Sanford Health continues to expand its reach beyond South Dakota

The growth story continues at Sanford Health with the Sioux Falls, S.D.-based hospital and clinic operator announcing plans last week to combine with Evangelical Lutheran Good Samaritan Society, a nonprofit group based in South Dakota that operates senior-care facilities in 24 states including Minnesota.

Sanford Health, which is a nonprofit that already operates a number of hospitals in western Minnesota, said it might enter the Chicago market by way of the deal.

With overall operations in nine states, Sanford employs about 28,000 people while Good Samaritan employs about 19,000 people.

"Sanford Health continues to explore growth opportunities locally, regionally and nationally," a spokesman for Sanford Health said Thursday in a statement. "As a function of the momentum created with our new relationship with the Evangelical Lutheran Good Samaritan Society, we are in discussions with various entities in the Greater Chicago area."

Evangelical Lutheran Good Samaritan Society provides senior care and services at more than 200 locations including skilled-nursing facilities and senior-living communities. The nonprofit's website lists dozens of locations in Minnesota.

Sanford Health is one of the larger operators of medical centers in the Upper Midwest, with 44 hospitals and nearly 300 clinics. For the 2017 fiscal year, Sanford posted operating income of $151 million on $4.4 billion in revenue.

In 2013, Sanford attempted a merger with Minneapolis-based Fairview Health Services that never came to pass. The South Dakota health system operates a growing network or weight-loss centers across the county including locations from a franchisee in the Twin Cities.

It's collaborating with Bloomington-based HealthPartners on a health plan for Medicare beneficiaries in South Dakota. Last year, Sanford Health made its first international hospital investment by acquiring a minority stake in a German medical center.

Good Samaritan last year posted a loss of about $37.5 million on revenue of about $1 billion, according to a disclosure to bondholders.

A spokesman for Good Samaritan said in a statement: "Over the last few years, this sector has been challenged immensely, and we are working through a time where we have the lowest occupancy in rehab/skilled care in our recent history."

In an August 2017 report, Standard & Poor's lowered its rating on debt at Evangelical Lutheran Good Samaritan Society based on "our assessment of the Society's continued weak financial performance … coupled with what we view as relatively light liquidity."

David Horazdovsky, the chief executive of the Good Samaritan Society, said in a statement: "By bringing the expertise of the professionals at the society together with the health care experts at Sanford … the organizations are stronger together."

"This forward-thinking plan will become a national model to serve communities with exceptional care and value through the full spectrum of one's life," said Kelby Krabbenhoft, the chief executive at Sanford Health, in a statement.

The nonprofits did not release financial terms of the deal, which is subject to regulatory review. Completion is expected by January 2019.

Christopher Snowbeck • 612-673-4744