Marshfield Clinic Health System, Essentia Health call off merger talks
The organizations said they would continue to collaborate with each other, but as two separate health systems.
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Marshfield Clinic Health System (MCHS) and Essentia Health have called off their merger talks and will not be moving forward with their proposed integration, the organizations said.
The two entities have "engaged in meaningful discussion" over the last two years about how they could combine their strengths, they said, but have decided that a merger "is not the right path forward" at this time.
They said they would continue to collaborate with each other, but as two separate health systems.
"Our organizations have great respect for one another, and we each remain committed to strengthening the health of our communities as we deliver high-quality, compassionate patient care," they said in a joint statement.
Essentia Health is an integrated health system headquartered in Duluth, serving patients in Minnesota, Wisconsin and North Dakota. It has 14 hospitals. Marshfield Clinic Health System, headquartered in Marshfield, Wisconsin, serves patients primarily in central and northern Wisconsin and Michigan's Upper Peninsula, primarily through its 60 Marshfield Clinic locations and 11 hospitals.
WHAT'S THE IMPACT?
The announcement comes months after Minnesota Attorney General Keith Ellison used a new state law to review two mergers, including the MCHS-Essentia merger, to determine if they were in the public's interest.
In May, Governor Tim Walz signed "New Requirements for Certain Health Care Entity Transactions" into law. The law gives the attorney general additional authority to review healthcare transactions and to seek court intervention if the AG believes the healthcare transaction is not in the public's interest.
In July, Essentia and Marshfield announced they had signed a letter of intent to form a new integrated regional health system serving rural and mid-urban communities across four states.
The merger was called off before Ellison was able to render an opinion on the merger, and they did not cite his ongoing review in their announcement.
Both systems maintained as late as October that the proposed merger represented an "incredible opportunity" to enhance both systems and solidify their futures.
THE LARGER TREND
A growing body of evidence shows that consolidation in healthcare provider markets has led to increases in prices without clear evidence of increases in quality, according to an August 2023 KFF report.
Policymakers and regulators have historically focused on consolidation within the same geographic area, but there have been a large number of mergers and acquisitions between hospitals and health systems that operate in different regions, including several multibillion-dollar deals over just the past couple of years, KFF said.
Some experts have raised concerns that cross-market mergers could result in hospitals and health systems raising their prices. It is also possible that cross-market mergers could result in the elimination of service lines by some acquired hospitals, which may reduce access to care, the report said.
Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com
