Gundersen Health System, Bellin Health say ‘merger of equals’ will close Nov. 30

The two systems are creating a new organization with 11 hospitals serving patients in Wisconsin, Michigan, Minnesota and Iowa.

Gundersen Health System and Bellin Health say they are on the cusp of coming together and forming a new healthcare organization.

The two nonprofit systems have announced that they plan to complete their merger by Nov. 30 and will move forward as a combined organization starting Dec. 1.  The new system will operate 11 hospitals and more than 100 clinics serving patients in Wisconsin, Michigan, Minnesota and Iowa.

Bellin and Gundersen have both described the consolidation as a “planned merger of equals.” The systems announced in June that they were discussing a merger to preserve and expand healthcare services for the region.

Both Bellin and Gundersen will keep their individual identities and logos, the systems said.

Scott Rathgaber, Gundersen’s chief executive officer, will serve as the incoming CEO of the merged organizations.

“Our health systems have been successfully fulfilling our individual missions, but we know we will thrive and best serve our patients and communities by finding partners with shared missions and strategic visions,” Rathgaber said in a statement.

“This merger brings transformative opportunities to expand our patient-centered care and community-minded work,” he said. “Together, we can invest resources wisely and efficiently to improve health and well-being in our communities, especially for marginalized individuals and broadly for everyone in our care.”

John Dykema, chairman of the Bellin Health Board of Directors, will be the chair of the newly created board, residing in northeast Wisconsin.

Bellin CEO Chris Woleske will serve as the new organization’s system executive vice president and regional president of the Bellin Region. Woleske sought to reassure patients that they would continue seeing their physicians.

“The most important message we want to share with everyone is this: The people you know and the care and locations you trust are not changing,” she said in a statement. “Coming together will allow Bellin and Gundersen to better serve our patients and communities, preserving and enhancing a legacy of local, personalized care that will endure for decades to come,” Woleske said. “We have found a true partner in Gundersen, and we know we will be stronger together.”

Bellin’s headquarters in Green Bay, Wisconsin and Gundersen’s headquarters in La Crosse, Wisconsin will remain. The systems said they will have a “balanced leadership structure” with the top two posts - the CEO and board chairperson - in different regions to ensure equal representation.

Heather Schimmers, Gundersen’s chief nursing officer and chief operating officer, will serve as regional president of the Gundersen Region.

The systems said they plan to offer more clinical services and expect to share resources. The combined organization also expects to offer more virtual care options into homes and workplaces, the systems said.

When the systems first disclosed the merger discussions in June, Rathgaber said, “Coming together would better position us to weather industry changes, and make needed financial investments in digital infrastructure, facilities, equipment and therapeutics, while maintaining affordability for the patients and communities we serve.”

While Bellin and Gundersen are poised to complete their consolidation, two other health systems in the Upper Midwest are exploring a merger.

Essentia Health and the Marshfield Clinic Health System said in October that they have begun talks that could lead to a merger. If Essentia and Marshfield Clinic merge, it would create a system of 25 hospitals and more than 26,000 employees.

Essentia operates 14 hospitals along with dozens of clinics in Minnesota and North Dakota, along with a few facilities in Wisconsin. Marshfield Clinic manages 11 hospitals and other sites of care in Wisconsin and Michigan’s upper peninsula.

Two Pennsylvania health systems, Excela Health and Butler Health System, announced last week that they have entered into “a definitive agreement” to join forces and create a new system. The new organization will operate five hospitals in western Pennsylvania and have more than $1 billion in revenue.

There have been fewer hospital consolidations in the COVID-19 pandemic, but there have been bigger deals. Industry analysts expect to see more hospital consolidations in the coming months, out of financial necessity or to seize opportunities to expand services.

Trinity Health, one of America’s largest Catholic health systems, completed the acquisition of MercyOne in September. MercyOne,  based in Iowa, operates 16 medical centers and more than 400 sites of care.

Atrium Health and Advocate Aurora Health announced in May that they plan to merge and form an organization with $27 billion in annual revenue. If federal regulators approve the deal, the new health system would operate 67 hospitals and 1,000 ambulatory sites in six states.

Industry analysts say if regulators sign off on the Atrium-Advocate Aurora merger, it could spur other hospital deals. Other larger systems could see the deal as a model for other transactions by merging with systems in other regions, and thus avoiding the regulatory scrutiny that comes with trying to acquire or merge with hospitals in the same markets.