SD based Sanford proposes merger to leverage lower admin costs with insurers

There’s no putting the breaks on this merger.

Sanford Health is exploring a merger with Des Moines-based UnityPoint Health to create a large health system that includes dozens of hospitals and nursing homes plus hundreds of medical clinics across six states including Minnesota. … The deal would fit with a broader merger trend where health care groups are getting bigger on the theory that size will help them operate more efficiently and push back against cost pressures.

The trend is true. The theory goes that, as opposed to acquisitions, mergers like this possible one is the increasing need for health orgs to consolidate to reduce waste – expressed in terms of needless expense.

UnityPoint Health has a joint venture health insurance company that’s co-owned Bloomington-based HealthPartners. Two years ago, HealthPartners announced plans to offer certain Medicare health plans in conjunction with Sanford Health for beneficiaries in North and South Dakota. … Sanford Health operates its own health insurance company, which holds an HMO license in Minnesota. … The merger could help the nonprofit groups reduce administrative and operating costs, while also giving them more leverage to negotiate payment rates with health insurers, said Daniel Zismer, co-founder of Castling Partners, a health care advisory and development firm in the Twin Cities.

All this, and the potential for top-3 market share in Minnesota.

Michael L. Douglas @doctorpundit

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