Sanford Health and Good Samaritan close merger

(Updated at 2 p.m. EST)

Sanford Health and the Evangelical Lutheran Good Samaritan Society completed their merger, the organizations announced Wednesday.

Sanford, which has 44 hospitals, more than 1,400 physicians and 28,000 employees, adds Good Samaritan and its 200-plus post-acute, skilled-nursing, hospice, assisted-living, rehabilitation and home-health facilities to its network, along with Good Samaritan's 19,000 employees. Their combined footprint spans 26 states.

The combination of the Sioux Falls, S.D.-based not-for-profits earned the necessary government approvals in August. Merger talks began in late 2017, when they started mapping out the integration process and growth opportunities, executives said.

David Horazdovsky remains CEO of Good Samaritan and has joined Sanford's corporate leadership team. Randy Bury has transitioned to president of Good Samaritan from his previous role as Sanford's chief administration officer.

"Wherever you combine acute-care operations with post-acute care you are going to find opportunities," Kelby Krabbenhoft, president and CEO of Sanford Health, told Modern Healthcare.

Good Samaritan adds home and community-based services that can fill any gaps in care, Horazdovsky said.

"We see great growth opportunities," he said.

The merger's close is the latest transaction in an active post-acute sector as organizations and investors look to capitalize on the huge number of aging baby boomers. Coordinating care after patients leave the hospital is a key strategy for health systems that want to avoid health complications that can bring readmission penalties.

"The organization that can provide care in the most coordinated way will be the most successful—that is what we are shooting for," Bury said.

Not-for-profit health system ProMedica expanded beyond its core business in its acquisition of struggling nursing home provider HCR ManorCare. Humana and private equity firms bought Kindred Healthcare and Curo Health to create the country's largest hospice operator. LHC Group and Almost Family also combined to form the second-largest home health provider in the country.

Consolidation is not expected to wane, experts said.

Sanford will continue to talk with other health systems about additional merger, acquisition or joint-venture opportunities as it looks to build out its long-term care operations, Krabbenhoft said. That marks a departure from the organization's traditional focus on acute-care partnerships and acquisitions, he said.

"This moment today is an inflection point for the company as we are required as a function of our responsibility to now think about our facilities and operations like we never have before," Krabbenhoft said.

Correction: An earlier version of this story misstated when the deal received its regulatory approvals. This error has been corrected.