Sutter Health, a 27-hospital system headquartered in Sacramento, Calif., is accelerating efforts to expand beyond its home state, pursuing acquisitions, partnerships and investments aimed at building a broader national footprint.
The strategy comes into focus with Sutter’s proposed acquisition of Minneapolis-based Allina Health, which would create a $26 billion, 39-hospital system spanning California, Minnesota and Wisconsin. The combined system would have more than 400 care sites and roughly 88,000 employees.
The move reflects a broader shift across the industry, as health systems increasingly pursue cross-market transactions to scale operations, diversify risk and strengthen negotiating leverage with payers and vendors. Recent deals — including Ontario, Calif.-based Prime Healthcare’s expansion into Illinois and Maine and Sioux Falls, S.D.-based Sanford Health’s acquisition of Marshfield (Wis.) Clinic — underscore growing momentum behind regional and national platforms.
Under the Sanford-Marshfield merger, the Wisconsin health system became the Marshfield Clinic region of Sanford Health — a structure similar to the proposed Sutter-Allina deal, which is expected to close by the end of 2026, pending regulatory approval.
In a March 16 interview with Becker’s, Sutter Health President and CEO Warner Thomas and Allina Health President and CEO Lisa Shannon said the proposed deal reflects a shared long-term vision centered on expanding access, scaling ambulatory care and investing in digital and AI-enabled capabilities.
“What stands out to me is that while we are both nonprofit health systems that are nationally leading and locally committed, we also have complementary strengths,” Ms. Shannon told Becker’s. “Minnesota sits in the middle of medtech and engineering. California … has done impressive work in AI, technology and innovation. It feels exciting to think about what we could bring together for the people we serve and the physicians and care teams who serve them.”
Is scale the new strategy for health systems?
The Allina deal is part of a broader push by Sutter to grow outside California.
Earlier this year, the system appointed Scott Nordlund as executive vice president of corporate development and partnerships to lead national mergers, acquisitions and joint ventures. The role is focused on identifying growth opportunities beyond Sutter’s traditional footprint.
Sutter CFO and Treasurer Jonathan Ma told Becker’s the health system is exploring multiple ways to expand its reach.
“Just like many not-for-profit health systems, we’re looking at different scenarios,” Mr. Ma said during a Feb. 20 episode of Becker’s “CFO + Revenue Cycle Podcast.” “As we continue to grow, we’re evaluating a number of different possibilities and thinking about how we can make the greatest impact.”
Healthcare is increasingly shifting toward multi-region models, and cross-market expansion is becoming more common as systems face saturated local markets and limited organic growth opportunities. A recent KFF study found regional and cross-market deals are increasingly viewed as a way to expand access while maintaining financial sustainability.
Can outpatient growth unlock access and affordability?
Sutter’s national growth strategy is heavily anchored in ambulatory expansion, digital capabilities and access.
“At Sutter, we’ve been on a journey the past two or three years expanding our ambulatory platform and building our digital and consumer capabilities,” Mr. Thomas said. “It just seemed like this could be the beginning of more in the future.”
That approach aligns closely with Allina’s priorities, including access and affordability.
“Affordability also matters,” Ms. Shannon said. “Access, affordability and building an ambulatory network are key parts of this. As health system leaders, we must find a new way forward.”
Sutter has already made significant investments in growth. Over the past three years, the system has added more than 2,000 physicians and clinicians and opened nearly 30 new ambulatory locations. Sutter now operates 38 ASCs and one surgical hospital, with plans for continued outpatient growth.
“The ASCs within our system are a critical part of that work and what we’re trying to accomplish as a health system,” Bradley Heaton, CEO of the surgery center division at Sutter, told Becker’s. “We are continuing to expand our footprint with more ASCs and have comprehensive plans to increase access in the coming years. Our goal is to provide more care for patients seeking high-quality, efficient and affordable healthcare.”
Will technology and geography redefine competition?
Leaders also see geographic and technological alignment as a key advantage of the deal.
“Allina is in the home of medtech in the country, with companies like Medtronic and Boston Scientific,” Mr. Thomas said. “Sutter has a large presence in Silicon Valley and San Francisco, where AI innovation is booming.”
By combining those strengths, the systems aim to accelerate innovation and scale new technologies across a larger patient base.
“Spreading these technologies across a broader population allows us to have a bigger impact and be more cost-effective,” Mr. Thomas said.
The combined system would serve a large and growing population. Sutter’s primary service area includes about 13 million people, while Allina serves roughly 3 million people and about 3.6 million unique patients each year.
Sutter enters this expansion phase with improving financial performance, reporting $509 million in operating income (2.6% margin) in 2025, up from $142 million (0.8% margin) in 2024, on revenue of $19.8 billion. Allina reported a $95.4 million operating loss (-1.6% margin) in 2025, down from a $16.6 million loss (-0.3% margin) in 2024. Allina’s financial dip reflects ongoing cost pressures from rising expenses, uncompensated care and payer dynamics.
For Sutter, national growth is ultimately tied to scale and mission.
“There is such a need for healthcare services, not just in California but nationally,” Mr. Ma said.
“What continues to excite me as I look forward is our growth … [and] the potential of our platform and the scale of our mission,” he said. “That growth translates into the ability to serve more people and patients and to have a bigger impact.”
Editor’s note: Kelly Gooch contributed to this article.
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