SIOUX FALLS, S.D. (KELO) – Two health care systems that have been looking for partners apparently found one in each other.
Sanford Health of Sioux Falls announced Wednesday that is has signed a merger agreement with Marshfield Clinic Health System of Marshfield, Wisconsin.
The merger is expected to close at the end of the year, according to a news release from Sanford.
If the merger is completed, it would end several years of searching by both systems.
Sanford had a failed attempt to merge with UnityPoint Health of Iowa in 2019. Another attempt in 2020 with Intermountain Healthcare of Utah failed in 2020. In 2023, Sanford withdrew from a proposed merger with Fairview Health Services of Minnesota after concerns were raised by labor groups, the University of Minnesota and the attorney general. Fairview is associated with the University of Minnesota.
Marshfield attempted a merger with Gundersen Health System of Wisconsin in 2019 but it failed. A merger attempt that started around 2022 with Essentia Health of Minnesota was called off by Essentia in part because of Marshfield’s rough finances, according to industry publications and media reports.
What are Sanford and Marshfield getting from the merger?
Marshfield would get a partner that according to financial and financial credit analysts is financial healthy. Sanford has a AA-ranking with a stable financial outlook, Fitch said in August.
A Fitch rating is based on the credit worthiness of the system.
In February Becker’s Healthcare said that Sanford reported an operating income of $402.2 million in 2023 which was more than double the $192.3 million in 2022.
Marshfield has had financial struggles. It placed 3% of its workforce on furlough in January. Later, it said employment for those furloughed employees would end in early May.
Media, including industry publications, have reported that the Marshfield system had $3.1 billion in revenue in fiscal year 2023 but had a $250.8 million operating loss. The layoffs in early 2024 did result in a $12.6 million operating gain for the first quarter.
In January, Fitch had downgraded Marshfield’s rating to BBB from BBB+ for its credit rating. In June, it updated the outlook to stable from negative.
Standard & Poor’s also downgraded Marshfield to BBB in June. It declared the outlook negative for Marshfield. S & P said while Marshfield’s finances improved in the first quarter of fiscal year 2024, there are concerns about how it would reach 2024 break-in targets.
A merger would increase the size of each system. Marshfield has about 10,000 employees including more than 1,200 providers over 170 specialties, according to its website. It has more than 60 locations. It has 11 hospitals and serves communities in Wisconsin and the Upper Peninsula of Michigan.
Sanford has more than 400 locations. It also has more than 1,300 physicians. Sanford has more than 25 hospitals.
In July, officials said if the two health systems merge, the combined system would be 56,000 employees and 56 hospitals.
