Aspirus Health, St. Luke's to affiliate and expand nonprofit healthcare system

Photo: Martin Barraud/Getty Images

St. Luke's Duluth and Aspirus Health, based in Wausau, Wisconsin, have signed a letter of intent for the two organizations to affiliate and create a healthcare system serving residents of northeastern Minnesota, northern and central Wisconsin and the Upper Peninsula of Michigan.

The combined organization will operate 19 hospitals and 130 outpatient locations, with nearly 14,000 team members, including 1,300 employed physicians and advanced practice clinicians. The system will operate headquarters in Wausau, Wisconsin, and maintain a corporate office in Duluth, Minnesota.

St. Luke's said it will remain a major care delivery hub for the region, and will benefit from Aspirus Health's successful care model.

WHAT'S THE IMPACT?

Recognizing an opportunity to build on the care the two organizations already deliver, Aspirus Health and St. Luke's described themselves as "like-minded" institutions with closely aligned missions and values.

As the affiliation process evolves, Aspirus Health and St. Luke's patients, members and communities will continue to receive the same level of care, the systems said. 

The organizations hope to complete the affiliation process in early 2024, following all due diligence, regulatory reviews and necessary approvals. Each organization said it will keep its communities informed as updates are available.

St. Luke's was founded in 1881. Dr. Nicholas Van Deelen, St. Luke's co-president/CEO and chief medical officer, said joining forces with Aspirus "enables us to expand access and better support clinical staff to reach even more patients."

"The like-minded missions of St. Luke's and Aspirus are rooted in serving people – our patients and the people who care for our patients," he said.

Eric Lohn, St. Luke's co-president/CEO and chief financial officer, said that "evolving community needs" requires the organization to find new approaches to care delivery, with the proposed affiliation accelerating investment in communities.

"Joining with Aspirus Health will benefit our patients, our staff and our broader network," said Lohn. "It will bring new ideas and build a best-in-class care network that people can count on for generations to come."

THE LARGER TREND

The fourth quarter of 2022 was a banner period in terms of healthcare merger and acquisition revenues, and the transactions that took place in the quarter pushed M&A revenues to $45 billion for 2022, according to a Kaufman Hall analysis released earlier this year.

A December analysis from PricewaterhouseCoopers found that healthcare mergers and acquisitions are expected to continue with ever-increasing transaction volumes, despite a shaky economy and fears of a recession.

Transaction volumes will continue to increase, due to enhanced attention on private equity-platform add-ons and the continued resilience of the sector, analysts project. Value-based care is also expected to be on the rise. Fee-for-service-focused models are in the rear-view mirror, and players are diving in and embracing value-based care throughout the ecosystem, PwC found.

These factors, along with continued large levels of corporate cash, translate into a continued strong outlook for health-services deal volumes in 2023.
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com