Darwin's Our Take: Sutter, Allina Health announce intent to merge

Sutter, Allina Health plan to merge, forming a 39-hospital, cross-market health system

Sacramento, Calif.-based Sutter Health has signed a letter of intent to merge with Allina Health, a 12-hospital health system based in Minneapolis that also serves western Wisconsin.  

If the deal is finalized, the resulting nonprofit organization will have 39 hospitals and more than 400 primary and specialty care sites. Based on 2025 earnings, it will generate approximately $26 billion in revenue.

The new health system will employ an estimated 88,000 team members and have 18,000 aligned physicians. According to the announcement, Allina will retain its name, brand, regional headquarters, and a board of directors in Minneapolis, although it will operate as the Upper Midwest division of Sutter Health.

Sutter Health has agreed to invest more than $2 billion to improve access to care and patients’ experiences in the communities Allina serves. In addition to enhancing digital capabilities, stepping up efforts to recruit physicians and clinicians, and advancing research, Sutter said it will establish new ambulatory care locations and expand specialty institutes.

Warner Thomas, Sutter Health’s president and CEO, will lead the combined entity. Lisa Shannon, Allina’s president and CEO, will continue serving in those capacities after Allina becomes a division of Sutter Health.

Next steps include due diligence and finalizing the terms and conditions of a definitive agreement. From there, if regulators approve the organizations’ plans to combine, the health systems have their sights set on closing the deal by the end of the year.

OUR TAKE: Like a number of other large health system mergers and acquisitions that have taken place in the last few years — Risant Health’s acquisitions of Geisinger and Cone Health come to mind, as does Advocate Aurora Health’s merger with Atrium Health — the proposed combination of Sutter Health and Allina Health crosses regional boundaries.

In fact, this type of acquisition has been increasing among health systems, according to a study published by Health Affairs in late 2022. The study showed that more than half of hospital mergers completed between 2010 and 2019 qualified as cross-market transactions.

The study authors noted that such transactions may face less regulatory scrutiny with regard to antitrust concerns, and they may provide the merged health systems with additional leverage in contract negotiations with insurers.

During the J.P. Morgan Healthcare Conference in January, Healthcare Dive reported that Sutter Health said it wanted to pursue “noncontiguous growth opportunities” to expand its reach and attract new partners. Sutter also hired Scott Nordlund in January to lead the health system’s corporate development and national expansion strategies outside of California.

Sutter CEO Warner Thomas said in Tuesday’s announcement of the planned merger with Allina, “Health care organizations across the country are facing complex challenges and a rapidly evolving landscape. As trusted nonprofit health systems, we have a responsibility to fundamentally transform care for patients and communities across the country. When Allina Health joins Sutter Health, we look forward to making significant investments that improve care access and patient experience in Minnesota and western Wisconsin communities. … Building on our complementary strengths and combined expertise, we will build a healthcare innovation engine that accelerates how ideas move from development and design into improving the health of patients and communities.”

Additionally, as MedCity News reported, U.S. health systems are pursuing mergers to gain the benefits of scale and other advantages “amid tight margins, rising costs, and the growing need for technology investments.”

While Sutter serves more than 3.5 million patients in California, the health system said Minnesota’s position as the leading hub for med-tech and engineering would play a key role in establishing the combined system as “a national leader in digital and technological advancements that meaningfully improve patients’ and caregivers’ experiences, while continuing to provide the compassionate care their respective communities have relied on for decades.”

“Together, with our combined resources and greater reach, we will lead the way for evolving how and where care is delivered,” said Patrick Blake, chair of Sutter Health’s board of directors. “We aim to reimagine how patients get and stay well, including focusing on proactive chronic disease prevention and management by combining innovation and more accessible ambulatory and virtual care settings to intervene earlier and improve outcomes.”

HCR #202: Lessons From Leading a Safety Net Hospital w/ Tesa Anewishki

On Chicago's West Side, a 100-year-old safety net hospital serves a community where the average life expectancy is 20 years shorter than it is just seven minutes away. Loretto Hospital collects 32 cents on the dollar, runs on 84% Medicaid, and still finds ways to innovate, collaborate, and show up for people that the rest of the system has left behind. Tesa Anewishki, CEO, Loretto Hospital joins John to discuss how community-rooted care models are closing the gap on health disparities, and why collaboration beats competition when people's lives are on the line. Watch here or listen wherever you get your podcasts.

What else you need to know

Providence is considering selling its insurance business, Providence Health Plan. A potential sale is one of multiple strategic options the Renton, Wash.-based health system is reviewing as part of a “broader focus on delivering high-quality patient care and ensuring [Providence’s] long-term strength,” chief financial officer Greg Hoffman told caregivers, according to a news release.

Hoffman pointed to challenges that smaller, regional health plans like Providence Health Plan face because they lack the scale that makes it possible for larger insurers to share resources, spread costs, and continually invest in technology. “[O]rganizations with larger platforms can improve long-term stability and support innovation,” Providence noted. The health system said it had no further details to share for now, including a timeline for making a decision.

According to Becker’s Hospital Review, while Providence Health Plan reported revenue of $2.5 billion last year, it recorded a $102 million net loss, largely due to increased medical and pharmacy utilization and a drop in the plan’s Medicare Advantage star rating. However. the plan’s CEO, Don Antonucci, told Becker’s he is projecting a return to financial stability this year, as the plan began implementing strategies more than a year ago to reposition itself.

