Sutter Health CEO Warner Thomas on planned merger with Allina Health

Sutter Health has expanded its reach since Warner Thomas became president and CEO of the California-based system more than three years ago.

Based in Sacramento, Sutter Health has opened 45 facilities since 2023, and the system aims to open new facilities in northern California in the next few years. Sutter operates 27 hospitals and hundreds of healthcare locations.

Now, Sutter Health is looking to merge with Allina Health, the health system operating in Minnesota and Wisconsin. If regulators sign off on the deal, Allina will become part of Sutter Health and the newly merged system will include 39 hospitals and boast $26 billion in revenue.

Last week, Thomas spoke with Chief Healthcare Executive® from a hotel room in Chicago, since he was in the Windy City for the Becker’s Healthcare 16th Annual Meeting.

“I think this is always a great meeting place, and people all come together from across the country,” Thomas says. “You know, I think that the key thing today in health care is that no one has all the answers. We have to be constantly learning. We have to have a growth mindset.”

In our conversation, Thomas spoke about his time at Sutter Health, the system’s growth, and the planned merger with Allina Health.

• Read more: Hospital merger activity rebounds in first quarter

‘Cultural alignment’

Thomas joined Sutter after serving as president and CEO of Ochsner Health in Louisiana for a decade.

Since taking over as president and CEO of Sutter Health more than three years ago, Thomas says he’s encouraged by the system’s growth and sees a lot of positive developments.

“I think Sutter is a great organization,” Thomas says. “I think we've made great progress in the past three years. Our engagement with our physicians and our employees is at an all-time high. We've made huge strides there. We've hired over 2,500 new physicians and clinicians. We opened 30-plus new ambulatory locations. You know, financially, we're stronger. So I think we've made great progress. I think the culture is strong.”

Thomas speaks enthusiastically about the planned merger with Allina Health.

Assuming the deal is finalized, Allina would become the Upper Midwest Division of Sutter Health, but Allina’s brand and identity would endure. Lisa Shannon, president and CEO of Allina Health, would retain that title. The organizations have said they hope to complete the transaction by the end of the year.

“Allina is a fine organization,” Thomas says.

“We have a lot of cultural alignment between our organizations,” he adds. “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.”

But Thomas says Sutter can also learn from Allina, pointing to the organization’s research and clinical institutes.

“We think there's things we can learn back and forth,” Thomas says. “I think the cultural alignment, the view of the future, is very important and, to me, is a critical piece of the success of this relationship.”

As part of the merger, Sutter Health has announced plans to invest $2 billion to improve care in Minnesota and western Wisconsin.

Thomas says Sutter is working with Allina on how to utilize that money. He says some will be deployed at Allina’s flagship campus in Minneapolis, but the organizations are still building the strategy in deploying the funds.

“The plans are in flight,” Thomas says.

Expanding capabilities

Thomas possesses a wealth of experience managing a large health system, and he’s overseen mergers in the past.

During his time as CEO of Ochsner, the system completed the acquisition of Rush Health Systems, a seven-hospital organization, in 2022.

When asked how that experience informs his current role and the pending merger of Allina, Thomas says, “There's similarities as far as how we want to think about integration.”

“There's similarities as far as how we want to think about extending capabilities. We had a lot of those capabilities at Ochsner that we extended into Lafayette and northern Louisiana and into Mississippi,” Thomas says. “And I think here with Sutter, we have a lot of strong capabilities that we can extend beyond California.”

The planned Sutter-Allina merger differs from typical hospital consolidations, which often involve two organizations in the same region or adjoining areas.

But there have been notable deals involving health systems in different geographies, such as the merger of Atrium Health and Advocate Aurora Health to form Advocate Health, and Kaiser Permanente’s acquisition of Geisinger in Pennsylvania and Cone Health in North Carolina.

Thomas says he understands some have concerns about a consolidation involving health systems in separate parts of the country.

But he says, “The capabilities around consumer, digital, insurance and risk management, population health, ambulatory … Those extend across your broad geographies.”

Thomas says there will be some added complexity with both Sutter and Allina operating in different parts of the country.

But he still sees opportunities and advantages in coming together.

“We're going to work hand in hand with the team at Allina on this work,” Thomas says. “They've got a lot of deep capabilities, and they bring a tremendous amount of experience and wealth of knowledge to the table. So I think the combination of our knowledge and theirs is going to allow us to accelerate the work they're doing. It will help us accelerate the work that we're doing.”

And he adds, “I think at the end of the day, it'll be … Can we deliver on our strategy and our plan? And you know, we've been pretty good at executing in the past.”