Midwest hospital systems complete $10B mega-merger

Less than six months after announcing plans to come together, Sanford Health and Marshfield Clinic Health System have completed their merger to form a $10 billion system.

Sanford Health and Marshfield Clinic Health System have completed their merger. Bill Gassen, left, president and CEO of Sanford Health, will lead the organization. Brian Hoerneman will serve as president and CEO of the Marshfield Clinic region of Sanford Health.

With the deal, Marshfield Clinic will become a part of Sanford Health. The joined organization includes a network of 56 hospitals, 4,500 providers and nearly 56,000 employees across the rural Midwest. Sanford and Marshfield announced the completion of the merger Thursday.

Sanford Health, based in Sioux Falls, S.D., operates 45 hospitals and more than 200 clinics, serving patients in South Dakota, North Dakota, Minnesota and Iowa. Marshfield Clinic, based in Marshfield, Wisc., runs 11 hospitals and more than 60 clinics in Wisconsin and Michigan’s upper peninsula.

While Marshfield Clinic becomes a region of Sanford Health, the Marshfield Clinic brand name will continue in Wisconsin and Michigan, the organization said.

Bill Gassen, president and CEO of Sanford Health, leads the merged organization. Gassen said the “historic milestone paves the way for us to advance world-class care across the rural Midwest.”

“Together, we will reimagine the future of local, patient-centered nonprofit health care by expanding services, enhancing access and harnessing innovative technologies to improve the health of our communities,” Gassen said in a statement. “We are thrilled to welcome 13,000 new employees from Marshfield Clinic Health System to our Sanford family and look forward to embracing all of the new possibilities that lie ahead.”

The two systems first announced plans to merge in July. The Sanford-Marshfield Clinic deal was one of the largest hospital deals announced in 2024, according to Kaufman Hall, the consulting firm.

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Marshfield Clinic, which has been facing some financial challenges, had been looking for a merger partner in recent years.

The Wisconsin system had initially planned to merge with Essentia Health in Minnesota. But in January, the organizations said that they would not be coming together after all. Marshfield Clinic announced furloughs last January to cut costs. Citing financial difficulties, Fitch Ratings downgraded Marshfield Clinic’s bonds from “BBB+” to “BBB” and projected a negative outlook in a January 2024 report.

Brian Hoerneman, who had been serving as interim CEO of Marshfield Clinic, will serve as president and CEO of the Marshfield Clinic region of Sanford Health.

“Our partnership brings together two organizations deeply committed to advancing health care for the people and communities we serve in rural America,” Hoerneman said in a statement.

Hoerneman had said that joining Sanford was the right move for the organization, as the two systems shared similar values. With the completion of the merger, he expressed optimism for the future.

“I am excited about the opportunities ahead as our teams learn from each other and combine our complementary strengths, cultures and missions,” Hoerneman said in a statement. “Together, we will build on our shared legacy, creating a future where every person, regardless of zip code, has access to the best possible care.”

Both Sanford and Marshfield Clinic operate health plans (Sanford Health Plan and Security Health Plan), and the two plans will continue operations under common management, officials said. Dr. Tommy Ibrahim, executive vice president and president and CEO of Sanford Health Plan, will lead the health plans. The plans serve more than 425,000 members.

Fitch Ratings gave Sanford a stable outlook in a September 2023 report, noting the system’s diverse mix of revenue sources from its providers, insurance plan and long-term care division.

“Sanford's geographic multi-state dispersion (located in four states for acute care services), solid market presences and the fact that it's not dependent on any one location for operational success, continues to be a notable credit positive,” Fitch said.

The organization said it is in the process of combining the two systems, and patients will continue to see their familiar providers.

With the completion of the merger, three board members of Marshfield Clinic now hold seats on the Sanford Health board of trustees, the system said.

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