Utah’s largest hospital system, Intermountain Healthcare, is planning to merge with its counterpart in the Dakotas, Sanford Health, leaders of the two companies announced Monday.
“In many ways, this is a match made in heaven,” said Dr. Marc Harrison, president and CEO of Intermountain, in an online news conference from Sanford’s headquarters in Sioux Falls, S.D.
“We’re almost twins,” agreed Kelby Krabbenhoft, president and CEO of Sanford Health.
The two companies, if the merger succeeds, would have a combined workforce of 89,000 people, operating 70 hospitals, many of them in rural areas, according to Intermountain. The two companies also operate 435 clinics in seven states, provide senior care in 233 locations in 24 states, and provide insurance to 11 million people.
Intermountain and Sanford are the largest private employers in Utah and South Dakota, respectively.
The CEOs don’t expect layoffs because of the merger. Instead, Krabbenhoft said, “the odds are so much more significantly on the side of momentum and growth and opportunity.”
Marc Harrison, M.D. | Intermountain Healthcare president and CEO
The two companies, Harrison said, “are geographically disparate but culturally very much the same.” Among their similarities are the two companies' development of telehealth and digital services, and their care to rural communities.
Intermountain’s patients in Utah would see no changes to their service “in the short run,” Harrison said. Over the long term, he added, patients will see expanded services in telehealth, such as Intermountain’s MyHealthPlus portal — which has had more than 200,000 downloads since it launched this summer, and is expected to have 1 million downloads by the end of the year.
The boards of the two nonprofit companies each approved a resolution to move forward on a merger. Now begins a process to perform due diligence — which should take “about nine months of regulatory filings, planning and a lot of work that needs to be done,” Krabbenhoft said.
Harrison will serve as CEO of the combined companies, supported by Krabbenhoft, who said he’s nearing his 63rd birthday and had hoped to retire at 65.
“I couldn’t think of a better person to hand over what I’ve been overseeing for the last 25 years than Mark Harrison,” Krabbenhoft said.
The combined company’s headquarters will be in Salt Lake City, where Harrison lives, and it will have corporate offices in Sioux Falls. The Intermountain and Sanford names would be retained in the areas they serve now, Krabbenhoft said.
Gail Miller, chairwoman of the Larry H. Miller Group of Companies and chairwoman of Intermountain’s board, has been picked to lead the combined board of Intermountain and Sanford, Krabbenhoft said. It’s expected, he said, that someone from the Sanford side would be the chairperson after Miller.
Krabbenhoft and Harrison said they weren’t exactly looking to merge when they met. Krabbenhoft credited former Utah Gov. Mike Leavitt, who was secretary of Health and Human Services under President George W. Bush, with being “the matchmaker in this relationship.”
Krabbenhoft said he was in Salt Lake City to discuss another merger — he didn’t say with whom — that Leavitt “talked me out of.” (The Sioux Falls Argus Leader also noted Monday that the announcement comes a year after Sanford’s potential merger with UnityPoint Health, a health system based in Des Moines, after UnityPoint’s board voted to discontinue the plan.)
Krabbenhoft talked glowingly about Intermountain’s reputation in the industry, and remarked that he had never met its CEO.
Leavitt made a call — “when Gov. Leavitt calls, I always answer,” Harrison said — and the next morning the two CEOs were having a breakfast meeting.
“Within a few minutes, it was one of those ‘Aha!’ moments that suggested we should be talking about something bigger than ham and eggs,” Krabbenhoft said.
Harrison agreed. “Chemistry existed right off the bat,” he said.
Once the merger is finalized, Harrison said he expects other health care companies in the interior West to want to join in. “We think the vision of affordable high-quality care … is going to be extraordinarily attractive,” he said.
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