Sioux Falls, S.D.-based Sanford Health's is set to acquire physician-owned Black Hills Surgical Hospital and Black Hills Orthopedic and Spine Center — a move poised to reshape the region's healthcare landscape, Sioux Falls Live reported Nov. 14.
The acquisition of the Rapid City, S.D.-based facilities includes the 46% ownership stake held by the hospital's physicians, as well as the remaining 54% owned by Medical Facilities Corp. Sanford is purchasing both stakes to assume full control, according to the report.
"The ability to be able to partner with them is really what makes this so attractive and makes them the partner we want to be doing this with," Sanford President and CEO Bill Gassen said in an interview with the publication. "If this were just acquiring an asset out there, we wouldn’t be interested in that."
This transaction marks a "major escalation" in Rapid City's healthcare market, currently dominated by Monument Health, according to the report. But Sanford has long expressed interest in expanding its presence in the area.
"It’s always been a market we’ve wanted to continue to invest in and grow in," Mr. Gassen continued. "We had the privileged opportunity to come together with incredibly talented physicians at Black Hills Orthopedic & Spine Center and Black Hills Surgical Hospital."
The acquisition follows a "decades"-long war between Sanford and the physician-owned hospital industry, according to the report. Under former Sanford leadership, including President and CEO Kelby Krabbenhoft and Vice President of Public Policy Cindy Morrison, the system lobbied extensively against POHs, arguing they prioritize high-revenue procedures for privately insured patients while leaving nonprofit hospitals with a greater share of lower-paying cases.
Supporters of POHs argue that outside of decreased costs, they can deliver superior care, better staffing, and higher-quality facilities.
"Sanford eventually won a major battle in the war," the report continued — citing the Affordable Care Act's ban on new POHs.
As lawmakers consider repealing the ACA restrictions on POHs, as reported by Medscape on May 13, this acquisition could serve as a bellwether for broader changes in the healthcare sector.