Intermountain Healthcare to merge with Sanford Health in 2021

Photo provided by Intermountain Healthcare

Salt Lake City, Utah-based Intermountain Healthcare and Sanford Health, headquartered in Sioux Falls, South Dakota, have signed a letter of intent to merge. Combined, the two health systems will have 70 hospitals in Utah, South Dakota, North Dakota, Minnesota and Iowa.

The two health systems plan to bring their organizations together under one system to expand access to value-based care, they said in a statement. Intermountain Healthcare is an integrated not-for-profit health system that has a team of more than 41,000 caregivers. Sanford Health is made up of 48,000 employees spanning 24 states.

Pending federal and state approvals, the merger will close in 2021. Terms of the deal were not disclosed.

WHAT'S THE IMPACT?

Once merged, the combined organization will employ more than 89,000 people across its 70 hospitals, 435 clinics and 366 senior care facilities. It will also insure over one million people.

The new organization will be headquartered in Salt Lake City and have corporate offices in Sioux Falls. Dr. Marc Harrison, the president and CEO of Intermountain Healthcare, will be the president and CEO of the combined organization. Meanwhile, Kelby Krabbenhoft, the president and CEO of Sanford Health, will serve as president emeritus.

The board of trustees from the two systems will also merge to create one, combined board. Gail Miller, the current chair of the Intermountain board, will be the board chair for the new organization.

Until further notice, the two organizations will continue to operate under their current names.

THE LARGER TREND

So far this year, healthcare merger and acquisition activity has been down, primarily as a result of COVID-19. The second quarter of 2020 saw M&A activity drop 20% from the first quarter and 34% when compared to Q2 of 2019, according to Irving Levin Associates.

Not only were there fewer mergers and acquisitions in Q2, but the ones that did occur were worth less than those in Q1 2020 and Q2 2019, according to S&P Global Market Intelligence. The aggregate transaction value of the M&As in Q2 was $12.26 billion compared to $29.31 billion in Q1 and $137.29 billion in the second quarter of 2019.

Despite Q2 being the lowest quarter as far as M&A activity in five years, analysts at Waller and Kaufman Hall predict that the pent-up M&A activity from the pandemic will "very likely" cause a surge of M&As moving into 2021. They predict that M&As will be particularly active among small and independent hospitals looking to partner to stay afloat.

Intermountain recently acquired Saltzer Health, a physician group in Idaho, in October. Last year, the system also acquired HealthCare Partners Nevada.

ON THE RECORD

"Intermountain and Sanford have a shared vision of the future of healthcare and have the aligned values needed to better serve more communities across the nation," said Dr. Marc Harrison, the president and CEO of Intermountain Healthcare. "This merger enables our organizations to move more quickly to further implement value-based strategies and realize economies of scale. Through coordinated care, increased use of telehealth and digital health services, we will make healthcare more affordable for our communities."

"For more than two decades, we've been focused on good growth, with the goal of driving innovation and bringing more affordable and accessible healthcare to the communities we serve," said Kelby Krabbenhoft, the president and CEO of Sanford Health.

"Today we're marking another major milestone in our long history of working to change the course of healthcare across the globe. By coming together with Intermountain Healthcare, we will improve the health and well-being of the communities we serve and strengthen our impact in healthcare delivery and value."

Twitter: @HackettMallory
Email the writer: mhackett@himss.org