Plans to merge Wausau, Wis.-based Aspirus Health and St. Luke, Minnesota, took a step forward Monday, with an announcement that the nonprofits had signed a definitive agreement to collaborate.
The tentative deal announced in July would give St. Luke's to join the larger, 17-hospital Aspirus.
The definitive agreement was unanimously approved by the two organizations' boards of directors and outlines the terms for Aspirus' support in St. Luke's.
These include investing at least $300 million in strategic St. Luke for eight years, implementing Epic and other standardized systems within two years, and expanding Aspirus Health Plan into the St. Louis service area. Luke within two years.
“I am grateful for the support we have received as we continue this collaborative process with our like-minded partner St. Luke's,” Matt Heywood, president and CEO of Aspirus, said in a joint statement. “Together, we will continue to evolve the way we care for our patients, especially those in rural areas, who will have the opportunity to access the same high level of care as patients in other parts of the country. We look forward to working with the regulatory authorities to approve the partnership.”
Should the deal close, the combined entity will employ nearly 14,000 people, including 1,300 practicing physicians and advanced practice clinicians, at its 19 hospitals and 130 outpatient locations in northeast Minnesota, north and central Wisconsin and Michigan's Upper Peninsula.
Aspirus and St. Luke's previously said their combination would deliver “improved access to capital, robust and unified technology platforms, increased scale and efficiency, and a health plan focused on maximizing value for patients and employers.”
The health systems said their deal has received letters of support from all six St. Luke's unions. Under the definitive agreement, the systems agreed to honor all existing employment contracts as well as to retain, integrate and offer “additional opportunities” to St. Louis employees. Luke, they reported.
“For more than 140 years, we have taken great pride in caring for this region,” Eric Lohn, co-president/chief executive officer and chief financial officer of St. Luke. “With the challenges facing the healthcare industry, including St. Luke's, we believe now is the time to work together. We are confident that Aspirus is the right partner to help us grow further and continue to provide the best level of care for the next 140+ years.”
The partners said they are targeting spring 2024 to close their deal pending regulatory approvals. That could become worrisome in light of Minnesota Attorney General Keith Ellison's recent announcement that he is reviewing the deal. His office was given additional authority to determine whether mergers of nonprofit health systems are in the public interest earlier this year.
Aspirus Health, St. Luke's Duluth unveils plans to create 19-hospital Midwest nonprofit system
July 12
St. Luke's Duluth in Minnesota is working on a deal to join Wisconsin-based nonprofit Aspirus Health, representing the latest in a series of Midwest hospital consolidation deals currently in the works.
The organizations announced Wednesday that they have signed a letter of intent for the two-hospital Minnesota system to become an affiliate of 17-hospital Aspirus Health. They said they expect the deal to close in early 2024 pending due diligence, regulatory reviews and other approvals.
“Since our founding days in 1881, St. Luke's has remained patient-centered above all else,” said Nicholas Van Deelen, MD, co-president/CEO and chief medical officer at St. Luke's. “Joining forces with Aspirus Health enables us to expand access and better support clinical staff to reach even more patients.”
The combined entity will employ nearly 14,000 people, including 1,300 practicing physicians and advanced clinicians, at 19 hospitals and 130 outpatient sites in northeastern Minnesota, north and central Wisconsin and Michigan's Upper Peninsula.
The combined system will also include the home health care and nursing, pharmacy, critical care and medical product operations of both. Aspirus Health would also bring a health insurance company and medical transportation services to the table, while St. Luke's will contribute its two ambulatory surgery centers.
Aspirus Health's Wausau, Wisconsin office will get the nod as the new organization's headquarters, while the St. Luke will become a corporate office, according to the announcement. The systems said their patients will continue to receive care from their current providers during the partnership.
“We welcome the opportunity to expand into Minnesota with St. Luke's and we look forward to learning from each other and leveraging our collective strengths to benefit our teams and patients,” Aspirus President and CEO Matthew Heywood said in the release.
Aspirus and St. Luke's said in a statement that their combination will bring “improved access to capital, robust and unified technology platforms, increased scale and efficiency, and a health plan focused on maximizing value for patients and employers.”
Eric Lohn, Co-Chairman/CEO and CEO of St. Luke, also said in a statement that the deal helps his system meet the “evolving needs of the community” and that the larger Aspirus will allow St. Luke “to accelerate investment in our communities and expand our impact faster than we can on our own.”
Aspirus reported about $47.1 million in operating income, $1.9 billion in revenue and a $22.8 million net loss in fiscal 2022 (ended June 30). It has made several key acquisitions in recent years to reach its current scale, most notably through a seven-hospital deal with Ascension Wisconsin in 2021.
St. Luke's reported a slight operating profit of $2.9 to $560.1 million during fiscal 2022 (ended June 30). Significant non-operating losses pushed it to a net loss of $62.7 million for the year.
The news about the Aspirus and St. Luke's come as other high-profile Midwest health systems pursue mergers of their own.
One of them, including Sanford Health of South Dakota and Fairview Health Services of Minnesota, would create a 58-hospital giant. It was originally scheduled to close on March 31, but has been delayed several times to give regulators more time to complete their assessments.
In addition, Minnesota-based Essentia Health and Wisconsin-based Marshfield Health System signed a memorandum of understanding last October to create a 25-hospital not-for-profit institution serving more than 2 million rural and mid-urban residents of the Midwest. Like others, the two systems said their agreement will help increase access to health care services for, in particular, communities in rural areas.
In April, Wisconsin nonprofits Froedtert Health and ThedaCare signed a letter of intent to combine and create an 18-hospital system. Should their due diligence and regulatory approvals be completed, the partners said they hope to enter into a definitive agreement and then launch the combined health system before the end of the calendar year.
