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Utah’s Intermountain Healthcare plans to merge with Midwest system Sanford Health

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Intermountain Medical Center in Murray is pictured on Sunday March 8, 2020.

Intermountain Medical Center in Murray is pictured on Sunday March 8, 2020.

Jeffrey D. Allred, Deseret News

SALT LAKE CITY — Intermountain Healthcare announced Monday it plans to merge with Midwest health care system Sanford Health in an effort to create a “model” for the country and improve health outcomes throughout the West.

“These are two great organizations with strong histories that are economically and clinically very strong. This is not something that needs to happen. This is not a turnaround, this is something that should happen for the future of American health care,” said Dr. Marc Harrison, Intermountain Healthcare’s CEO and president.

He called the merger between the two systems that were both originally founded by religious groups — Intermountain by The Church of Jesus Christ of Latter-day Saints, and Sanford by Lutherans — “a match made in heaven.”

The health care industry is “plagued” by issues including waste, poor public health outcomes, and expensive care leading Americans to ration care and drugs, according to Harrison.

“We think the antidote to this is a system at scale across the interior West of the United States that’s predicated on population health and value and affordability and the people we’re privileged to serve,” Harrison said during a news conference announcing the merger.

Sanford Health is headquartered in Sioux Falls, South Dakota. Intermountain Healthcare is based in the Salt Lake City and has hospitals around the Intermountain West.

Intermountain Healthcare employs more than 41,000 people and has 23 hospitals and one virtual hospital across Utah, Idaho and Nevada. Sanford Health has 46 hospitals across 24 states and employs 48,000 people.

Last week, both companies’ boards voted unanimously to join together. A regulatory process review will now start, and the companies intend to merge in mid-2021.

Harrison and Kelby Krabbenhoft, president and CEO of Sanford Health, were introduced in April by former Utah Gov. Mike Leavitt, who Krabbenhoft said is one of his advisers. He said they realized they share a “common view of the future” within a few minutes of meeting.

“We have a mandate, Marc and I, and that is to rationalize, to make sense of large tracts of country and large populations in terms of how health care’s delivered, because people are so mobile today and expect to be able to move with their health care insurance, and with their health care provider organizations traveling with them,” Krabbenhoft said.

“So large geographies are now just a very common sense, very rational way for health care organizations to be talking to each other because we have to. That’s what our populations demand,” he said.

Harrison said the planned merger won’t affect Intermountain’s existing workforce.

“Their day to day should not change at all. They should keep working while we do our work around due diligence and the negotiations to get to the starting line, but (Sanford Health) have the time and attention of their leadership, and they have all the resources that they need,” Harrison said, explaining that neither of the systems need financial aid from each other.

Krabbenhoft said he would imagine “growth and opportunity” would be more likely when the merger takes place, rather than potential layoffs.

The pandemic has brought to light the importance of collaboration between health care systems, Harrison noted, as Intermountain has worked with University of Utah Health to fight COVID-19.

“And I look forward to over the years having the Sanford part of the system and the Intermountain part of the system ... working together collaboratively on any number of problems,” Harrison said.

Intermountain Healthcare will serve as the parent company of the two organizations, with headquarters remaining in Salt Lake City. Sanford Health will retain its name for its eastern hospitals.

Both companies’ boards will join together “largely as they exist now,” Krabbenhoft said, with Gail Miller remaining chairwoman of the board.

“She’s an incredible businesswoman and accomplished matriarch of her family, and someone that we are just really taken with,” Krabbenhoft said. A Sanford board member will later follow as chairman of the board, he said.

Harrison will remain president and CEO, with Krabbenhoft supporting him through the merger until his retirement in about two years, Krabbenhoft said.

Intermountain Healthcare began in 1974, when the Church of Jesus Christ donated 15 hospitals to the community on the condition that a not-for-profit organization would be formed to operate them. Sanford Health’s first hospital was founded by a board of Lutheran clergy and physicians in the late 1800s before it received its current name in 2007.