Attorney General Ellison should intervene and reject Allina acquisition by California hospital giant

Minnesota has had the bad luck of recently being the site of significant hospital merger and acquisition drama. In 2022-23, South Dakota-based behemoth Sanford Health attempted to merge with Minnesota’s Fairview Health. Fortunately, that merger fell apart after public outrage over the deal’s likely side effects for Minnesota patients.

But now, we are back at it again. On March 17, California-based Sutter Health and Allina Health announced the former’s intent to acquire Allina and create a new $26 billion nonprofit entity. While technically the deal is not a merger in the strict sense because Allina would keep its local leadership rather than being entirely absorbed, they would be overseen by Sutter management.

In their press release, Allina claimed the goal of the transaction is to “deliver innovative solutions to improve access and affordability and reimagine exceptional care for patients and communities.” As with any corporate announcement, however, we should be skeptical and dig deeper.

We live in a Gilded Age of American health care, and the road to glory for hospital systems, health insurers, drug companies, pharmacy benefit managers, and all the various middlemen between them is to build an empire as wide and deep as possible to allow the extraction of monopoly rents from everyone else. Despite their charitable tax status, nonprofit health systems and insurers generally follow similar playbooks as their for-profit peers, if only a year or two behind on the cutting edge of revenue optimization. Additionally, Allina has been losing money for some time now, putting pressure on management to find a way to plug the gap, such as by obtaining the market power necessary to raise prices via an acquisition by another health system. Studies have shown that when two health systems merge — even in geographically distinct markets — they can leverage their size to negotiate higher prices with insurers, which will likely pass the cost on to consumers.

Against this backdrop, Minnesota urgently needs to assess whose interests the Sutter and Allina combination might serve. A useful hint at what motivates leadership at nonprofit health systems is to look at their tax filings, where they are required to disclose details of their finances. A nonprofit organization can say more or less anything they want to the press, but their accountants cannot lie to the IRS. By tracking where they spend their money, we can test if a health system’s spending aligns with its stated priorities. In particular, we can compare executive salaries versus how much they spent paying all their other employees during the pandemic.

The pandemic was undoubtedly stressful for everyone, but frontline clinicians and other hospital staff were the ones suffering the most. If anyone got raises during this time, it should have been them. Sutter and Allina tax disclosures, however, show that their executives got unusually large raises, rather than the other employees. In 2022 for example, total annual executive compensation at Allina rose by 26.8% and rose at Sutter by a whopping 37.8%. Total spending on annual pay for all other employees rose by a more moderate 9.2% at Allina and actually fell by 1.5% at Sutter in that same year. 

Additionally, the ratio between executive and all other pay exhibits large spikes starting at the same time as the pandemic. While the raw value of this ratio is not particularly insightful here, when it goes up, it indicates that executives are receiving bigger raises relative to the raises of all other employees. These spikes have only started to recede in 2024, the most recent year for which data is available, indicating that only now are ordinary employees starting to catch up.

It’s difficult to look at these figures and not conclude that during the pandemic, executives at Allina, and especially Sutter, chose to richly reward themselves without sharing that good fortune with their employees, to say nothing about the propriety of paying such lucrative executive salaries at what is supposed to be a charitable organization.

The consolidation of health care entities gives the survivors increased market power, leaving patients and workers with fewer options. The inevitable result: higher prices for patients for the same care, and lower pay for employees for the same work.

In California, Sutter Health has a proven track record of seeking to exploit exactly that. In 2021, they settled a lawsuit for $575 million with California’s attorney general as well as unions and employers, who had alleged anticompetitive practices where Sutter had conspired to use its large market power to bully other stakeholders and illegally inflate healthcare costs. In 2025, Sutter settled another lawsuit filed by other plaintiffs over similar exploitation of market power for about $230 million. Both cases had been ongoing for about a decade, demonstrating Sutter’s long history of worrisome behavior. If we allow Sutter to come to Minnesota, we choose to take the risk of their management trying to do the same here. Even if we take Allina’s word for it, this is all just in exchange for some investments from Sutter, many of which would shift Allina away from the bread-and-butter of health care towards more flashy and high-dollar specialty medicine.

Allina has issues of its own, too. Management has dragged its feet on contract negotiations with the union that represents clinicians for three years now, and staff have recently voted to authorize a strike. In 2023, the health system was forced to suspend a policy, revealed by The New York Times, of denying new appointments to patients — many struggling with debilitating illnesses — with over $4,500 of outstanding medical debt with the health system. Would Sutter’s new oversight likely encourage or discourage Allina executives from continuing behaviors like these?

This transaction would also take control of one of Minnesota’s key health systems out of state. When our health systems are run by Minnesota-led institutions, decisionmakers must also bear the consequences of their actions: If their hospitals fail, their own care goes down the drain with the rest of us. In contrast, when out-of-state interests run our hospitals, this safeguard breaks down. If they succeed here, our money easily flows out of state to fuel unrelated passion projects or buy up yet more hospitals. If they fail here, it’s not the hospitals that the decisionmakers and their families visit that fall apart. In any case, it’s a lose-lose scenario for Minnesota.

The Department of Health and Attorney General Keith Ellison can block this acquisition if it’s not in the public interest. Ellison should not merely accept a negotiated settlement that allows the merger to go through with conditions, either. Notice that Sutter was able to settle the two anticompetitive practices lawsuits it faced. Bad actors prefer settlements because they often allow them to get away with the worst of their behavior in exchange for giving up some of the spoils. 

No settlement can change the fact that this merger puts two leadership teams with questionable priorities in charge of a very large unified enterprise which our state would depend on for lifesaving health care.

The only way to prevent the large potential harms to the public that could come from that result is to fully block the acquisition. Here’s to hoping he’ll do so, both for this net-negative transaction and any others that health care executives cook up in the years to come.