Fairview Health Services, which operates the University of Minnesota Medical Center among its seven hospitals, has agreed to merge with four-hospital HealthEast, the systems have announced.
Minneapolis-based Fairview has a large health plan, PreferredOne, and annual revenue of about $4 billion. It is combining with HealthEast, whose four hospitals are located across the Mississippi River in the St. Paul area.
In a release, Fairview CEO James Hereford said their geographies complement each other. HealthEast has a strong presence in the eastern part of the Twin Cities while Fairview has hospitals in the west, south and northern part of the metro area and the upper part of the state.
“By joining forces, we can expand clinical services and combine our expertise to serve patients where they live and work, giving them access to the widest range of care choices available,” Hereford said.
Hereford will lead the combined organization and Fairview's board of directors will stay in place with the addition of three representatives from HealthEast.
The organizations plan to begin integration upon receiving regulatory and legal approval expected this spring, the companies said.
The Twin Cities remain a highly competitive market with players such as Allina Health, HeathPartners and Mayo Clinic.
In 2015, Fairview posted income of $71.3 million for an operating margin of 3.6%, according to data at Modern Healthcare.
HealthEast in 2015 posted income of $21.2 million on revenue of $970.5 million. Its operating margin was 2.5%.