Image by PublicDomainPictures from PixabayA proposed $26 billion combination could have big implications for the ambulatory surgery center (ASC) market.
Sutter Health and Allina Health have signed a letter of intent to combine into a single nonprofit health system. The deal that would reshape the ASC landscape by uniting two of the sector’s most active health system operators under one roof.
The proposed transaction, announced March 17, would create a $26 billion system spanning Northern and Central California, Minnesota and parts of Wisconsin. The combined health system giant would boast 39 hospitals, more than 400 primary and specialty care sites, 18,000 aligned physicians and 88,000 employees – all serving more than 5 million patients.
Based on 2025 revenue figures, the combined organization would likely generate more annual revenue than Mayo Clinic, according to reporting by the Minneapolis Star Tribune.
In terms of ASCs, the numbers are similarly striking. Sutter currently operates 36 ASCs throughout California, a source confirmed to ASC News. Allina brings nine facilities in the Upper Midwest.
Together, the combined system would enter the deal with approximately 45 ASCs – and a previously stated commitment to build more.
“Sutter is committed to addressing the health care access challenges facing patients in California,” Sutter Surgery Center Division CEO Brad Heaton previously told ASC News. “We’re investing significantly in new and enhanced care facilities and services across all areas, including ambulatory surgery.”
Building around ambulatory care
In the organizations’ announcement about their letter of intent, Allina and Sutter also teased a $2 billion investment for Minnesota and western Wisconsin.
The announcement specifically identified “establishing new ambulatory care locations and expanding specialty institutes” as a primary use of that capital.
Sutter CEO Warner Thomas framed the deal in terms that will resonate with ASC operators tracking the outpatient migration, too.
“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,” Thomas said in the announcement. “This includes establishing new ambulatory and specialty care sites to fill care gaps and meet growing community needs, as well as recruiting more physicians and enhancing AI and digital health capabilities.”
Building on the health systems’ “complementary strengths and combined expertise,” Thomas said, they hope to build a health care “innovation engine” accelerating “how ideas move from development and design into improving the health of patients and communities.”
Again, Sutter’s ambulatory ambitions predate this deal. As ASC News reported in July 2024, the system’s Surgery Center Division had already announced plans to open 25 new ASCs over five years.
Sutter has several ASCs that were recently named in the U.S. News & World Report rankings of top-performing ASCs in the country, an ASC News review found. Some of those facilities include Sutter Sierra Surgery Center, Sutter Roseville Endoscopy Center and Sutter Amador Surgery Center, for instance.
Allina has at least two ASCs on the top-performing ASCs list: Allina Health Surgery Center – Vadnais Heights and Allina Health Surgery Center – Brooklyn Park.
Further contextualizing the deal
The combined system’s $26 billion in annual revenue would rank it among the largest nonprofit health systems in the country.
For context, Sutter alone ranked No. 15 among U.S. health systems by revenue in 2024, according to news reports, while Allina ranked No. 50.
In the nonprofit space in particular, the deal stands out. Last year’s Sanford Health-Marshfield Clinic merger – itself a notable cross-market combination – was a fraction of this scale. The Sutter-Allina combination more closely resembles the mega-mergers of the for-profit sector, though it carries the regulatory and mission-driven dynamics of the nonprofit world.
What’s more, it’s important to note that cross-market deals like this one have drawn increasing scrutiny from regulators.
But Sutter has navigated that terrain before. In 2021, it paid a $575 million settlement with the California attorney general over anticompetitive practices allegations.
The union representing 600 Allina physicians has already called on Minnesota Attorney General Keith Ellison to oversee the transaction, according to KSTP.
Technology as a strategic differentiator
Both systems have also leaned into the technology angle as a core rationale for the deal.
Sutter’s Northern California footprint puts it in proximity to Silicon Valley’s AI ecosystem. Allina’s Twin Cities base sits at the center of the U.S. medical device industry, home to companies like Medtronic and a deep network of med-tech engineering talent.
Sutter Surgery Center Division Chief Medical Officer Dr. Peter Bravos has previously highlighted the system’s technology trajectory.
“Robotic and artificial intelligence-aided tools can offer many benefits to patients, including less pain and faster recovery time,” Bravos told ASC News in 2024. “Many of our ASCs use them for general, urologic, gynecologic and orthopedic surgeries, and some have begun using an AI-powered polyp detector to aid in endoscopic procedures.”
Allina CEO Lisa Shannon echoed the innovation theme in the deal announcement.
“We are incredibly excited for the opportunity to harness the collective strength of our two mission-driven organizations to make a difference in the lives of our patients, communities and care teams,” Shannon said. “As one nationally leading, locally committed nonprofit health system, we will be uniquely positioned to be at the forefront of innovation, building upon the expertise of our physicians, advanced practice providers, nurses and team members to chart a new path for healthcare.”
What comes next
The two systems will complete due diligence and finalize terms of a definitive agreement in the coming weeks and months, with a targeted close by the end of 2026, pending regulatory approval.
Allina will become Sutter’s Upper Midwest Division, retaining its name, brand and Minneapolis headquarters. Shannon will remain division CEO, while Thomas will lead the combined system.
Key questions for the ASC industry to watch include whether Sutter’s previously shared ASC expansion plans will be extended into Allina’s markets, or how Allina’s nine facilities will be integrated into Sutter’s operating model.
