Sanford Health looks west

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Talk about it

FARGO — Sanford Health moved closer to extending its reach into the western part of the state Monday with the announcement it’s signed a letter of intent to merge with Bismarck-based Medcenter One.

The move would stretch the borders of Sanford — a six-state system with sites from northern Iowa to central North Dakota — west into the fertile territory of the states’ Oil Patch.

“The demands for care out there are very compelling,” said Kelby Krabbenhoft, Sanford’s president and chief executive.

He spoke to Forum Communications on Monday alongside Craig Lambert, president and chief executive of Medcenter One. Lambert said Sanford’s culture and the economic advantages of consolidation make the move an attractive one.

“We see the future as economies of scale,” he said.

Krabbenhoft would likely head the merged company. Sanford, which has more than 1,600 beds to Medcenter One’s 228, will also likely wind up with dibs on the name.

“We know full well what Sanford represents,” Lambrecht said. “We’re very comfortable with that. We’re ready for that.”

He also said it’s important to Medcenter One that Bismarck and Mandan become a hub for the company. Sanford has headquarters in Fargo and Sioux Falls, S.D.

A merger would push the combined annual revenues of the companies past $3 billion. Sanford, alone, does about $2.3 billion in revenues.

Long time coming

Krabbenhoft said he and Lambrecht first started talking even before Sanford’s merger with MeritCare three years ago. Those conversations eventually blossomed into the current merger discussion.

The letter of intent is nonbinding. The boards of both companies still must approve the plan, along with federal and state regulators. That could happen this summer, with an effective merger date set for fall.

Jerry Jurena, president of the Bismarck-based North Dakota Hospital Association, said the letter of intent comes as no surprise after months of rumors and reports the two companies were in talks.

He said patients likely won’t see many changes because the systems already cooperate on many levels, like sharing patients and resources.

“They’ve already been working together,” he said. “There just has never been a formal agreement.”

He said hospital systems that consolidate do so in search of efficiencies and economies of scale, and to broaden the specialties they offer.

Along with Sanford, Minot-based Trinity Health, Altru Health System of Grand Forks and Essentia Health, which spans four states, are the largest systems in the region.

Eccher reports for Forum Communications, which owns The Herald.

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