MeritCare merger made Sanford Health nationally relevant

Two companies created largest rural health system 10 years ago

MeritCare Hospital in Fargo, ND
MeritCare Hospital in Fargo, ND

Ten years ago, on Nov. 2, Sanford Health and MeritCare Health System joined together to become the largest rural, nonprofit health system in the country, serving 2 million people in a 130,000 square mile area across five states.

Both were century-old organizations with Lutheran heritages that primarily served the Dakotas, North and South. Coincidentally, the merger took place on the 120th anniversary of North and South Dakota entering the union, on Nov. 2, 1889.

The motto was the now-familiar “Stronger Together” and promised patients that the combined organization would not only have more physicians but also expand services, advance medical research and education, and provide a national model of care for the future.

Current Sanford Health president and CEO Kelby Krabbenhoft said at the time of the merger that it marked the point when the health system became “nationally relevant.”

“The things we do, the people we talk to and the questions we ask will have national relevance, national impact. We didn’t seek that; that is the nature of what we’ve created,” he added.

Formation of MeritCare

MeritCare had been formed from previous mergers. Its origins begin with St. Luke’s Hospital in 1908 and continue with the opening of Fargo Clinic in 1921 and the Neuropsychiatric Institute (TNI) in 1955. In 1961, TNI affiliated with St. Luke’s. And in 1993, the MeritCare Health System was created with the merger of St. Luke’s Hospital and Fargo Clinic.

In the ’90s, a series of clinic affiliations across the region provided a strong network of physician practices across eastern North Dakota and western Minnesota.

Subsequently, MeritCare installed a state-of-the-art electronic medical record system and completed its largest building program yet: a new heart center. MeritCare also renovated its children’s hospital, family birth center and pediatric intensive care unit.

Benefits realized

Best practices

The merger brought with it a number of benefits. At the time, Becky Nelson, then the senior vice president and chief operating officer of the combined organization, said, “We will be bringing together the best practices from both organizations into the best practice for the new organization. To do that, you need to capitalize on the expertise among physicians and staff.”

This sharing of expertise was accomplished by running “rolling offices” — that is, two buses, one from Sioux Falls and one from Fargo — up and down Interstate 29 each weekday. Krabbenhoft, who previously lived in Fargo, began spending Thursdays there, and monthly meetings of the new Board of Trustees, composed of seven MeritCare and seven Sanford Health members, rotated between Sioux Falls and Fargo.

One example of the two organizations learning from each other was in the realm of electronic medical records. Sanford Health had just implemented a system while MeritCare had operated one for 13 years.

Complementary services

Another benefit emerged in the complementary services provided. Nelson said MeritCare possessed “very strong physician clinics in the region” and would be able to provide Sanford Health with guidance in operations and types of services to offer. At the same time, Sanford Health had been focused on building a strong network of hospitals.

The combined organization included 29 hospitals with more than 1,600 beds, more than 120 clinics with a combined 2.7 million annual visits and 30 senior living facilities. The two service areas showed little overlap, and in 2010, Sanford Health signed an agreement with Southeast Medical Center to fill a gap between its Fargo and Sioux Falls service areas in southeastern North Dakota.

Moreover, a larger health system was able to offer more services instead of referring patients out to other health care systems, disrupting the continuity of care. At a town hall in Fargo, one patient who was battling Huntington’s disease, a neurological disorder, said the merger would create “a new Mayo between Fargo and Sioux Falls,” providing better access to services.

Cost savings

Yet another benefit came with the purchasing power of a larger organization, which generated cost savings. This served as the key financial benefit. The organization did not pursue cost savings through consolidation of services or through mass layoffs. They served separate regions and needed to continue offering all types of care across the region. The combined organization now employed 17,500 people, including 809 physicians.

Instead, senior executive vice president of the combined organization, Dave Link, said, “We’re really very, very focused on new opportunities for the organization — expansions of clinical services, the expansion of our research program, the development of a health plan that covers the entire region.”

Improvements in the Fargo area

A year after the merger, Sanford Health expanded research in Fargo by making the Sanford Diabetes Center Fargo the second clinical research site for the Sanford Project, which seeks to find a cure for type 1 diabetes.

