Two health care companies that serve patients in California and across the country have announced plans to merge. Sanford Health and UnityPoint Health signed a letter of intent for a planned $11 billion merger. If the plans are completed, the resulting company would be one of the top 15 not-for-profit health care companies across the country. The combined entity would own 76 hospitals in 26 states and nine different countries. It would also employ 2,600 doctors and 83,000 total staff. In a statement, the CEO of Sanford Health said that both companies were already successful and wanted to build on their records.

The CEO said that by building an even larger health care company, the new firm would receive greater value and offer more affordability. According to the plan, the Sanford CEO would lead the new company, while the UnityPoint CEO would serve as senior executive vice president. While both organizations would continue to operate their existing medical groups and maintain partnerships with other providers and independent physicians, they would share a united governing board. The companies said that they expected the merger to go fully into effect before the end of 2019. Experts said that Sanford and UnityPoint should not run into antitrust problems.

While healthcare companies have touted the strength of size to obtain volume discounts, some economists warn that mergers in any industry tend to drive prices up, especially as hospitals themselves become larger and more expensive. However, consolidation is a significant trend in the health care industry, especially in regional areas where a merged company can become a dominant player in a particular state or broader region.

Mergers and acquisitions can be an important mechanism of expanding and increasing profitability. A business law attorney can provide advice and guidance to firms considering expansion, helping to negotiate an airtight agreement.