Sanford Health merges with Bemidji hospital

North Country Health Services, Bemidji's locally owned hospital, will soon merge with Sanford Health, based in Sioux Falls and Fargo.

Thursday's announcement comes just a year after Sanford merged with the Fargo-based MeritCare Health System, which had clinics in Bemidji and across northern Minnesota.

Hospital officials in Bemidji say the merger will lead to better, more efficient health care in the region.

Sanford Health is the largest rural, not-for-profit health care system in the country. It has a long history of merging with hospitals throughout South Dakota, Iowa, Nebraska and southern Minnesota. Bemidji's will be the 13th hospital in Minnesota owned or managed by Sanford.

Sanford took over the clinic that's right next door to the hospital last year, so it makes sense to take this next step, North Country Health Services spokeswoman Joy Johnson said.

"It really does mean great things," she said. "This is what I would consider a monumental event in health care in Bemidji and in the region."

Many people in Bemidji hadn't even heard of Sanford before it came into the market last year. But it's becoming much more visible. Sanford announced just a few weeks ago that it will pay $2 million over 10 years for the naming rights to the city's new regional events center and hockey arena.

But Johnson said the hospital will maintain its local identity and will still have a local board of directors.

"It is not a takeover," she said. "It is a way to bring together the various components of health care delivery in this community, so we can focus on building and growing and improving services together."

Sanford Health officials say the merger will mean greater local access to specialists in cardiology, cancer treatment and neuroscience. Right now, people in Bemidji typically have to travel to Fargo for those services.

Operating rural health facilities isn't easy these days. They're under big financial pressure. In Minnesota, 29 rural hospitals have closed in since 1987, according to the Minnesota Hospital Association. Fewer than half of rural hospitals are independently operated.

Health care mergers are likely to become more commonplace. The latest push is driven by federal health care reform legislation passed by Congress last session.

Bruce Pitts, president of Sanford Clinic in Fargo, said new federal rules greatly favor hospitals, clinics and doctors that come together to provide coordinated, efficient care.

"So there's an awful lot of conversation among health care organizations that's very lively, that two years ago was not nearly as lively," he said.

Pitts said hospitals interested in merging typically come to Sanford Health, not the other way around. He also said Sanford has no designs on moving into the Twin Cities market.

"We're not out knocking on any doors in the Twin Cities, because that is a very different world," he said. "It's a pretty consolidated market. It's a very urban environment, and I never know what's going to happen down the road, but it certainly is not key to who we are or what we've been."

Health analysts say mergers like the one between Sanford Health and North Country Health Services will ultimately help drive down health care costs in the United States. But not everyone agrees bigger is necessarily better.

Tor Dahl, a medical economist and adjunct professor at the University of Minnesota, said increasingly larger health organizations might be more efficient, but it could also lead to people waiting longer to get care.

"There are pressures in the health sector that will be unleashed with health reform that [are] focusing on outcomes rather than on procedures," Dahl said. "If the health sector can prove that they can utilize resources better by combining resources over a larger system or larger area, that will quickly become evident."

Hospital officials in Bemidji say their merger with Sanford Health will mean more doctors, not fewer. They expect that new investment in the facilities, staff and technology could total $75 million in the next decade.

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