Health systems announce merger updates, expansion plans as 2024 gives way to 2025
Although Sioux Falls, S.D.-based Sanford Health anticipated finalizing its merger with Marshfield (Wis.) Clinic Health System before the end of the year, the nonprofit organizations announced their official integration on Jan. 2.
Marshfield Clinic Health System, now referred to as the Marshfield Clinic region of Sanford Health, serves rural Wisconsin and Michigan’s Upper Peninsula. With the merger, the combined health system also serves Iowa, Minnesota, North and South Dakota, and Wyoming.
“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,” said Bill Gassen, Sanford Health’s CEO. “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 health systems signed a nonbinding agreement in July to combine their assets and create an integrated system with 56 hospitals and nearly 56,000 employees, including approximately 4,500 providers.
The newly combined entity also has research institutions, specialty pharmacies, and two fully integrated health plans, Sanford Health Plan and Security Health Plan. According to the announcement, Dr. Tommy Ibrahim, president and CEO of Sanford Health Plan, will oversee Security Health Plan as well, though the health plans will maintain their existing operations.
“I am excited about the opportunities ahead as our teams learn from each other and combine our complementary strengths, cultures and missions,” said Dr. Brian Hoerneman, who served as interim CEO of Marshfield Clinic Health System and is now president and CEO of Marshfield Clinic region of Sanford Health. “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.”
A process is underway to establish a regional board of community leaders to govern the operations and strategy of the Marshfield Clinic region.
In mid-December, St. Louis-based Ascension received approval from the Illinois Health Facilities and Services Review Board to sell nine of its hospitals in the state to Ontario, Calif.-based Prime Healthcare. The $375 million deal would also include four post-acute and senior living facilities, as well as two ambulatory surgery centers.
Seven of the nine hospitals included in the transaction would become for-profit entities, while Ascension Saint Francis in Evanston and Ascension Saint Mary-Kankakee would remain non-profits. Ascension is still waiting on approval from the Archdiocese of Chicago before finalizing the sale.
If the deal is completed early this year, Prime Healthcare intends to invest $250 million to upgrade systems, facilities and technology at the Ascension hospitals. Illinois would be a new market for Prime. which has 45 hospitals in 14 states, according to the organization’s website.
Renton, Wash.-based Providence received a less encouraging notification in mid-December when the Oregon Health Authority determined the health system’s planned joint venture with Compassus — a national, for-profit, private equity-backed provider of integrated home-based care with headquarters in Brentwood, Tenn. — must be reviewed under Oregon’s Health Care Marketing Oversight (HCMO) program, which was launched in 2022.
When Providence and Compassus announced their plans for the joint venture in October, they expected to finalize the transaction by year-end, but the review process under the HCMO program takes anywhere from 30 days to 180 days.
If the joint venture is approved, Providence would transfer partial ownership of 24 home health locations in Alaska, California, Oregon, and California, along with 17 hospice and palliative care locations in Alaska, California, Oregon, Texas, and Washington, to Compassus, who would manage the facilities.
Compassus has formed similar joint ventures with other health systems, including Ascension, Cincinnati-based Bon Secours Mercy Health, and Columbus-based OhioHealth, Becker’s Health IT reported.
Meanwhile, shortly before the holiday break, two other large health systems revealed plans to make substantial investments in their facilities and services.
Advocate Health Care announced it would spend $1 billion to expand access to primary care, specialty care, and wellness services on Chicago’s South Side by adding more locations, additional preventive care services and programs, and a new community hospital.
Developed with considerable input from the community, the wellness model for the expansion is intended to help address “the significant health inequities” between residents of the city’s South Side and those on the North Side.
“We have built a model that gets at the heart of chronic disease and wellness through much greater access to extensive prevention, health management tools, and education designed to help South Side residents live their healthiest lives,” said Michelle Blakely, president of Advocate Trinity Hospital.
About $300 million of the total $1 billion investment will be used to build a state-of-the-art, 52-bed hospital that will replace the existing Advocate Trinity Hospital building, which is more than 115 years old.
Advocate is the largest health system in Illinois.
In Northern California, Sutter Health plans to invest more than $800 million to renovate two vacant office campuses into “flagship health care destinations.” The campuses are less than a mile apart; combined, they include approximately 1 million square feet.
The larger of the two, the Sutter West Santa Clara Campus, will focus on specialty services and feature four destination centers of excellence: orthopedics and sports medicine; cancer; women’s health; and heart and vascular care.
