SIOUX FALLS, S.D. - The parent corporation in the new Sanford-MeritCare network will be officially based in North Dakota rather than South Dakota, a detail officials said is part of setting up the regional health giant.
"We knew it had to be in one of the two states and agreed it would be in North Dakota, with corporate offices in both Sioux Falls and Fargo," said Mark Johnston, a vice president for Sanford.
"I don't know if there's any specific reason. It's just part of the 'merger of equals' approach the two boards took during these discussions," he said.
The decision to register in Bismarck instead of Pierre concerns only the parent corporation, which will oversee smaller Sanford and MeritCare corporations that will continue to operate in both states under the new name of Sanford-MeritCare.
Selecting North Dakota as the domicile, or home base, has no bearing on plans for operating dual headquarters in both Sioux Falls and Fargo, Johnston said.
ADVERTISEMENT
Still, the decision touches a nerve because of economic concerns and the interest in how the merger will play out.
"Really?" said David Owen, president of the South Dakota Chamber of Commerce and Industry, when told of the Sanford decision.
"You will always find things that are going to give people cause for pause," Owen said. "In South Dakota, it makes us wonder, 'Hmm, what about that?' And if you're in North Dakota, you're thinking, 'Geez, this Sanford is a 400-pound gorilla. How's this going to go?' "
That's the concern of a Fargo group still awaiting assurance from MeritCare that the merger won't hurt their community. Former Mayor Bruce Furness said incorporating in North Dakota does not allay any fear. The issues are "the same ones as before - potential loss of jobs, loss of local control, assurance of continued quality of medical care in the Fargo region," he said.
Officials have said the merger will increase employment and medical services in both communities.
Owen doesn't think the site of incorporation will cause any alarm when people consider the reliable histories of health care networks in the Dakotas.
"I'd be much more concerned about functions and good-paying jobs that come with key administrators," he said. "That's more important than technicalities of where certain papers are filed, particularly in health care."
Still, decisions about a home base can put corporate goodwill at stake.
ADVERTISEMENT
"That can be an inflammatory thing, but it should not be," said Tom Geu, professor at the University of South Dakota Law School. "It is a marriage, but they will be one place or the other for the purposes of the law. They can't be both."
Geu doesn't think Sanford is at risk by choosing Bismarck. "There shouldn't be a problem, as long as they're keeping a strong presence in South Dakota. It sounds like they're doing that," he said from Vermillion.
The two states have similar rules. A new corporation in North Dakota would pay a $50 filing fee, said Clara Jenkins, director of business systems and programs in the North Dakota secretary of state's office in Bismarck. In South Dakota, a nonprofit would pay $30 to incorporate as an in-state business or $125 if out-of-state and doing business here, said Secretary of State Chris Nelson in Pierre.
At the board level it wasn't a big debate, said Ron Moquist, president of Raven Industries and vice chairman of the Sanford trustees. "That's a legal question, not really a question the board would discuss and bring up," he said. "It's not something that's going to make a lot of difference."
Johnston said that in terms of filing for incorporation, "There's no material difference between North and South Dakota."
