Hospital mergers in Minnesota: What’s driving deals

Minnesota has emerged as a hotbed for hospital mergers.

Sanford Health finalized its merger with North Memorial Health in the Twin Cities in September. But two other big deals are in the works.

HealthPartners and Essentia Health, both nonprofit systems in Minnesota, announced that they are looking to combine and form a single organization. Under the plans, HealthPartners would acquire Essentia and they would form a system with 22 hospitals.

Earlier this year, Sutter Health, based in California, announced plans to acquire Allina Health in Minnesota. If the deal is finalized, the merged system would operate 39 hospitals.

Bill Gassen, president and CEO of Sanford Health, talked with Chief Healthcare Executive® about the system’s plans to invest $600 million in upgrades across North Memorial. He also talked about the appeal of the Minnesota market, its long record of innovations in healthcare, and the deals taking place in the state.

“I really do think that it's a convergence of a number of different dynamics that are happening right now,” Gassen says.

‘A rich history’

Gassen points to macroeconomic challenges for health systems in Minnesota and across the nation. He talks about the surging costs of supplies, including pharmaceuticals.

“Inflation has been on somewhat of a rocket ship since COVID,” he says.

But Gassen also points out factors within Minnesota. Even before the merger with North Memorial, Sanford Health has been serving patients in western Minnesota for decades.

“Minnesota is a really special place, especially in the Upper Midwest,” Gassen says. “It has such a rich history of being at the forefront of healthcare innovation. And so, whether you're talking about health tech, whether you're talking about health care delivery, you're talking about health insurance, with United (UnitedHealth Group) being headquartered there as well, and lots of other insurers, there's always been that rich history of wanting to be the leader at the forefront there.”

Gassen also points to the need to invest more in rural communities in Minnesota, and across the Upper Midwest. He says organizations are seeing the need to think differently to expand more services.

“You need a requisite population in order to be able to make that level of investment to build out those programs, to ensure that you have enough volume there to maintain that level of expertise for those providers,” Gassen says. “I believe that a lot of that convergence then leads you to the state of Minnesota, to sort of the greater Twin Cities, but then really outstate Minnesota as well, as a great place to grow.”

“For us at Sanford Health, we believe very strongly that we need to grow where we're planted, and we've been planted in the state of Minnesota for a long time,” Gassen says.

Continued investment

Now, he says the time is right to expand its presence in Minnesota, and the merger with North Memorial is an important step in that direction. As North Memorial faced more financial pressures in recent years, the system wasn’t able to invest in facilities and new technology. Now, Gassen says Sanford is going to upgrade facilities and expand services.

“We're excited to continue to grow, continue to invest in the state of Minnesota, and we believe it's going to be a great return measured by better outcomes for patients, that we're going to have increased quality performance there,” Gassen says. “We really believe that we can work together in partnership with the others in the state, working with the state itself, to really work to lower that total cost of care in a way that helps impact in a positive way the lives of our patients.”

Eyeing growth in Minneapolis

Warner Thomas, president and CEO of Sutter Health, told Chief Healthcare Executive® in an April interview that Allina Health is “a fine organization.” Sutter plans to invest $2 billion in Allina’s market in Minnesota and part of Wisconsin.

“We have a lot of cultural alignment between our organizations,” Thomas said in April. “We think there's an opportunity to expand and grow and help Allina grow in the greater Minneapolis, St. Paul area. And I just think that there's capabilities we have in the ambulatory and digital and consumer areas that could be helpful to Allina.”

Hospital merger activity has accelerated in 2026. Through the first three quarters of 2026, there have been 56 announced hospital mergers, according to data from Kaufman Hall. In all of 2025, there were only 46 deals, a 15-year low for hospital mergers.