Aug. 21, 2023

In the end, it was a “undynamic” breakup, Sanford Health CEO Bill Gassen said.

After more than a year of conversation and controversy, Sanford ultimately decided its second attempt to merge with Minnesota-based Fairview Health Services was going to go the same way as the first.

“We decided we would go our separate ways,” Gassen said of the decision announced late last month.

“There’s nothing untoward. There’s not an exciting story about why it didn’t happen. When it came down to the critical points in the final moments, we didn’t have complete alignment around those priorities and the model for how it would look going forward.”

The merger would have created a system with more than $13.5 billion in annual revenue, ranking it among the nation’s largest nonprofit health systems.

From the start, Gassen and his counterpart, Fairview CEO James Hereford, acknowledged among themselves that while they considered a merger “a wonderful opportunity,” for it to happen “we needed a multitude of parties to align, to coalesce around a singular vision.”

That road proved one the two couldn’t navigate, amid pushback from Minnesota state government, the University of Minnesota, some care providers in the state and even members of the general public resisting the idea that a South Dakota-based health system might establish such a presence within its neighbor to the east.

On Sanford’s side, there were other nonnegotiables, what Gassen refers to as the organization’s “cornerstone commitments.”

Any combined health system would be domiciled in South Dakota, with its headquarters, CEO and the majority of the C-suite in Sioux Falls. It would continue to be called Sanford Health. Not just today, but perpetually, no matter what other growth opportunities came along.

And that’s “growing where we’re planted,” Gassen added. “The states where we’re already established and have deep roots.”

Through that lens, a deal with Fairview made sense, he said. The system also would have brought new capabilities to Sanford.

“Had we been able to fully align and coalesce, I believe it would have been a great thing for all organizations involved and most importantly for patients,” Gassen said, adding that “it was time very, very well spent. I have absolutely zero regrets about it. And I stand here with an immense amount of pride.”

Despite the demands of working through a merger, Sanford’s broader workforce navigated “easily one of the most tumultuous times health care has seen,” he said. “2022 and into 2023 were some of the most challenging financial years. This organization improved its quality scores, its patient satisfaction scores, our employee net promoter scores, and we achieved a level of financial stability very, very few across the country were able to do. To me, that reflects the strength of the organization where it matters most.”

Sanford finished 2022 with a positive margin. This year, through the first six months, the organization has beat its budget targets, “so we feel really, really good about that,” Gassen said. “We absolutely consider ourselves very blessed to have finished the year as strong as we did and to start 2023 the way we did.”

Workforce development, while still presented with the challenge of finding enough people, has evolved to look at how technology and process improvement can help optimize the organization’s talent, he said.

“What we’ve set our minds to is not ‘how do you throw more bodies at it?’ but how do we change the way we do the work we do,” he said.

“How do we automate, how do we change workflows. Our talented caregivers work hard every single day, but portions of their day are doing work that probably isn’t top of license of doesn’t bring the greatest level of satisfaction. How can we remove that redundancy and … allow them to do the work that’s most rewarding? That’s starting to provide a greater level of relief than bringing in new bodies, but change is hard, and there’s a learning curve, so I’m very grateful for the willingness of our people to change.”

Refocused on the future

Looking ahead, Gassen first points back – to the strategic aspiration he first brought forward shortly after becoming CEO in 2020.

“To be the premier rural health system in the United States,” he said. “It’s what we do well, and it reflects the communities we serve.”

To that end, he looks to initiatives such as Sanford’s push into virtual care, marked by its new center under construction in northwest Sioux Falls, or its increased graduate fellowships and residencies in key specialties.

Investments in existing communities, such as the gastroenterology and orthopedics facilities under construction in Sioux Falls, is part of the strategy, too, but so is continued openness to mergers, he said.

“It’s that commitment to say, as we look forward, what are the capabilities that this organization needs to add to our portfolio to ensure we’re not only able to meet the needs that exist today but what are those needs into the future.”

The so-called stakes in the ground that will guide any future deals are more assets than limitations, Gassen said.

If potential partners can’t accept them, “it’s just not the right deal for us,” he said. “I believe those cornerstone commitments are reflective of the strength of this organization and will be part of what allows to continue to be strong into the future.”

The fact that it’s centered in Sioux Falls should be a point of pride, he added.

“Sioux Falls should be proud. Sioux Falls, its business leaders, the incredibly talented caregivers here and our patients who helped build the system that exists today should be very proud of what they helped build and feel confident and assured that’s going to be here for generations,” he said.

“I do think the most important message I can share is just a sincere, heartfelt thank you to the incredible people at this organization … and to our communities who continue to put faith and trust in us to meet their needs.”