AI-assisted coding tools are likely driving up hospital billing, an analysis by the Blue Cross Blue Shield Association indicates. The association’s data analytics arm, Blue Health Intelligence, examined de-identified claims data for tens of thousands of patients admitted for maternity purposes over a three-year period ending in March 2025. The analysis revealed a significant increase in cases coded for acute posthemorrhagic anemia at a subset of hospitals. The condition usually requires additional medical intervention, often including a blood transfusion. Yet many of the patients flagged with the diagnosis did not receive a transfusion.

The patterns detected in the analysis pointed to AI-enabled coding, the association noted. In a single year, increased coding for this one condition added $22 million in maternity admission costs across the facilities included in the analysis. “Upcoding is a real contributor to our country’s affordability crisis. … This research suggests AI is making it worse,” the association stated in the press release.

Roche has launched a supersized, high-performance AI factory through an expanded collaboration with Nvidia. The deal adds 2,176 Nvidia Blackwell GPUs to Roche’s computational infrastructure, bringing the total to more than 3,500 Blackwell GPUs. Roche said in a news release that it now operates “the pharmaceutical industry’s largest announced hybrid-clause AI factory.” AI factories help speed up drug discoveries, make clinical trials more efficient, and unlock data insights at scale, the Swiss drugmaker noted. “By providing the massive computational power needed to continue to scale our Lab-in-the-Loop strategy — a space we have pioneered for over 5 years — our scientists can build more sophisticated predictive frontier models and further shorten the path from biological insight to life-saving medicine,” said Aviv Regev, head of research and early development at Roche subsidiary Genentech.

Microsoft unveiled Copilot Health, a new feature of its AI-powered Copilot platform that compiles data from users’ electronic health records, wearable devices, and health history to help users interpret their health-related data and prepare for physician visits. The data Copilot Health compiles will be stored separately within the Copilot platform and protected through additional access, privacy, and safety controls, Microsoft said. With the introduction of Copilot Health, Microsoft joins other tech innovators that have recently launched similar AI health chatbots, including OpenAI (ChatGPT Health), Anthropic (Claude), and Amazon (Health AI). Epic also introduced an AI-powered health chatbot for consumers, called Emmie, at the company’s annual Users Group Meeting last August. Microsoft plans to roll out Copilot Health in phases and has opened a waitlist for early adopters.

The FDA approved Johnson & Johnson and Protagonist Therapeutics’ Icotyde (icotrokinra), a targeted oral peptide, as a treatment for patients ages 12 years and older who have moderate to severe plaque psoriasis and are candidates for systemic therapy or phototherapy. The once-daily pill, which targets the interleukin-23 receptor, is the first oral treatment the FDA has approved for this patient population. Previously, patients whose plaque psoriasis did not respond adequately to topical drugs typically had to choose an injectable therapy as their next form of treatment. Dr. Linda Gold, director of dermatology clinical research at Henry Ford Health, said in a press release that “an innovative option like Icotyde is a potential game-changer” for many patients.

D.C. developments

A federal judge granted an injunction to prevent Health Secretary Robert Kennedy Jr. from implementing vaccine policy changes based on recommendations from the new members of the Advisory Committee on Immunization Practices (ACIP) Kennedy installed last year. The American Academy of Pediatrics and several other medical organizations requested the injunction as part of a lawsuit they brought against Kennedy and others who lead federal health agencies. The injunction is in place while the lawsuit makes its way through the legal process. “[T]here is a method to how these decisions historically have been made — a method scientific in nature and codified into law through procedural requirements,” U.S. District Court Judge Brian Murphy wrote in a 45-page ruling. “Unfortunately, the government has disregarded those methods and thereby undermined the integrity of its actions.”  The judge also granted a stay on Kennedy’s ACIP appointments, ruling that his reconstitution of the committee may have violated the Federal Advisory Committee Act. It is likely that the federal government will appeal the ruling.

If disruptions in supply routes, including constricted shipments through the Strait of Hormuz, persist in the war against Iran, they could adversely affect the export and manufacture of generics, as well as the supply of drugs for clinical trial distribution and biologics that rely on cold chain shipments, various news outlets reported. While countries in and around the Middle East will feel the effects first, U.S. consumers could also experience an impact in weeks to come, as numerous global pharmaceutical manufacturers have operations in the Middle East region. India — which supplies almost half of the generic drugs dispensed in the U.S. (by volume), according to CNBC — relies on the Strait of Hormuz to receive materials used in manufacturing drugs and to ship finished products to the U.S. CNBC cited an executive at Relex Solutions, a pharma supply chain software firm based in Helsinki, as its source.  

What we’re reading

When Disregard for Population Health Becomes US Policy. JAMA, 3.16.26 (subscription or registration required)

Cancer CARE (Connected Access and Remote Expertise) Beyond Walls — Safety, Feasibility, and Patient Experience of Home-Based Chemotherapy. NEJM Catalyst, 3.18.26 (abstract available, subscription required for full article)

Primary Care Physician Trends: Dissatisfaction, Stress, And Burnout In The US And 9 Comparator Countries, 2012–22. Health Affairs, March 2026 (abstract available, subscription required for full article)