UnityPoint Health, One of the largest health care systems in Iowa and the Quad-Cities, has announced its intentions to merge with South Dakota's Sanford Health.
UnityPoint Health, based in Des Moines, and Sanford Health, based in Sioux Falls, South Dakota, signed a letter of intent that details their plans to combine, officials announced Friday. The merger — which could take effect by the end of the year if approved — would create a mammoth hospital system in the Midwest and Upper Great Plains.
"Our organizations share a deep commitment to exceptional patient care and a vision for transforming and sustaining health care in our communities," said Kevin Vermeer, president and CEO of UnityPoint Health, in the release. "We are approaching our discussions very purposefully, with a clear and common vision for success. First and foremost, our focus is on people. Working together, we will find new ways to broaden access to care – beyond the traditional settings – and take greater responsibility for the health of the populations we serve."
News of the potential merger comes on the heels of a federal judge on Thursday unsealing documents in a lawsuit against Sanford Health. Two doctors employed by Sanford Health are suing the company, accusing it of defrauding the federal government and harming patients by performing unnecessary surgeries. The lawsuit was filed in 2016.
The deal would be the latest big merger in the health care industry, where consolidating local hospital systems to create regional giants is becoming increasingly common.
A UnityPoint spokesperson would not comment on what the health system merging with Sanford might mean for hospitals in the Quad-City region, which also includes Trinity Regional Health System.
"Patients won’t notice any changes now," the spokesperson said. "While we are considering a partnership to create a better health care experience, these things take time. We are still in the early stages of this decision. In the meantime, patients can expect their care to continue as usual."
The combined company would have more than $11 billion in operating revenue, and rank among the top 15 largest nonprofit health systems in the country, according to the release. It would employ more than 83,000 staff and 2,600 physicians in 26 states and nine countries.
UnityPoint Health officials said they aim to become a world leader in personalized primary care. Through the partnership, it expects to offer greater access to research and treatment; access opportunities to participate in later-stage clinical trials; take advantage of Sanford's program that integrates genetic medicine into primary care; plus, implement pilot programs at a faster pace.
UnityPoint's system operates 32 hospitals and provides care throughout Iowa, western Illinois and southern Wisconsin. UnityPoint Health got its start in 1993 in Des Moines, when Iowa Methodist and Iowa Lutheran merged to form Iowa Health System. The provider changed its name in 2013.
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Sanford includes 44 hospitals, 482 clinics and more than 200 senior care centers in 26 states and nine countries, according to the release. Officials with the system also touted the benefits of a potential merger.
"We believe that in the very near future, fully integrated health systems will drive greater value through affordable options for high-quality health care to patients, governments and employers," said Kelby Krabbenhoft, president and CEO of Sanford Health, in the release. "The combination of Sanford and UnityPoint will help both organizations better meet this need, creating a new system positioned for continued growth across a broad geography."
Around 10 years ago, Sanford merged with MeritCare, of North Dakota. Last year, Sanford merged with the Good Samaritan Society.
In recent decades, large consolidations have been limiting competition in health care markets across the United States.
Doug Cropper, president and CEO of Genesis Health System — the other major hospital system in the Quad-Cities — commented on the growing trend of consolidation in the industry.
"To patients, this, unfortunately, means health care decisions affecting them may be made hundreds of miles away from where they receive their care," he said, boasting Genesis and its "predecessor organizations have been locally owned and locally governed for 150 years."
In the past, hospitals have argued consolidation results in lower prices and better services. But whether UnityPoint patients would see lower health care costs remains to be seen.
A November 2018 New York Times analysis showed the cost of hospital stays jumped between 11% and 54% in areas where hospitals consolidated. The news organization examined 25 metropolitan areas with the highest rate of consolidation from 2010 to 2013 — what the report calls a "peak period for mergers."
Merger announcements continue as the health care industry deals with added pressures. Politicians have been speaking out against hospitals' influence on prices. Hospitals have dealt with the federal government cutting Medicare. And specifically in Iowa, hospitals have been navigating the privatized state Medicaid system, which UnitedHealthcare recently pulled out of.
Both UnityPoint and Sanford are classified as nonprofit organizations. If the merger is approved by regulators, a new governing board would be established for the new company, according to the release. The company would be led by Kelby Krabbenhoft of Sanford and Kevin Vermeer of UnityPoint.
Officials have not said what the consolidated company would be named.