Intermountain Healthcare CEO Marc Harrison and Sanford Health CEO Kelby Krabbenhoft announced a merger on Monday in Sioux Falls. (Photo: Gabrielle Pike)

Sanford Health CEO Kelby Krabbenhoft announced Monday that Sanford is planning to merge with Intermountain Health, a Salt Lake City based health system and Utah’s largest private employer.

The alliance shifts top leadership to Intermountain Health, as Krabbenhoft serves as president emeritus and Dr. Marc Harrison, president and CEO of Intermountain, serves as president and CEO. Headquarters will also move to Utah while corporate offices will be in Sioux Falls.

The merger creates a sprawling $15 billion health system whose service area spans the western United States and Upper Midwest. Besides health care, both entities operate a private health insurance business, and Sanford also owns the Evangelical Lutheran Good Samaritan Society.

Both organizations will keep their current names for the “foreseeable future.” The parent company will be Intermountain Healthcare.

‘A match made in heaven’

The organizations plan to officially combine by summer 2021, pending regulatory approvals. Harrison and Krabbenhoft started discussing the merger after meeting in April. Krabbenhoft said he was introduced to Harrison by Utah Gov. Mike Leavitt while on a business trip to Salt Lake City.

“In many ways this is a match made in heaven,” Harrison said during Monday’s announcement.

On paper, the two systems are similar. Intermountain operates 24 hospitals and 215 clinics in Utah, Nevada and Idaho. The system employs 41,700 people, including 2,971 physicians and advanced-practice providers.

Sanford employs 47,757 at its 46 medical centers and 210 clinics. Of those, 2,633 are physicians or advanced-practice providers. Sanford is South Dakota’s largest private employer.

Both systems operate large hospitals in their metropolitan service areas as well as operate in rural settings. The combined organization will employ more than 89,000 people and operate 70 hospitals.

“You get a cultural match that really is quite powerful,” Krabbenhoft said.

“This is two really strong organizations coming together,” Harrison said. “It’s not me sending a check to Kelby, and it’s not him sending one to me.”

But where the two organizations differ is in the strength of their private health insurance businesses, Krabbenhoft said. Intermountain’s health insurance business, SelectHealth, has more than 900,000 members and about $4 billion in revenue. The Sanford Health Plan has about 210,000 members and about $1 billion in revenue. 

Krabbenhoft said that Sanford has been stymied over the years in its efforts to build up a stronger insurance pool and that the merger “really solves a problem for us.”

“It’s just a scale issue,” he said.

Sanford Health has history of expansion

Monday’s announcement confirmed rumors that had been swirling for weeks in Sioux Falls, and it marks another chapter in Sanford’s drive to expand, which included the system’s merger with the Good Samaritan Society in 2018. A decade ago, Sanford merged with North Dakota-based MeritCare, which deepened its reach into the Upper