Hospital CEOs field questions over out-of-state acquisition of Robbinsdale and Maple Grove hospitals

South Dakota-based Sanford Health has committed to maintaining core services at its Robbinsdale hospital for two years if it successfully acquires North Memorial Health.

“We would have loved to say that we would make that a 25-year commitment, right? Because that’s our hope, that’s our goal. But the reality is … healthcare is incredibly challenging right now,” said North Memorial Health CEO Trevor Sawallish.

Sawallish was fielding questions Tuesday alongside Bill Gassen, the CEO of Sanford Health, at a forum hosted by the Minnesota Attorney General’s Office at Fellowship Missionary Baptist Church, a Black church in north Minneapolis.

The Attorney General’s Office held the public forum as part of its expanded regulatory powers over healthcare mergers, bestowed by the Legislature and Gov. Tim Walz in 2023. The office is now able to analyze and block hospital mergers if they are against the public’s interest, for example if they reduce a community’s access to healthcare by reducing the range of services historically offered by a hospital.

The office is simultaneously reviewing an even bigger proposed acquisition of Allina Health by Sutter Health, a $19.8 billion nonprofit health system in California. The office will host a similar forum Monday for public comments on that deal. (You can register here for location information and here to sign up to speak.)

The proposed acquisitions of Allina and North Memorial by large out-of-state health systems are part of a broader trend of healthcare consolidation — hospitals and clinics combining into sprawling health systems. Evidence has shown that consolidation has led to higher prices, though effects on quality of care are less clear, according to health policy research organization KFF.

Sanford Health, an $11.7 billion nonprofit health system that mostly operates rural health facilities, has unsuccessfully tried to enter the Twin Cities before, with proposed acquisitions of Fairview Health in 2013 and again in 2022. The effort faced intense scrutiny from the Attorney General’s Office, especially after the 2023 law gave the attorney general sign-off power on any out-of-state or for-profit acquisition of University of Minnesota health facilities.

The stakes could be higher this time. Standing in front of the church’s triptych of a Black Jesus, Sawallish said that North Memorial risks closing unless it’s acquired by Sanford.

North Memorial consists of 22 clinics, mostly in the north Twin Cities metro area, and hospitals in Robbinsdale and Maple Grove. The system’s flagship safety net hospital in Robbinsdale loses money in part because many patients are uninsured or on lower-paying government insurance. The hospital includes one of the state’s few Level 1 trauma centers, handling the most serious emergency cases, which Gassen said Sanford Health has committed to preserving. A newer hospital in the more affluent Maple Grove area consistently makes money for the system.

The Legislature approved a cash bailout of Hennepin County Medical Center, another struggling safety net hospital. Proposed legislation included cash assistance to North Memorial as well, but that was dropped by the time the law passed.

“Without a change, without this partnership, it is very, very likely that North Memorial will not be here,” Sawallish said.

As part of the acquisition, Sanford is promising a $600 million cash infusion into North Memorial’s healthcare system. Roughly $500 million of that will go towards doubling the size of the Maple Grove hospital, as first reported by the Star Tribune.

At a press conference preceding the forum, a coalition of union organizers and faith leaders from SEIU, the Minnesota Nurses Association and the progressive ecumenical group ISAIAH said they were asking Sanford and North Memorial to negotiate what’s known as a “community benefits agreement” as part of the acquisition.

Rev. Karen McKinney, who serves at Fellowship Church, referred to the choice to expand Maple Grove.

“If Maple Grove deserves expansion, why does Robbinsdale have to fight to maintain what it already has? Why should a hospital serving one of Minnesota’s largest Black communities be asked to settle for less?” McKinney said.

The community benefits proposal has yet to be written, but speakers said it would include limits to healthcare prices; guardrails on artificial intelligence; medical debt forgiveness; and policies limiting access by federal immigration agents. The two CEOs responded to the coalition with a letter Tuesday saying they would need to review a proposal draft before agreeing to meet.

Comments from North Memorial health providers were mixed.

Christopher Palmer, an emergency department physician who has worked at the Robbinsdale hospital for 23 years, spoke in support of the acquisition, arguing it would sustain high-quality care.

“You can’t have a Level 1 trauma center without a cardiac surgeon, an interventional radiologist, palliative care teams, primary care doctors. You just can’t do it. By maintaining that through this merger, we can provide additional care in all the other service lines,” Palmer said.

Tami Carlson, a certified medical assistant at the North Memorial Brooklyn Center Clinic, where she’s worked since 2001, said she’s especially worried about North Memorial’s gender care program.

Erik Haugland, a North Memorial physician specializing in gender care, spoke at the first forum on June 8, expressing the same concern that, in the face of state or federal pressure, Sanford would change how North Memorial offers gender care.

Sanford Health had a youth gender services program in Moorhead that it closed in response to pressure from the Trump administration and never reopened, Haugland noted. At the forum Tuesday, Gassen was asked about gender care services: “Subject to state and federal law, it will be under the decision of the medical staff.”

In other responses, Gassen also said Sanford Health committed, in a letter of understanding, to honoring existing and tentative union contracts.

Sanford would continue physician training programs at the Robbinsdale hospital through the University of Minnesota.

Sawallish said he expects that the acquisition won’t change North Memorial’s emergency transportation services.

And Sanford Health agreed in writing that charitable giving and community benefit will be “the same or better than it was historically with North,” Sawallish said.

“We never give care based on what your insurance card is, based on your ability to pay. We looked for a partner that shared that same ethos, that same commitment to delivering care, no matter your ability to pay,” Sawallish said.

At Sanford, 85% of patients who apply for financial assistance pay nothing to receive care, Gassen said.

Still, the CEOs didn’t do much to assuage some skeptics in the audience.

“When these takeovers happen, one of the big arguments is always that they’ll streamline supply and it’ll all be more efficient,” Sara Hartfeldt, a Twin Cities metro area physician, told the Reformer.

“But, that’s happening all over the country as healthcare presidents do this. It never turns out to be cost saving for the healthcare system as a whole.”

Hartfeldt is on the board of directors for the Minnesota chapter of Physicians for a National Health Program, which advocates for single-payer health insurance, also known as Medicare for All.

Jacque Pokorney, a geriatric-certified physical therapy doctor who volunteers at another single-payer advocacy group, Healthcare for All Minnesota, commented on Sanford Health’s promise to maintain core services at Robbinsdale for two years.

“That’s the honeymoon period,” Pokorney said.

She said she’s “gravely concerned” about the promises from the hospital CEOs and supports a binding community benefits agreement “to guarantee these large hospital groups actually support their missions to serve.”