Bloomington, Minn.-based HealthPartners and Duluth, Minn.-based Essentia Health announced Sept. 29 that their boards approved an agreement to combine, forming a nonprofit system with 22 hospitals, more than 135 clinics, 6,000 clinicians and 45,000 colleagues. The combined organization will be called HealthPartners and led by HealthPartners President and CEO Andrea Walsh. David Herman, MD, CEO of Essentia since 2015, will serve as president of combined clinical care group operations, and Essentia facilities will keep the Essentia Health name while operations are integrated.
No money is changing hands. The organizations will combine their assets under a single community-based board and expect the combination to be effective Jan. 1, pending a Minnesota public interest review and federal filings.
The deal is the latest in a run of consolidation reshaping Minnesota’s health system market.
Ms. Walsh and Dr. Herman spoke with Becker’s after the announcement about why they chose to combine now, how the deal is structured and what they would tell other CEOs weighing similar decisions.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: Why combine now, and what made this the right moment and the right partner for each of you?
Andrea Walsh: From our standpoint, as we look at the needs in the community today and think about what the future looks like, our belief is that our two strong organizations coming together bring complementary strengths that will enable us to navigate and provide better solutions for our patients, members and the community longer term. We’re excited about being able to keep care closer to home, make coverage and care more affordable, strengthen rural and community health, and be part of the solution to Minnesota’s workforce.
Dr. David Herman: The other thing is that we have two strong organizations. One of the attributes that has gotten us there is that when you’re facing a changing environment, you can choose to react, respond or lead. When you react, you wait for something to happen and then figure out what you’re going to do. When you respond, you anticipate it and have a plan, but you wait for it to happen. Neither of our organizations runs that way. We believe the best way to succeed and take care of the people we’re privileged to serve is to lead, and our organizations have done that. As we’ve worked together in Minnesota and other places on a variety of things, we asked ourselves: Do we want to continue going in parallel, or do we want to bring things together for the benefit of our colleagues and the people we’re privileged to serve? The more we talked about it, the more we decided that our communities deserve for us to come together to serve them best.
Q: Minnesota has seen significant consolidation, with Sioux Falls, S.D.-based Sanford Health completing its acquisition of Robbinsdale, Minn.-based North Memorial Health this month and Oakland, Calif.-based Sutter Health and Minneapolis-based Allina Health pursuing a combination. How does that landscape shape what you’re doing, and what does the combination let you do that neither of you could do alone?
AW: From our vantage point, we’re two Minnesota-based organizations. We know and understand the people in the communities we serve. We see our populations aging, we see illness burden increasing, and we know we need to make sure we’re making investments in care delivery to serve the needs of people across our communities, no matter where they decide to live. As a combined system, we are rural, suburban and urban. We’re large multispecialty group practices coming together with the notion that our obligation is to improve the health of the community by providing support to keep people healthy and by providing exceptional care: primary care, specialty and hospital-based care, as well as digital care. Our belief is that these complementary strengths position us to make the right investments for the future.
DH: Each of us has a long track record of not just cutting costs or becoming more efficient but changing the way care is delivered. We know the largest opportunity for affordability in healthcare is keeping people healthy, so they don’t need to go to the hospital. If they do need to go to the hospital, it’s making sure they get their care in the hospital and after the hospital, so they don’t need to go back in. This isn’t just about scale. This is about designing healthcare as it should be, to serve patients and keep them healthy wherever they choose to live.
AW: And responsible stewardship of resources. We know technology will play a great role in the delivery of care. It does today, and it will in the future. Our two organizations combining enables us to have a better platform for the delivery of care for the long term.
DH: Each of us was excited about seeing what the other organization was doing to design that care. The question became: Why do we continue to go on these parallel paths? Why don’t we come together and do this together? We know we can go faster and farther together.
Q: What would you tell other CEOs about your thought process when so many issues are competing for attention at the same time?
DH: When we talked to our board and within our organization, this was about opportunity. What can we do better? What can we do faster to go forward? You can ask how this solves a problem; that’s not how we looked at this. We looked at this as how it increases the opportunity for us to take better care of the people we’re privileged to serve.
AW: Beginning with the end in mind is important. Staying focused on what our patients and the people who live and work in our communities need, and therefore what we need to be equipped to do, helped us focus on the most important attributes and capabilities we will need for the future. Then it’s how we, as an organization, ensure that we have those in place, either individually or collectively. That’s where we decided collectively is a way better move.
Q: What role will the HealthPartners health plan play in the combined organization?
AW: Essentia as an organization has been very focused on population health, and HealthPartners is very focused on population health. From our vantage point, how you access and how you pay for care is really important in making sure people in the community can get what they need. We look forward to the new solutions in the marketplace that will come about as a result of this combination.
Q: What do you expect from the regulatory review process and timeline?
AW: In Minnesota, we have a public interest review process that we will need to go through, along with the traditional federal filings for the transaction. We will begin that process today as the paperwork gets filed, and we expect to close by the end of the year, assuming we’re through that process.
Q: Is there anything else you want to add?
DH: We’re really excited for the opportunity, as is our staff. We’ve worked together with HealthPartners. I mentioned earlier to another group that Minnesota is a unique state where people reach out to each other and say, “Can you help with this?” We love to compete with each other, but at the same time, we find a common basis to do better for the state. When we talk about the partners we’ve had in the past that have gone the fastest and furthest, it’s been HealthPartners. Our team is used to working with their team, her team is used to working with ours, and both teams are excited about doing this together.
