How Sanford Health makes mergers succeed

Sanford Health has been getting a lot of practice when it comes to integrating other health systems in the organization.

Based in Sioux Falls, South Dakota, Sanford Health now operates 60 hospitals and more than 300 clinics in the upper Midwest. The system finalized its merger with North Memorial Health in Minnesota in September.

In 2025, Sanford completed its merger with the Marshfield Clinic Health System, which operates 11 hospitals in Wisconsin and Michigan. Last year, Sanford acquired Prairie Lakes Healthcare System, a hospital based in Watertown, South Dakota.

Bill Gassen, president and CEO of Sanford Health, tells Chief Healthcare Executive® that the system aims to be intentional about setting the right expectations as other health systems join the organization.

“It's really important to set clear expectations, and then have people hold you accountable that you're going to follow through on those,” Gassen says.

In an interview last month, he shed some light on how Sanford works to integrate other hospitals into the system and make mergers successful.

Not a holding company

Sanford Health has built an integration management office to help coordinate merging new organizations.

“We have a full-time team that is dedicated to doing that work,” Gassen says. “And so they know what it's like to go through and map out those processes to be able to sit down and work collaboratively in a way that says, "Hey, here's how we've done it, but we're open to hearing from North Memorial.’ They may do it better, and certainly in certain situations they will, and so every time we get the chance to do that, it makes us better as we go through that process.”

The office also reflects Sanford’s approach to mergers, and that means combining new systems, as opposed to running separate entities. He says Sanford isn’t a holding company, and he says that perspective is “the most important part of mergers.”

“We're committed to not being a holding company,” Gassen says. “I personally believe that coming into mergers, especially in healthcare, with the mindset of, ‘We're just going to be a holding company,’ I think goes in the wrong direction. I believe that that has an adverse impact on our ability to address access, to be able to address affordability, and to bring down the cost or bring up the quality. And so, for us, it's working hard every single day on integrating the two systems. So it's not two separate organizations, but it becomes one.”

‘A lot of hard work’

Gassen also talks about addressing people and processes as systems join Sanford.

“We start with making sure we've got everybody in the right spaces and the right places as leaders and clinicians for the teams, and then working on going through all of our processes,” he says.

“And for us at Sanford Health, we've had the privilege of doing that several times over the last few years and really across our history, which has helped us learn from our mistakes,” Gassen says. “We made lots of mistakes. I wish we didn't make any, but we still make a few of those.”

Gassen acknowledges that integrating systems is an arduous effort that takes time.

“It's a lot of hard work,” he says. “A lot of organizations don't finish that work because it's challenging. It takes a lot of time, but for us, we believe that the return on that investment is very significant, allowing us to create a seamless experience for our patients to make sure that we're removing as much of the friction from those encounters as we possibly can.”

‘Things will change’

As Sanford integrates other health systems, Gassen says that he is blunt with leaders and staff that things aren’t going to stay the same.

“One of the things that we do is, we make sure to tell everybody as we're coming together and creating a new organization, that things will change,” Gassen says.

“Sometimes, it maybe feels good in the moment to tell people nothing's going to change, it's going to be okay,” he explains. “And I always tell people if you hear that, first off, assume that that's not accurate. And then assume if it is accurate, this is probably not what you want to do. Because we need to change.”

Gassen notes that the core elements of the organization - delivering care, offering comfort, and working for cures - will never change.

“How we do it has to change, and that's really what this is about,” he says.

Gassen says that being realistic about change shows staff that leaders are being honest, and he says there are returns down the road.

It also allows teams to focus on an integrated operating model.

“We've got folks that have some of the highest EQs, and they've just got hearts of gold,” he says. “Letting them know right away that things have to change, and they're going to change. And as that happens, it could be really hard. As long as they know what to expect? They do an incredible job. They're beautifully resilient in healthcare, unfortunately, because we have to be oftentimes. But they do a wonderful job.”

Retaining local leaders

Gassen also points out that even with the integration of new systems, he’s a big believer in keeping local leaders in place.

Trevor Sawallish, who had been chief executive officer of North Memorial Health, now leads the Twin Cities region of Sanford Health.

Dr. Brian Hoerneman, who had led Marshfield Clinic, is president and CEO of Sanford Health Marshfield. Gassen credits Hoerneman for helping successfully integrate Marshfield Clinic.

Since the merger with Marshfield Clinic, Gassen says there’s been a significant reduction in physician turnover.

“Under Brian's leadership, things have flourished, and I would tell you we have exceeded my expectations for the pace with which we would improve there,” Gassen says.

In an interview with Chief Healthcare Executive® in May, Hoerneman pointed to improvements in quality, safety and financial returns.

“We've got a long way to go in a number of different areas, but the partnership has absolutely been additive for us, and we're excited about continuing to move forward,” Hoerneman said in May.

Gassen says that local hospital leaders have more support from Sanford. He also points to the value of moving forward as a single system.

“It is really going through and mapping out all of the workflows, all of the processes, and making sure that we're doing things in an aligned way, and if one of us does it better than the other, then let's go ahead and make a shift in how we do that as an organization,” he says.