FARGO — Sanford Health and Intermountain Healthcare, based in Salt Lake City, have announced plans to merge next year and form a health system with a sprawling geographic reach extending from the Mississippi River to the Rocky Mountains.

The boards of the two health systems voted on Friday, Oct. 23, to sign a letter of intent to merge next year and form what’s believed will be the nation’s sixth or seventh largest health system, which will include a network including hospitals, clinics, long-term care facilities and health insurance.

The Sanford name will continue in Sanford’s service area, while the Intermountain name will remain in its locations, but the new parent not-for-profit organization will be Intermountain Healthcare with headquarters in Salt Lake City and corporate offices in Sioux Falls, S.D.

Once the merger takes place, Sanford CEO Kelby Krabbenhoft will remain as CEO emeritus for two years, continuing his role in charting strategy and growth opportunities. Krabbenhoft, whose 40-year career in health care administration includes 25 years at the helm of Sanford, also will join the board of the merged organization.

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Intermountain Healthcare Medical Center
Intermountain Healthcare Medical Center

“I’m really comfortable with this,” Krabbenhoft told The Forum. “I’ve been doing this for 40 years and am anticipating my retirement in a couple of years,” a timetable he announced five years ago to his executive team.

Dr. Marc Harrison, a pediatric critical care specialist and Intermountain’s CEO, will be the top executive of a merged organization employing 89,000 people operating 70 hospitals and 435 clinics in seven states, providing senior care in 233 locations in 24 states and insuring 1.1 million.

Intermountain Health describes itself as the largest health provider in the intermountain west.

Combined, the two health systems will form an integrated health delivery system that will strive to deliver value and affordable care.

“Intermountain and Sanford have a shared vision of the future of health care and have aligned values needed to better serve more communities across the nation,” Harrison said. “This merger enables our organization to move more quickly to further implement value-based strategies and realize economies of scale.”

Mark Harrison, CEO of Intermountain Healthcare, based in Salt Lake City, Utah. Special to The Forum
Mark Harrison, CEO of Intermountain Healthcare, based in Salt Lake City, Utah. Special to The Forum

That will be accomplished, he said, through coordinated care, increased use of telehealth and digital health services.

Intermountain has been a leader in digital health delivery, including creation of a “digital hospital” that brings together 50 services, as diverse as infectious disease and neonatal care, with more in the pipeline.

An initiative in tele-critical health for Intermountain’s critical care units has succeeded in reducing mortality by 30%, reducing costs per case and decreasing length of stay, Harrison said.

“That continues to grow,” he told The Forum in a joint interview with Krabbenhoft to announce the planned merger. “This is totally scalable.”

Both health systems serve areas encompassing vast territories, with a few metropolitan centers but largely sparsely populated rural areas that benefit from extensive telehealth offerings, both executives said.

“As health systems we have to deliver care across a wide geography,” said Krabbenhoft. Sanford’s service area centers on North Dakota, South Dakota, Minnesota, Iowa and Nebraska, while Intermountain primarily serves Utah, Nevada and Idaho.

“We sort of look at each other across Wyoming,” Harrison said.

Once the merger is accomplished next year, pending state and federal approval, Intermountain would consider other mergers “with the right partners,” including organizations that would help to connect their geographical services areas, Harrison said.

“It’s a pull, not a push from my perspective,” he said. Intermountain also will continue to invest in its system, in brick and mortar and especially in digital and telehealth platforms. “The right investments will be made,” Harrison said.

Besides its ability to serve patients in remote areas, telehealth and digital health can deliver care more affordably. Patients have learned to embrace telehealth during the coronavirus pandemic, he said.

Both systems also provide health insurance, although Intermountain’s health insurance operation is four or five times larger than Sanford’s, Krabbenhoft said.

Kelby Krabbenhoft
Kelby Krabbenhoft

Combining health delivery and insurance is an important ingredient in helping to better manage populations of patients and provides incentives to deliver high-quality care at an affordable cost, Harrison said.

“If you do it well it’s sort of the secret sauce,” he said. “It becomes incredibly powerful when everyone is pulling for you to stay well. It’s proven to be an incredibly powerful combo for us.”

The pending merger marks “another major milestone” in Sanford’s growth path, Krabbenhoft said, which began in 2007 with an infusion of $400 million from benefactor Denny Sanford and was catapulted by the 2009 merger with Fargo-based MeritCare Health System, which formed in 1993 when Fargo Clinic and St. Luke’s Hospital combined.

In fact, Krabbenhoft compared the planned Intermountain Health union with the MeritCare merger, which grew out of the 2009 Red River flood, when MeritCare CEO Dr. Roger Gilbertson asked Krabbenhoft if his health system could accept patients if emergency transfers were required.

Talks about their shared vision of health delivery and the benefits of a merger soon evolved, and once the merger took place, Gilbertson, who was nearing retirement, stepped aside.

Former Utah Gov. Mike Levitt served as a matchmaker in bringing together Krabbenhoft and Harrison. Their initial meeting took place in April at a hotel in Salt Lake City.

Levitt, who heads Levitt Partners, a health consulting firm, will join the Sanford board in December.

Gail Miller, who heads a group that owns the Utah Jazz professional basketball franchise, is chairwoman of the Intermountain group, a role she will continue to hold in the merged organization.

After her term ends, however, a member of the Sanford board will assume the top board position, Krabbenhoft said. An executive committee of the merged board will be created with equal representation from each of the two boards.

The Sanford board unanimously voted in favor of the letter of intent to merge with Intermountain, Krabbenhoft said.

Intermountain was ranked in the top five nationally in a peer review compiled by Health Reputation, recognized as a model for innovation and for delivering “high quality care at sustainable costs.”

After merging with MeritCare in 2009, Sanford merged with health systems in Bemidji, Minn., and Bismarck, resulting in hubs in Fargo, Sioux Falls, Bemidji and Bismarck. Proposed mergers with Fairview Health System in Minnesota and UnityPoint Health in Iowa did not materialize.

Harrison became president and CEO of Intermountain Healthcare in 2016. He previously held executive positions with the Cleveland Clinic.