Sanford Health, UnityPoint merger falls through

Nov. 12, 2019

A merger just days from being finalized between Sanford Health and Des Moines-based UnityPoint Health is off.

The deal would have created an organization based in Sioux Falls with more than 83,000 employees and more than $11 billion in annual revenue. It would have been one of the 15 largest nonprofit health systems in the country.

Since it was announced in June, the merger had been steadily progressing and was cleared by the federal government in September to proceed with no further inquiry or requests.

In October, both organizations selected 11 at-large trustees to comprise a new board.

It came down to a final vote by the board of directors of each system, and on Monday, members of UnityPoint voted 13-6 against merging.

“I am proud of our behavior, our character, my trustees and my executives across the country and globe,” Sanford CEO Kelby Krabbenhoft said in a statement.

“The executive management teams and physicians worked diligently for 18 months to provide a merger recommendation to the boards. We are disappointed that the UnityPoint Health board failed to embrace the vision. Our focus now is on the patients and communities we serve and the 50,000 people working tirelessly to support them.”

UnityPoint Health also released a statement: “Over the past several months, UnityPoint Health has seriously explored the opportunity to join together with Sanford Health. After significant consideration, we will not be moving forward with a formal partnership. We have great respect for Sanford Health and the relationships we’ve developed. UnityPoint Health remains strong, focused on delivering exceptional patient care and is competitively positioned for the future.”

The merger was intended to close Feb. 1, 2020.

Krabbenhoft would have been CEO of the new organization. UnityPoint CEO Kevin Vermeer would have been senior executive vice president. The corporate office would have been split between Sioux Falls and West Des Moines. The board chair would have come from UnityPoint, and the vice chair would have come from Sanford. The name would have been Sanford UnityPoint Health, doing business as Sanford Health.

UnityPoint Health is the nation’s fifth-largest nondenominational health system. It was known as Iowa Health System until 2013 and is one of two major players in Iowa.

“I’m tremendously proud of our organization and we will continue to work tirelessly to evaluate any avenue that improves the delivery of health care,” Vermeer said in a statement. “Sanford is an exceptional organization with a bright future ahead. UnityPoint Health moves forward with strong roots and a fierce commitment to improving the experience of the people we serve.”

The two systems were introduced by mutual external advisers. They then agreed to create a new organization where neither system would be acquired by the other.

In releasing the news internally today, Krabbenhoft also addressed an issue from the Department of Justice that was coming to a conclusion as the merger was being settled, involving a medical device developed by a Sanford surgeon.

“Public reporting of the matter provoked an unsettling series of discussions and inquiries from UnityPoint toward Sanford,” the email said, while continuing:

“The conclusion from UnityPoint physician leadership, regarding the device issue, is summarized here for brevity and collegial politeness: ‘The review of the medical device issue in question revealed Sanford’s process, policies and conduct are at least equal to and in some ways superior to those of UnityPoint.’ ”

The failed deal marks the second time a major merger has not materialized for Sanford. In 2013, the system was on track to merge with Minneapolis-based Fairview Health but suspended talks following political opposition.

“Sanford Health has a philosophical policy of only going where we are invited,” Krabbenhoft said at the time.

The mergers that have come together have grown the system considerably, including Fargo’s MeritCare in 2009 and The Evangelical Lutheran Good Samaritan Society at the beginning of this year.

“We will continue integrating the 24-state Good Samaritan Society into our system to complete the continuum of care we promised,” Krabbenhoft said. “We are significantly ahead of plan for that effort and will continue on our trajectory of historically positive financial and clinical outcomes.”

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Sanford Health, UnityPoint merger falls through

A merger just days from being finalized between Sanford Health and Des Moines-based UnityPoint Health is off.

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