The boards of directors representing Essentia Health and HealthPartners are proposing a merger to combine the Minnesota-based nonprofit health systems.

HealthPartners owns and operates Regions Hospital in St. Paul.

The proposal would create one of the larger healthcare systems in the state with approximately 45,000 employees.

It’s the third proposed joining of healthcare systems in the state this year. Minneapolis-based Allina Health and Sutter Health, based in California, have proposed joining together. That proposal is still under review by the state Attorney General’s Office. Earlier this month Robbinsdale-based North Memorial Health has merged with Sanford Health, of South Dakota.

Andrea Walsh, left, president and chief executive officer of HealthPartners and David Herman, chief executive officer of Essentia Health. (Courtesy of Essentia Health)

The Essentia-HealthPartners merger will require a review by Attorney General Keith Ellison’s office.

“Proposed health care consolidation requires close scrutiny,” Ellison said in a statement Tuesday. “… We will conduct a thorough review of this potential acquisition to ensure it complies with the law and is in the public interest.”

A number of healthcare systems are moving to merge or join in partnerships to create efficiencies and improve access to technology, according to industry experts.

As a result of the Essentia-HealthPartners merger patients are expected to have greater access to specialists, advanced clinical programs, telehealth and coordinated care, according to a news release from the health systems. Patients and members are not expected to experience any changes or interruption to their care or insurance coverage, according to the announcement of the proposed merger.

“The healthcare industry is under tremendous pressure,” said Andrea Walsh, president and CEO of Bloomington-based HealthPartners. “By bringing our capabilities together, we will be able to share in the investments needed to make the future bright.”

‘Navigate the headwinds in healthcare’

Walsh will lead the new organization, while Essentia Health’s current CEO David Herman will serve as president of the combined clinical care group operations. Essentia is based in Duluth.

“Our organizations share similar missions and values, deep roots in this region, and a focus on improving health and well-being,” Herman said in the release.

The new partnership is anticipated to be effective Jan. 1, 2027, pending regulatory approvals. The combined organization will be called HealthPartners. Access to care will span across Minnesota and the Upper Midwest to include 22 hospitals, more than 135 clinics and 6,000 clinicians.

“We believe that together we’ll be able to provide stronger coordination of care across our organization, across the community, and most importantly across the continuum of care,” Walsh said, noting HealthPartner’s significant investment in digital care.

Leadership indicated that the organizations will also make increased investments toward research, data analytics and workforce development.

“We’ll be better able to navigate the headwinds in healthcare, and make sure that there are good career paths for our people by coming together, as opposed to each of us trying to navigate that independently,” Walsh said.

‘Changing our models of healthcare’

Both HealthPartners and Essentia have “strong labor management relationships,” the release noted.

“We intend to abide by the contracts that are in place for both organizations,” Walsh said. “… In our unionized sites, the floating work rules that apply there will apply, and in our locations that do not have labor contracts, we’ll adhere to floating approaches in those settings that are different.”

Herman said he does not anticipate that layoffs will be a factor in the affiliation.

“We have a lot of great people, a lot of great colleagues, and we look forward to working with them as we change the model of care and move forward,” Herman said. “Our premise right now is that our positions will not be eliminated, and we will continue at the sites of the service that we have now.”

The partnership also aims to help make healthcare more affordable for patients. According to the release, HealthPartners delivers lower total costs of care compared with national benchmarks.

“The only way we can make healthcare more affordable is by changing the way we practice and changing our models of care,” Herman said. “We’ve actually been doing that in parallel. … As we looked at the capabilities of our two organizations, they’re very complementary. There are things that we’re very strong in, such as Medicare shared savings and volume-to-value, and things that HealthPartners is very strong in — the partnership between the health plan and the clinical aspects of care.”

With escalating costs making it more difficult for patients and members to access healthcare, Walsh said affordability is the No. 1 challenge for patients, especially an aging population.

“There’s some natural increase in healthcare costs, simply related to the demographics of the communities that we serve,” Walsh said. “In addition, drug costs are escalating well in excess of the Consumer Price Index, and even of medical CPI.”

New models of care

In addition to maintaining the quality and the sites of care within the rural and urban communities served, officials said the new partnership will enable more cost-effective drug acquisition through review of supply chain costs and making sure the organization receives the most value in the contracts it has.

“When people don’t get the care they need when they need it and where they need it, healthcare costs go up,” Walsh said. “When people show up in our emergency departments needing care that could have been provided in a primary care office visit, we’ve got work to do to make sure that we help people find the care they need in lower-cost settings, and that’s one of the things that we’re committed to do through this combination.”

Walsh indicated that new models of care are also needed in order to effectively serve Medicare and Medicaid populations, as well as all patients. Herman noted that 24% of Minnesotans currently receive Medicaid, with as many as 140,000 individuals losing coverage by 2027.

“We felt very, very strongly, with the capabilities that each organization has, that we can serve those people better together than we could individually,” Herman said.

How to get more information, submit comments

For more information on the merger, visit healthpartners-essentiahealth.com.

More information also is available on the state Attorney General’s Office website.

The public can submit comments on the merger through an online community input form at the Attorney General’s website.