Hennepin Healthcare and North Memorial health systems break off merger talks

Two major Twin Cities hospital systems have discontinued talks of a potential merger.

Hennepin Healthcare and North Memorial entered into preliminary negotiations of a partnership earlier this year as a means of creating greater access to care for patients in the region.

"Together we have made the decision to not continue those conversations at this time," said Hennepin Healthcare spokesman Thomas Hayes.

The parties were discussing forming an alliance that could range from a partnership to a full merger into a single new health care system and planned to draft a letter of intent, according to Hennepin County Board records.

But Commissioner Jan Callison said they never sent the letter, and talks didn't move past informal conversations.

"The feeling was that discussions were premature," said Callison, who also serves on Hennepin Healthcare's board of directors. "The timing maybe wasn't right. There's a CEO search going on. There's a desire to have a better sense for what the hospital needs to do. And it just felt like it wasn't the right time for a conversation."

Callison said there are no plans to pick up the conversations at this time.

Hennepin Healthcare and North Memorial serve some of the most vulnerable patients in the region and include Level 1 trauma centers, which provide the highest level of surgical care for critically injured patients.

Hennepin Healthcare, a subsidiary corporation of Hennepin County, is home to a 484-bed academic medical center, a large outpatient specialty center and a network of clinics, including its flagship facility, HCMC, in downtown Minneapolis.

North Memorial has 27 specialty and primary care clinics and two hospitals, Robbinsdale's North Memorial Health Hospital and Maple Grove Hospital.

Health care mergers and acquisitions hit record levels nationally in 2018 as hospital systems continued looking for ways to cut costs and gain a competitive edge.

The local merger talks came after years of Hennepin Healthcare reporting financial issues, operating at a loss of $49 million in 2016 and $29 million in 2017, according to hospital records. County Board documents showed that financial performance improved in 2018. An alliance could have potentially benefited both systems, strengthening Hennepin Healthcare's financial position, while bringing North Memorial into a vast network of medical specialists.

"Evaluating partnership opportunities is an important part of ensuring our communities have access to the services they need and expect," said North Memorial spokeswoman Katy Sullivan, who confirmed the news Friday. "At this time, Hennepin Healthcare and North Memorial Health have decided to end the exploratory partnership conversations that were reported earlier this year."

Andy Mannix • 612-673-4036