Marshfield Clinic Health System and Essentia Health called off their merger plan, the nonprofit health systems said Friday.
Marshfield, of Wisconsin, and Duluth, Minnesota-based Essentia signed an integration agreement in July to form a 25-hospital system with roughly $6 billion in annual revenue. The heath system CEOs said in a news release that the “combination at this time is not the right path forward for our respective organizations, colleagues and patients,” but did not elaborate.
The health systems, which largely operate in rural communities, will still look to collaborate, Marshfield Interim CEO Dr. Brian Hoerneman and Essentia Health CEO Dr. David Herman said in the release.
Related: Marshfield Clinic, Essentia Health take key step toward merger
Marshfield is “actively exploring additional partnerships and has selected a third-party financial advisor to assist with that process,” according to a Friday filing in the Electronic Municipal Market Access database.
A Marshfield spokesperson said the health system has a "strong strategy to achieve a successful financial turnaround."
Marshfield has been recording operating losses since 2021 and Essentia is facing potential financial pressure related to the 340B drug discount program eligibility of two of its 14 hospitals.
Through the nine months ended Sept. 30, Marshfield reported an operating loss of $133.6 million on $2.32 billion of operating revenue, compared with an operating loss of $92.6 million on $2.28 billion of operating revenue in the comparable year-earlier period. In August, Marshfield amended some bond covenants to give it more time to improve financially.
For its fiscal first quarter that ended Sept. 30, Essentia reported an operating loss of $11.9 million on $704.7 million of revenue, compared with an operating income of $5.1 million on $665.8 million of revenue in its fiscal 2023 first quarter, according to its unaudited financial statement.
Minnesota Attorney General Keith Ellison (D) said in October that his office would investigate Marshfield and Essentia’s proposed merger to ensure it complied with state and federal laws.
