Proposed combo of Intermountain, Sanford likely to win regulatory OK
THE PLANNED MERGER of not-forprofits Intermountain Healthcare and Sanford Health is likely to sail through antitrust approval, thus creating the country’s seventh-largest not-for-profit health system by revenue.
Salt Lake City-based Intermountain and Sioux Falls, S.D.-based Sanford signed a letter of intent to form a 70-hospital system with about $15 billion in annual revenue. The CEOs of both said their boards unanimously approved the move, and they expect to close by summer 2021.
The proposed system, called Intermountain Healthcare, would be led by Intermountain CEO Dr. Marc Harrison and would keep Intermountain’s headquarters in Salt Lake City. The system would employ more than 89,000.
Sanford operates in North Dakota, South Dakota, and parts of Iowa and Minnesota. Intermountain is in Utah, Idaho and Nevada. M& A experts said they think that puts the deal in relatively safe territory from an antitrust view.
In order to prove anticompetitive harm, the Federal Trade Commission would need to undermine the work the agency has done over the past 15 years focusing on local markets, said Kevin Hahm, a partner in Hunton Andrews Kurth’s antitrust group.
Jordan Shields, a partner with Chicago-based healthcare M& A consulting firm Juniper Advisory, agreed that the likelihood of regulatory interference is low. “Typically where systems run into trouble is when they have geographic overlap, either acute-care facilities or, increasingly, issues with physician employment overlap,” he said
Sanford and Iowa-based UnityPoint Health called off their $11 billion merger just under a year ago citing differences in vision. That illustrates to Hahm that the bigger hurdle could be cultural.
Sanford CEO Kelby Krabbenhoft said an FTC decision would be expected in mid-January. North Dakota’s attorney general also has a 90-day review.
Sanford drew almost $7 billion in total revenue in 2019, and almost $100 million in operating income in the first half of 2020 on $3.1 billion in revenue. Intermountain earned $374 million in operating income on $7.6 billion in revenue in 2019.