Health

UnityPoint calls off merger with South Dakota's Sanford Health system

Regional health systems had been exploring merger since June

St. Luke’s Hospital in Cedar Rapid on Monday, May 12, 2014. (Cliff Jette/The Gazette)
St. Luke’s Hospital in Cedar Rapid on Monday, May 12, 2014. (Cliff Jette/The Gazette)

UnityPoint Health and Sanford Health will not move forward with a merger.

After five months in formal discussions, UnityPoint Health officials announced late Tuesday it no longer will pursue a jointly operated company with the South Dakota-based health system, Sanford Health.

“With any and all growth opportunities, UnityPoint Health looks for strategic alignment, a strong cultural fit, and the right timing,” Sarah Corizzo, spokeswoman for UnityPoint Health-Cedar Rapids, said in a statement to The Gazette. “After careful evaluation and extensive input from our stakeholders, we believe we can best meet the needs of our patients and our communities by maintaining our existing corporate structure at this time.”

If combined, the partnership would have created one of the 15 largest nonprofit health systems in the country, with an operating revenue of more than $11 billion. It also would have employed more than 2,600 physicians and 83,000 staffers.

Sanford officials said they were disappointed UnityPoint Health ended formal negotiations.

“We were excited at the opportunity our combination would have provided to create a new health system of national prominence,” said Kelby Krabbenhoft, president and CEO of Sanford Health, 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.”

Des Moines-based UnityPoint Health has 32 hospitals — including UnityPoint Health-St. Luke’s in Cedar Rapids — and 280 clinics in Iowa, Illinois and Wisconsin.

Sanford Health, based in Sioux Falls, is one of the largest health systems in the United States, employing about 1,400 physicians across 44 hospitals and more than 200 senior care facilities in 26 states and nine countries.

The two health systems signed a letter of intent to explore a merger in June, which officials at the time said would “deliver greater health outcomes and value in communities in the Midwest and around the world.”

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In a public letter, UnityPoint Health President and CEO Kevin Vermeer said the decision to end talks will not impact patient care, as the system “will continue to be a people-first organization.”

The potential partnership was among the latest move in an ongoing trend within the country’s health care systems. Experts say the industry is shifting from small, locally controlled markets to regional system powerhouses that are better equipped to cope with rising cost of care and changing national policy.

“More than ever before, our organization is culturally aligned and ideally positioned to continue our transformation and realize our vision to become the premier health system in the Midwest,” UnityPoint’s Corizzo said in a statement. “We’ve made important strides in redesigning our system, including rethinking the way we operate, reshaping our culture and realigning our resources to support our goal. Our success has attracted the attention of others and will continue to present us with new opportunities to redesign the health care experience and improve the health of the communities we serve.”

Corizzo said UnityPoint officials will continue to evaluate opportunities to form partnerships with other health systems.

“Like all successful health systems, we will continue to evaluate opportunities to work with other high-quality and like-minded partners to improve team member and patient experience and outcomes, lower medical costs and provide better access to health care within the communities we serve,” she said in a statement.

Comments: (319) 368-8536; michaela.ramm@thegazette.com

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