Sanford, MeritCare agree to create new health system

The unified system, a merger of equals, would strengthen health care in the region by expanding services, education, research and access to care. Both organizations would work together through the summer and into the fall on additional analyses, further due diligence and communications to develop a final agreement, and any necessary regulatory applications to create the new organization.

Key elements of the Letter of Intent include:

• The shared vision of both MeritCare and Sanford to strengthen and improve health care delivery in the Fargo and Sioux Falls service areas.
• All governing boards would have representatives from across the region.
• Physicians would have a strong voice in the new health system.
• A commitment to maintain corporate offices in both Sioux Falls and Fargo.

“The decision to pursue combining our organizations is in keeping with the ongoing commitment MeritCare and Sanford have to seeking new ways of improving health and access to care for people in our respective regions,” said Ellen Earle-Chaffee, Chair, MeritCare Board of Trustees.

“Because the two organizations have achieved strong leadership positions, it is important that we continue to promote health and economic development in the regions we serve,” said Barb Stork, Chair, Sanford Board of Trustees. “With the current emphasis on health care reform calling for positive action, it is the perfect time to together pursue how we could grow and improve our services and expand our research and education capabilities as a shared mission.”

MeritCare is North Dakota’s largest health system with many regional sites in North Dakota and Northwest Minnesota. It is known for regional excellence in a number of medical specialties offered at Roger Maris Cancer Center, Heart Center and Children’s Hospital. MeritCare’s Heart Center has been named a 100 Top Heart Hospital nine times in 10 years, one of only five in the nation to receive this distinction.

Sanford Health is comprised of Sanford USD Medical Center and a network of community hospitals and clinics in South Dakota, Southwest Minnesota, Northwest Iowa, and Northeast Nebraska. It is known for its comprehensive health services, and growing research and education programs. A recent $400 million gift from Denny Sanford has enabled Sanford Health to initiate significant new programs in Children’s Health and Research, an initiative to find a cure for Type 1 Diabetes, and the establishment of Children’s World Clinics and Health Campus development which includes the new Sanford Children’s Hospital.

“As two proven leaders in integrated health care, our new system would make us think beyond our historic perspectives in caring for the thousands who come to us daily,” said Kelby Krabbenhoft, Sanford President and CEO. “Becoming a larger system is simply building on the depth and range of two already large organizations. That reality is more humbling than it is anything else,” said Krabbenhoft. “Together, we would grow and improve the delivery of medicine; deliver on the promise of results in research; and deliver on the promise of medical and health education. The new system is designed to address the challenges and potential of today, but much more importantly, the legacy of the past as a commitment to opportunity and security for care and the work of tens of thousands in the generations to come.”

MeritCare President and CEO Roger Gilbertson, M.D., said, “Together, Sanford and MeritCare would bring the full potential of two integrated care systems to the benefit of patients, communities, employees and physicians. We would add value for patients, be proactive in health care reform, attract talent including doctors, nurses, health professional and others that would significantly advance the service sophistication of our organizations and promote economic development in our communities.”

If the new system is approved, Krabbenhoft, at the request of both boards, would assume the role of CEO for the new health system. One of his early priorities would be to recommend, for board approval, a new president for the Fargo Sanford MeritCare operations. After this important transition period, Dr. Gilbertson would retire after more than 17 years as President and CEO of MeritCare.
The exploratory process leading up to the Letter of Intent – including the first phase of an independent study by Deloitte Consulting, LLP – has provided positive results taking the following into consideration:

• Affiliation would create growth opportunities that would facilitate the development of regional centers of excellence and facilitate the development of health services not currently offered by either organization.
• The increased size of a new organization would provide a stronger financial position to pursue strategic initiatives through economies of scale and enhanced access to capital.
• A combined organization would enhance research opportunities, the ability to collaborate on medical education initiatives such as training centers, fellowships and residencies, as well as improve recruitment of physicians and other clinical personnel.
• The ability to accelerate expansion of health plan products into a broader market area would help mitigate the out-migration of patients to other markets.

According to Bruce Morgan, principal, Deloitte Consulting LLP, “With a six state presence and premier medical centers in adjacent but distinct geographic regions, the combination of MeritCare and Sanford Health would create a new health organization. It would have the ability to increase the level and efficiency of healthcare delivery for a very broad population in large contiguous service areas and expand research activities and education programs for further health improvements.”