Essentia Health making major acquisition of North Dakota, rural Minnesota facilities

DULUTH — The city's largest employer and health care provider, Essentia Health, intends to grow its regional footprint with a massive acquisition of hospitals and clinics owned by CommonSpirit Health in North Dakota and rural Minnesota.

The two health systems have signed a letter of intent to bring two dozen CHI-branded facilities under Essentia ownership as early as this summer.

Anchored by the CHI St. Alexius Health hospital in Bismarck, N.D., and related clinics and hospitals around the state, the planned acquisition also includes CHI LakeWood Health in Baudette; CHI St. Francis Health in Breckenridge; CHI St. Joseph's Health in Park Rapids; and CHI St. Gabriel's Health in Little Falls.

"This is an exciting opportunity to extend our passion for excellence in rural health care to additional communities," Essentia CEO Dr. David Herman said in a statement. "We're grateful that our shared Benedictine heritage and values form a strong foundation for our ongoing discussions."

CommonSpirit is the nation's largest Catholic health system and the second-largest nonprofit owner of hospitals. It was formed when Catholic Health Initiatives (CHI) merged with Dignity Health in 2019. The system had $29.6 billion in revenue in its last fiscal year and has locations in 21 states.

"Essentia Health is well-positioned to integrate these facilities into a continuum of care, while carrying on the Catholic heritage and mission of these facilities," Dr. Cliff Robertson, senior vice president for CommonSpirit's Midwest division, said in a statement.

Essentia Health declined to share the letter of intent, potential costs of the acquisition or the number of employees affected, saying the health care system would "refrain from additional comment until we have more to share than we have already included in the media release." A CHI spokeswoman did not return a call Friday afternoon.

The letter of intent announced Friday is "the first step in the process of reaching a formal agreement to transfer ownership of these facilities," Essentia said in a news release. "It is the hope of both organizations that the due-diligence process moves forward smoothly, and the CHI facilities could join Essentia by summer 2021."

Last year Essentia laid off 900 employees, 6% of its workforce, after losing $100 million in the early months of the pandemic due to restrictions on nonemergency care. Hospital officials say they have hired back a number of clinical staffers but declined to say how many.

At the end of June, Essentia had about 13,200 employees across its locations in Minnesota, North Dakota and Wisconsin and now says it employs about 13,800 people.

Also in June, Essentia Health completed its takeover of Mercy Hospital in Moose Lake.

The Duluth-based health system, which had revenue of $2.19 billion in its most recent fiscal year, is building a new $900 million campus in downtown Duluth that is expected to open in early 2023.

Brooks Johnson • 218-491-6496