UPDATE: Jan. 16, 2024: Marshfield Clinic Health System said on Monday that it will furlough approximately 3% of its employees in a bid to manage rising labor costs. The furloughs will impact mostly non-patient-seeing positions, including leadership roles, a spokesperson said.
Dive Brief:
- Duluth, Minnesota-based Essentia Health and Wisconsin-based Marshfield Clinic Health System have called off their proposed merger, according to an announcement last week.
- The systems called off the merger five months after they signed an integration agreement to create a regional 25-hospital health system serving Minnesota, Wisconsin, Michigan and North Dakota.
- This marks another called-off merger attempt for Marshfield. In 2019, the health system ended a proposed merger with Gundersen Health, which would have created a 13-hospital regional system.
Dive Insight:
The Essentia-Marshfield merger was expected to close at the end of 2023 pending regulatory approval, the systems said in July.
However, the systems ultimately determined that combining was “not the right path forward for our respective organizations, colleagues and patients," according to a Friday announcement.
Essentia and Marshfield first announced merger discussions in October 2022. At the time, the health systems said combining would increase patient access to primary and specialty care and help expand needed services, according to a news release. A year later, Minnesota Attorney General Keith Ellison announced that his office would review the merger.
In the nine months ending Sept. 30, Marshfield reported an operating loss of $133.5 million — a ‐5.8% margin — compared to an operating loss of $92.6 million in the prior year. Revenues grew 1.8% year over year to total $2.3 billion. However, expenses climbed by 3.5%, totaling $2.5 billion.
In November, the health system cut executive pay by 15% and suspended its 401(k) match for employees as part of its “financial turnaround strategy,” according to a report from Wisconsin-based outlet WQOW-TV.
Essentia was in the black for its fiscal year ended in June 2023. The health system posted a net income of $121.6 million for the year.
The now-defunct deal is the latest in a series of called off mergers.
In October, Presbyterian Healthcare Services and UnityPoint Health called off a cross-market merger amid ongoing financial troubles.
Other deals collapsed due to regulatory pressures. In December, John Muir Health and Tenet Healthcare abandoned merger efforts following a lawsuit from the Federal Trade Commission. Sanford Health and Fairview Health Services similarly called it quits on merger discussions in July after failing to get buy-in from Minnesota state officials.
