partner with other provider organizations that ultimately bore no fruit.
Early last year Essentia and the University of Minnesota shared plans to form a $1 billion “all-Minnesota health system solution,” potentially alongside Fairview Health, but pulled out of those discussions before the end of the year. In late 2022 it began working with Marshfield Clinic to potentially combine into a 25-hospital system, but scrapped those plans in early 2024.
HealthPartners and Essentia’s proposed deal has already raised “serious concerns” at the Minnesota Nurses Association, which on Tuesday described the plans as the latest instance of provider consolidation within the state (after the Sanford Health-North Memorial Health and Sutter Health-Allina Health deals from earlier this year). The labor group called for “a thorough and transparent review” of the deal and its impact on costs, staffing and insurance networks, as well as to enshrine its commitments around union contracts in a legally binding agreement.
“Every time control over healthcare is concentrated in fewer hands, we need to understand what patients and communities stand to gain, what they could lose and who will be accountable for those outcomes,” Chris Rubesch, president of the Minnesota Nurses Association, said in a statement. “HealthPartners and Essentia must show how this acquisition will lower costs, preserve patient choice, protect access to care and put resources where they belong: at the bedside.”