In 2014, Sanford Health was awarded North Dakota Managed Medicaid, and the following year the organization contracted with North Dakota Public Employees Retirement System (NDPERS). Correspondingly, the system continued to improve services in the eastern North Dakota and northwestern Minnesota region.

The signature accomplishment was the opening of Sanford Medical Center Fargo, a nearly $500 million comprehensive regional facility, in July 2017. Envisioned in 2010 at the cost of $200 to $300 million, then-president of MeritCare Medical Center Fargo, Dennis Millirons, said it would be “a record-breaking project” that “would take us into the 100-year future.”

In April of the following year, it was designated an Advanced Comprehensive Stroke Center by The Joint Commission, treating the most complex cases. And in August 2018, Sanford Medical Center Fargo received level 1 adult trauma verification, making it the only facility between Minneapolis, Seattle, Denver and Omaha to hold that status.

The Roger Maris Cancer Center has had its oncology visits grow from roughly 10,000 annually to more than 28,000 annually over the past decade. It currently has patients enrolled in 125 active oncology trials.

The region also remains focused on its original clinic-based care, unveiling a new clinic in West Fargo this year.

Since 2009, the Fargo region has experienced continuous growth — from 479 physicians and roughly 7,500 employees to 620 physicians and nearly 9,900 employees today.

Development across the company

Following the merger with MeritCare, Sanford Health continued to grow, merging with North Country Health Services, whose hub is based in Bemidji, Minnesota, in March 2011, and with Medcenter One, centered in Bismarck, North Dakota, in July 2012. This brought Sanford Health to 1,200 physicians and 25,000 employees across 220,000 square miles in seven states.

At the beginning of 2018, Sanford World Clinic expanded its presence beyond the United States, Ghana and Germany to include China, Costa Rica, Ireland, New Zealand, South Africa and Vietnam, totaling more than 30 international clinics.

At the beginning of 2019, Sanford Health completed its affiliation with The Evangelical Lutheran Good Samaritan Society, extending its presence into 26 states and increasing the number of senior living facilities from 30 in 2009 to more than 200 today.

Sanford Health also continued to grow its service areas, opening the Sanford Research Center in 2010, a $73 million heart hospital in 2011, the 162-acre Sanford Sports Complex in 2013, the Edith Sanford Breast Center in 2016, and Sanford Imagenetics in 2017, all located in Sioux Falls. The latter two were created with a $100 million and $125 million gift, respectively, from Denny Sanford, for whom the Sanford House was created as a tribute and opened in 2017.

At the same time, the Sanford Health Plan, launched in 1998, continued to grow. It surpassed 100,000 covered lives in 2013 and is nearing the 200,000 mark at this time.

Recently, Sanford Health has given out its inaugural $1 million Lorraine Cross Award, a biannual prize to cutting-edge researchers. Sanford also announced a partnership with the Veterans Administration to provide free pharmacogenetic testing to 250,000 veterans, expanded telehealth with the launch of TytoCare, and held its second Sanford International golf tournament, which benefits children through the Sanford Health Foundation.

With all of this development, the enterprise is much larger than it was in 2009, going from 809 physicians to 1,382 and from roughly 17,500 employees to more than 48,000.

Looking forward

Sanford Health has unveiled a bold vision for the Fargo-Moorhead area. It plans to:

  • Build a 100,000-square-foot heart and vascular center just east of the new medical center
  • Increase the number of rooms in the new medical center, which has already exceeded its volumes
  • Invest $100 million to make the Roger Maris Cancer Center a national destination for cancer care by increasing infusion rooms and expanding services and specialties, which will decrease travel times
  • Create a stand-alone orthopedics and sports medicine clinic and hospital on the South University campus, the only one in the state
  • Work in conjunction with the Fargo Park District to complete a multimillion-dollar sports complex on the south side of the city, creating a regional destination for more than 600,000 visitors annually

Across the company, Sanford Health also has big plans. It intends to:

Creating good

Roger Gilbertson, M.D., who practiced neuroradiology for 30 years before becoming the first and only president and CEO of MeritCare, retired on the day of the merger at age 72.

He concluded, “I think this is good for MeritCare. It is good for Fargo-Moorhead. It is good for the region that we serve. It is good for health care. It is good for education. It is good for economic development.”

History has proven him right.

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