Sanford Health finalized its merger with Marshfield Clinic Health System, the health systems announced last week, and the deal expands Sanford's reach to communities in Wisconsin and Michigan’s Upper Peninsula.
The two health systems announced their intent to combine in July.
The combined system will serve patients across the upper Midwest, including South Dakota, North Dakota, Minnesota, Wyoming, Iowa, Wisconsin and the Upper Peninsula of Michigan.
Sanford committed to invest $500 million in capital spending in Marshfield over five years and will switch the health system to its Epic electronic health record system.
The organization includes nearly 56,000 employees, 56 hospitals, 4,500 providers, two fully integrated health plans, specialty pharmacies and nationally recognized research institutions. Sanford Health Plan and Security Health Plan will serve more than 425,000 members.
Marshfield Clinic brings 11 hospitals, 12,000 employees and 1,400 providers to the combined organization and reported $3.1 billion in revenue during its 2023 fiscal year but a $250.8 million operating loss. Sanford, meanwhile, reported $7.2 billion in revenues and a $402.2 million operating gain during its fiscal 2023, more than doubling the $192.3 million it logged the year prior.
Sanford Health executives said the combined organization will bring more resources, expertise and innovation to patient care in communities across the rural Midwest.
“Today’s historic milestone paves the way for us to advance world-class care across the rural Midwest and accelerate vital investments in the communities we have the privilege of serving,” said Bill Gassen, president and CEO of Sanford Health, in a statement.
“Together, we will reimagine the future of local, patient-centered nonprofit health care by expanding services, enhancing access and harnessing innovative technologies to improve the health of our communities," Gassen said.
Sanford Health, which calls itself the largest rural health system in the U.S., is headquartered in Sioux Falls, South Dakota and brought to the merger 45 hospitals, 211 clinics and more than 160 senior living centers. The provider employs 2,900 physicians and advanced practice providers.
Marshfield Clinic Health System, now Marshfield Clinic region of Sanford Health, brought to Sanford 1,400 providers comprising 170 specialties, health plan and research and education programs. Primary operations include more than 60 Marshfield Clinic locations, 11 hospitals, Marshfield Children’s Hospital, Marshfield Clinic Research Institute, Security Health Plan and Marshfield Clinic Health System Foundation.
“Our partnership brings together two organizations deeply committed to advancing health care for the people and communities we serve in rural America,” said Brian Hoerneman, M.D., who previously served as interim CEO of Marshfield Clinic Health System, in a statement.
Hoerneman has now transitioned to the role of president and CEO of the Marshfield Clinic region of Sanford Health.
“I am excited about the opportunities ahead as our teams learn from each other and combine our complementary strengths, cultures and missions. Together, we will build on our shared legacy, creating a future where every person, regardless of zip code, has access to the best possible care.”
Sanford Health brought in total revenue of $5.6 billion in the nine months ending Sept. 30, 2024, an 8% increase from $5.2 billion from the same period in 2023. The health system reported net income of $281 million for that nine-month period, according to its most recent unaudited quarterly financial statement.
Marshfield Clinic reported an operating loss of $15 million on operating revenue of $2.4 billion during that same nine-month period ending Sept. 30, according to its unaudited quarterly financial report. That compares to an operating loss of $133 million on operating revenue of $2.3 billion during the same period in 2023.
Sanford Health said an integration process is underway to create a unified organization.
Each organization’s respective health plans, Sanford Health Plan and Security Health Plan, will continue current operations under a common management reporting and governance structure. The health plans will be led by Tommy Ibrahim, M.D., executive vice president and president and CEO of Sanford Health Plan. Krista Hoglund serves as regional president and CEO of Security Health Plan.
The new Marshfield Clinic region has a Physician Executive Council, which will feature Marshfield Clinic physician leaders.
Three Marshfield Clinic Health System Board members have now joined the Sanford Health Board of Trustees-- Dr. George Brown, Thomas Wenzel and Maureen McCausland, M.D.
A regional board of community leaders is being established to govern the operations and strategy of the Marshfield Clinic region, the health system said.
Sanford and Marshfield Clinic’s rocky history with health system mergers outlines the local and organizational difficulties organizations may face, Associate Editor Dave Muoio reported in July.
Sanford's past three merger attempts with other major nonprofit systems have all fallen through the cracks. These include a merger planned with UnityPoint Health in 2019 and a failed 2020 combination with Intermountain Healthcare, which was preceded by the sudden resignation of controversial Sanford CEO Kelby Krabbenhoft.
In July 2023, Sanford’s board scratched a planned combination with Fairview Health Services nearly a year ago. The decision came after the pair repeatedly bumped back key deadlines amid pushback from Minnesota labor groups, the Fairview-affiliated University of Minnesota and the state’s attorney general.
Marshfield Clinic, meanwhile, had seen a merger with Gundersen Health System fall apart in 2019. It was later slated to combine with Essentia Health until the deal was called off in early January after about two years of talks.