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Attorney General Ellison completes review of merger between St. Luke's and Aspirus, reaches five-year oversight agreement

March 1, 2024 (SAINT PAUL) — Minnesota Attorney General Keith Ellison announced today he has reached a five-year oversight agreement with Wisconsin-based Aspirus Health and St. Luke’s Hospital of Duluth, requiring Aspirus to provide to the Attorney General annual reports on the commitments the systems have made in their merger. These reports will help establish whether Aspirus is following through on its commitments to St. Luke’s, and help the Attorney General’s Office determine whether the transaction continues to be compliant with charities and antitrust laws and in the public interest, pursuant to Minn. Stat. 145D.01, the new Health Care Entity Transaction law.

Aspirus and St. Luke’s announced their intent to merge their hospital systems on July 12, 2023. Today, they announced the completion of their merger and several commitments about how the new integrated hospital system will be run. These include commitments to:

• invest at least $300 million in expanding and improving St. Luke’s Duluth within eight years following the closing date;

• maintain St. Luke’s Hospital Duluth as a full-service general acute care hospital and regional tertiary referral center and Lake View Hospital in Two Harbors as an acute care hospital for at least ten years after the closing date;

• honor all St. Luke’s labor, union, and physician contracts, and acquire new equipment and software systems for St. Luke’s;

• maintain the current scope of available reproductive health care and gender-affirming care; and

• maintain community-benefits offerings, including charity care.

The Memorandum of Understanding between Attorney General Ellison’s Office and Aspirus and St. Luke’s requires Aspirus and St. Luke’s to report on the fulfillment of Aspirus’ pre-transaction commitments, including but not limited to: their investments in the community, including charity care; use of charitable assets; maintenance of certain healthcare services at their hospitals and clinics, including behavioral health, critical care, labor and deliver, reproductive health and gender-affirming care services; maintenance of an open medical staff; and application of bylaws and policies consistent across all members of the medical staff, regardless of employment status.

Notably, all six of the labor unions representing St. Luke’s employees issued statements in support of the merger.

“Access to affordable, high-quality healthcare is essential to affording your life and living with dignity, safety, and respect — and health-system mergers can have a huge effect on the quality and cost of care,” said Attorney General Ellison. “Health-system mergers tend to follow a pattern. Systems make promises about improving care and saving patients money, but once the merger is completed, too often systems reduce services, close clinics, and charge patients more. I appreciate the commitments that St. Luke’s and Aspirus have made in their merger. This agreement with them means my office will have oversight for the next five years to make sure they keep those promises.”

Attorney General’s review of health care entity transactions and Aspirus/St. Luke’s merger

The Attorney General is Minnesota’s primary regulator of charities and nonprofits, including hospitals; enforces state and federal antitrust laws; and under state law (Minn. Stat. 145D.01, subd. 2), has additional authority to review certain healthcare transactions. Since the law went into effect in May 2023, the Minnesota Attorney General’s Office has received eight submissions and completed review of six proposed transactions. Review of a proposed transaction may not be completed because a transaction was abandoned or is still under review.

Using that authority, the Attorney General conducted an extensive investigation into the proposed merger, including speaking with many third parties who would be affected by the transaction. This review also included a tour of hospital facilities and a community meeting in Duluth on October 25, 2023, where members of the public provided comments about the proposed merger to representatives of the Attorney General’s Office and the Minnesota Department of Health, with whom the Attorney General works when conducting this type of review. Many citizens expressed support for the merger, while some expressed caution about consolidation in the healthcare industry.

The Attorney General negotiated the agreement with Aspirus and St. Luke’s after considering these public comments and reviewing all the material gathered in this investigation.

About St. Luke’s and Aspirus

St. Luke’s is a nonprofit healthcare system based in Duluth, Minnesota serving patients in northeastern Minnesota, northwestern Wisconsin, and the Upper Peninsula of Michigan. It has 2 hospitals, over 40 primary and specialty care clinics and 2 pharmacies run by approximately 3,000 employees, including nearly 300 physicians and advanced practice clinicians. Locations in addition to Duluth include Hermantown, Hibbing, Moose Lake, Mountain Iron, Silver Bay, and Two Harbors, as well as Ashland and Superior, Wisconsin.

Aspirus is headquartered in Wausau, Wisconsin, serving patients in central and northern Wisconsin and the Upper Peninsula of Michigan. It has 17 hospitals, 75 clinics, home health and hospice care, pharmacies, critical care and air-medical transport, medical goods, and nursing homes run by 11,000 employees. Hospital locations in Wisconsin include Antigo, Eagle River, Medford, Merrill, Ontonagon, Portage, Rhinelander, Stanley, Stevens Point, Tomahawk, Wausau, Wisconsin Rapids, and Woodruff.

A Community Input Form on the Attorney General’s Office website is available for Minnesotans to offer their input on proposed health care mergers. Minnesotans may also offer input by calling the Attorney General’s Office at (651) 296-3353 (Metro area) or (800) 657-3787 (Greater Minnesota).

 

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