The Sutter East Santa Clara Campus will offer comprehensive primary care, a broad variety of specialty clinics, urgent care, pediatric care, an advanced diagnostic lab and imaging, and an ambulatory surgery center.
The Palo Alto Foundation Medical Group and The Sobrato Organization are collaborating with Sutter Health on the initiative. The project will be completed in phases, with the first building expected to open in the second half of this year.
What else you need to know
The Department of Justice is suing CVS, alleging the company knowingly filled prescriptions for opioids and other controlled substances “that lacked a legitimate purpose, were not valid, and/or were not issued in the usual course of professional practice” from Oct. 17, 2013, to the present, according to a press release.
In the civil complaint, which was unsealed in Providence, R.I., on Dec. 18, the DOJ claimed that CVS Pharmacy and various subsidiaries filled a large number of unlawful prescriptions for “dangerous and excessive quantities of opioids, early fills of opioids, and ‘trinity’ prescriptions,” referring to “an especially dangerous and abused combination” of an opioid, a benzodiazepine, and a muscle relaxant. The DOJ said CVS allegedly also filled large quantities of prescriptions for controlled substances written by prescribers known to engage in “pill mill practices.”
The violations, according to the complaint, “resulted from corporate-mandated performance metrics, incentive compensation, and staffing policies that prioritized corporate profits over patient safety.” The DOJ alleged that CVS violated both the Controlled Substances Act and, where the company sought reimbursement from federal health care programs, the False Claims Act. If found liable, CVS could face civil penalties.
In a statement issued in response to the lawsuit, CVS Health said pharmacists are “held to vague, undefined, and ever-changing standards of practice” when it comes to filling opioid prescriptions.
Eli Lilly’s weight-loss drug, Zepbound (tirzepatide), is the first drug to gain FDA approval as a treatment for obstructive sleep apnea (OSA). Specifically, Zepbound is approved for treating moderate to severe OSA in adults who are considered obese and is to be used along with a reduced-calorie diet and increased physical activity. According to Lilly, clinical trial results showed that Zepbound was significantly more effective than placebo in reducing breathing disruptions in adults who do and do not use a continuous positive airway pressure machine.
A subcutaneous version of BMS’ blockbuster cancer drug Opdivo received FDA approval late last month, making it the first PD-1 inhibitor to be approved for subcutaneous administration. Branded as Opdivo Qvantig, the injectable drug is a combination of nivolumab and recombinant human hyaluronidase. It is approved in most previously approved adult, solid tumor Opdivo indications as both monotherapy and combination therapy, BMS noted in a press release. An exception, Fierce Pharma pointed out, is that Opdivo Qvantig cannot be used in combination with BMS’ Yervoy (ipilimumab). Administration time for Opdivo Qvantig is three to five minutes, compared with a 30-minute infusion time for Opdivo.
Elevance Health completed the acquisition of Indiana University Health Plans, a managed care organization created by IU Health that serves 19,000 Medicare Advantage members in 36 Indiana counties as well as 9,600 fully insured commercial plan members through employers. The amount of the transaction was not disclosed. IU Health Plans will operate as part of Elevance Health’s Anthem Blue Cross and Blue Shield.
NeueHealth, formerly Bright Health, entered into a definitive merger agreement on Dec. 23 under which it will become a privately held company. NeueHealth is to be acquired by an affiliate of New Enterprise Associates (NEA) in a deal that sets NeueHealth’s enterprise value at approximately $1.3 billion. According to Fierce Healthcare, venture capital firm NEA already owns more than 60% of NeueHealth.
The agreed-upon acquisition price of $7.33 per share of common stock represents a premium of about 70% relative to the stock’s closing price on the day the transaction was announced, according to a corporate news release. For context, Bright Health raised almost $1 billion in its initial public offering in June 2021, and that month the company’s stock traded at a high of nearly $1,430 per share.
The transaction with NEA is subject to customary closing conditions, including regulatory approval.
Health Systems Are Struggling to Keep Up With AI—A National Registration System Could Help. JAMA, 12.20.24
A Value-Based Primary Care Model That Doubles Primary Care Investment. Health Affairs, 12.18.24
Evernorth’s Perlberg bullish on $400B specialty pharmacy market. Modern Healthcare, 12.30.24 (subscription required)
