MN AG allows Sanford Health acquisition of North Memorial Health

South Dakota-based Sanford Health may move forward in acquiring North Memorial Health next month after the hospital systems signed a 10-year oversight agreement with the Minnesota Attorney General’s Office.

As part of the agreement, Sanford committed to maintaining hospital and emergency services at North Memorial’s Robbinsdale hospital, which is the health system’s flagship safety net hospital, for the next decade. The 10-year agreement is far longer than Sanford’s initial commitment to maintain core services at Robbinsdale for only two years. The agreement also stipulates that North Memorial maintain its extensive emergency transportation services across the state for 10 years.

“We’ve talked about the financial concerns of the hospital. We now have a path forward,” said North Memorial CEO Trevor Sawallish, who spoke at a press conference Friday, Aug. 28, outside the Robbinsdale hospital alongside Minnesota Attorney General Keith Ellison and Sanford CEO Bill Gassen.

The proposed acquisition had alarmed healthcare advocates and labor leaders, who worry further consolidation will hurt patient care, drive up costs and lead to the reduction of critical services at Robbinsdale and the possible closure of one of the state’s few Level 1 trauma centers there. A coalition of union organizers and faith leaders advocated for a “community benefits agreement” with worker and patient protections throughout the merger review, including at public forums held by the Attorney General’s Office.

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JaNaé Bates, the co-director of the progressive ecumenical group ISAIAH, said that much of what’s in the final agreement was included in the coalition’s original proposal.

“Robbinsdale Hospital remaining open for at least 10 years with its full services is incredible,” Bates said at the news conference alongside the hospital leaders.

Citing the hospital’s financial troubles, Sawallish previously said that North Memorial risks closing unless it’s acquired by Sanford. The Robbinsdale hospital has been losing money, in part because many patients are uninsured or on lower-paying government insurance. The Legislature approved a cash bailout of Hennepin County Medical Center, another struggling safety net hospital, but a proposal for additional cash assistance to North Memorial was dropped by the time the bailout was passed.

The agreement binds Sanford to maintaining Robbinsdale’s Level 1 trauma center, its emergency department, cardiac and cath lab services, labor and delivery, ICU, stroke care, reproductive health and gender affirming care, mental health services and oncology services for 10 years.

The merger also includes protections for union contracts, $100 million of upgrades to the Robbinsdale hospital and $500 million in investments to North Memorial’s newer, income-generating hospital in the more affluent Maple Grove area. The transaction is set to close on Sept. 1, the Star Tribune reported.

The proposed acquisition of North Memorial by the $11.7 billion Sanford Health is part of a broader trend of healthcare consolidation — hospitals and clinics combining into sprawling health systems. Evidence has shown that consolidation has led to higher prices, though effects on quality of care are less clear, according to health policy research organization KFF.

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The Minnesota Attorney General’s Office was bestowed with expanded regulatory powers over healthcare mergers by the Legislature in 2023. It’s now able to analyze and sue to block hospital mergers if they are against the public’s interest — for example, if they increase healthcare costs for patients.

Sanford has unsuccessfully tried to enter the Twin Cities before, with proposed acquisitions of Fairview Health in 2013 and again in 2022. The effort faced intense scrutiny from the Attorney General’s Office, especially after the 2023 law gave the attorney general sign-off power on any out-of-state or for-profit acquisition of University of Minnesota health facilities.

In signing the oversight agreement, the Minnesota Attorney General’s Office gave its blessing to the merger, though it still has the ability to intervene if Sanford doesn’t meet the terms.

The Attorney General’s Office has also been reviewing the proposed acquisition of the Upper Midwest’s health giant Allina Health by the even bigger California system, Sutter Health.

The community benefits agreement coalition published a statement lauding the North Memorial-Sanford oversight agreement and contrasting it with Allina and Sutter’s leadership’s failure to meet with the coalition.

Minnesota Reformer is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Minnesota Reformer maintains editorial independence. Contact Editor J. Patrick Coolican for questions: info@minnesotareformer.com.