Aspirus Health in Wisconsin and St. Luke’s in Minnesota have signed an agreement to come together. Aspirus will invest $300 million over eight years to fund projects at St. Luke’s.
Just three months after Aspirus Health announced it had intended to acquire St. Luke’s, the two systems said Monday they have secured a definitive agreement to come together.
Aspirus, based in Wausau, Wisconsin, also detailed plans to make significant investments in St. Luke’s, based in Duluth, Minnesota. Aspirus said it would invest at least $300 million over the next eight years to finance strategic projects at St. Luke’s.
In addition, Aspirus said it would expand into St. Luke’s service area within two years of the closing of the deal to improve the delivery of healthcare services.
Aspirus operates a total of 17 hospitals, with 13 hospitals in Wisconsin and four in Michigan. St. Luke’s operates two hospitals and a host of other healthcare sites in northeastern Minnesota, northwestern Wisconsin, and Michigan's upper peninsula. The systems said the headquarters of the merged organization would be in Wausau, but there would be a corporate office in Duluth.
Regulators must still sign off on the deal. The hospital systems hope the merger will be complete in the spring of 2024.
Matt Heywood, president and CEO of Aspirus, said the system has found a “like-minded partner” with St. Luke’s.
“Together, we will continue to evolve the way we care for our patients, especially those in rural areas, who will have the opportunity to access the same high level of care as patients in other parts of the country,” Heywood said in a statement. “We look forward to working with regulators on the approval of the affiliation.”
St. Luke’s has provided healthcare to Duluth and the surrounding area for more than 140 years. Eric Lohn, co-president, CEO and chief financial officer of St. Luke’s, described the partnership with Aspirus as a necessary step to continue serving the region.
“With the challenges facing the healthcare industry, including St. Luke’s, we believe that now is the time to affiliate,” Lohn said in a statement. “We are confident that Aspirus is the right partner to help us further grow and continue providing the best level of care for the next 140+ years.”
St. Luke’s said all of its six unions have signed off on the affiliation with Aspirus, saying it’s in the best interest of the organization. Aspirus has pledged to honor all labor contracts, the systems said in a news release.
Aspirus has expanded significantly in the last few years. In 2021, Aspirus purchased seven hospitals from Ascension Health. Since Heywood took over as CEO in 2013, Aspirus has grown from a $600 million organization to a system that will have $2.5 billion in revenue, after the completion of the St. Luke’s acquisition.
In a recent interview with Chief Healthcare Executive®, Heywood expressed his enthusiasm for bringing St. Luke’s into the Aspirus system.
“We both are very committed to rural healthcare,” Heywood told Chief Healthcare Executive. “We're very committed to high quality, and we're very committed to making sure we bring services locally to the communities that are outside of Duluth, just as much as Duluth. And that's our model here. We don't want you to have to travel to Wausau for some basic services. We want to bring those services out into the community.”
“So St. Luke's definitely, I think, saw that same alignment with us, and they saw how we were delivering it, and they saw how we could help them come in and deliver that opportunity to their communities and their organization,” Heywood added.
In a message to the community, St. Luke's says it doesn't expect any healthcare locations to close if the deal is completed. St. Luke's says the system plans to expand the workforce, especially in clinical positions.
As part of the deal, Aspirus said it will bring Epic’s electronic health record system to St. Luke’s, along with other standard systems to bring greater efficiency, within two years of the completion of the deal.
The deal still needs the approval of officials in Wisconsin and Minnesota. Minnesota Attorney General Keith Ellison announced earlier this month that he was going to take a look at the planned Aspirus-St. Luke’s deal, along with the planned merger of Essentia Health and Marshfield Clinic Health System.
Minnesota passed a law earlier this year giving the attorney general the power to examine hospital mergers to ensure they don’t reduce competition or healthcare services.