DULUTH, Minn. — A potential merger between two large health care systems has been called off.

In a joint news release Friday, Duluth-based Essentia Health and Marshfield, Wis.-based Marshfield Clinic Health System said they were ending merger talks. The two had signed a memorandum of understanding in October 2022 as they mulled a potential merger and then entered a merger agreement in July 2023.

In a separate statement, Essentia said Marshfield’s financial situation “was the primary factor in our decision to end discussions.”

“To be clear, Essentia’s finances are strong, and it is imperative we maintain that stability so we can continue investing in and enhancing care for our patients,” Essentia said.

“Essentia Health and MCHS have engaged in meaningful discussion over the last two years about how our organizations could combine our unique strengths. We have decided that a combination at this time is not the right path forward for our respective organizations, colleagues and patients,” Essentia and Marshfield said in their joint release. “We will continue to seek opportunities for collaboration as two mission-driven, integrated health systems dedicated to sustainable rural health care. Our organizations have great respect for one another, and we each remain committed to strengthening the health of our communities as we deliver high-quality, compassionate patient care.”

This is the second time since 2019 that Marshfield has been in failed merger talks, according to the Marshfield News Herald. In December 2019, Marshfield Clinic Health System and Gundersen Health System of La Crosse, Wis., mutually decided to call off merger talks, the newspaper reported.

Last month, the newspaper also reported a new Marshfield Clinic Health System hospital in Wisconsin Rapids was still not open, six months after it was originally set to see patients. A spokesperson cited “the current challenges in rural health care” as it reviewed potential opening date timelines.

Had the two systems merged, Essentia Health CEO Dr. David Herman was set to serve as the CEO of a new parent company with more than 3,800 providers and 150 care sites, 25 of which are hospitals, across Wisconsin, Minnesota, North Dakota and Michigan’s Upper Peninsula.

Chris Rubesch, an Essentia nurse and president of the Minnesota Nurses Association, said the union viewed the merger failing as a win for patients, workers and the region.

“For years, workers and patients have watched as corporate health care executives closed and consolidated critical services, taking jobs and care out of our communities. Thanks to the efforts of MNA nurses and patients, the tide is beginning to turn,” Rubesch said in a news release. “The defeat of this planned merger is a win against the further corporatization of our health care system. MNA nurses will continue to organize, speak out, and take action to put patient needs before corporate greed in our hospitals.”

In October, St. Luke’s — Duluth’s other major health care system — signed a definitive agreement to merge with Wausau, Wis.-based Aspirus Health.

The Minnesota Attorney General’s Office, which recently gained authority in state law to consider whether such mergers were in the public interest, was reviewing both sets of mergers.

Essentia said regulatory reviews did not factor into the decision to end talks.

Minnesota Attorney General’s Office spokesperson Brian Evans said the Essentia-Marshfield merger review had been ongoing before Friday’s announcement.

“The Attorney General’s Office has been conducting a review of the proposed merger, based on both existing authority under nonprofit and antitrust law and new authority under Minnesota’s new healthcare entities transaction law,” Evans said. “That review was ongoing, but the parties have now decided not to pursue the merger.”

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