MMIT Payer Portrait: Sanford Health Group

Sanford Health Group is the health insurance unit of Sanford Health, a large, integrated nonprofit health system of 47 hospitals based in Sioux Falls, South Dakota. It is the second-largest insurer in both its home state and neighboring North Dakota and also has a presence in Iowa, Minnesota and Nebraska. Sanford largely serves the commercial health insurance markets, having a strong presence in both the North and South Dakota exchange markets. The majority of its members are enrolled in risk-based commercial insurance products. UnitedHealth Group’s OptumRx serves as Sanford’s pharmacy benefits manager and also facilitates most of its specialty pharmacy benefits.

Sanford Health and Minneapolis-based system Fairview Health Services on Nov. 15 announced their intent to combine organizations, with Sanford serving as the combined system’s parent company. The deal would create one of the largest health systems in the Midwest — together, the two orgs brought in about $14 billion in revenue in 2021. A press release about the deal emphasized Sanford’s experience serving rural communities and Fairview’s experience serving urban communities as a driving force for a merger both organizations hope will improve health equity and overall population health across their service areas. The companies expect to close the deal sometime in 2023, pending antitrust review.

This is not the systems’ first attempt at a merger, however, and the new deal could come under fire from regulators. Sanford and Fairview previously had plans to combine in 2013, but the move was called off after an uproar from Minnesota officials, which included legislation that would have blocked the merger. Fairview operates the University of Minnesota’s teaching hospitals, which sparked concerns about whether out-of-state ownership would be in the public’s best interest, according to an article about the merger in the St. Paul Pioneer Press.

Sanford has been on the hunt for a merger for the past few years. The system previously weathered failed deals with Iowa-based UnityPoint Health in 2019 and Salt Lake City’s Intermountain Healthcare in 2020. The Intermountain merger would have created a system of more than 70 hospitals and provided health insurance to more than 1.1 million people, but the deal was called off after longtime Sanford CEO Kelby Krabbenhoft’s abrupt departure from the organization. Krabbenhoft had made controversial statements about his refusal to wear a mask amid the COVID-19 pandemic and was replaced by current CEO Bill Gassen.

SOURCE: AIS’s Directory of Health Plans as of November 2022; MMIT Analytics as of 4Q 2022.

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