University of Minnesota leaders express concern over proposed Sanford-Fairview merger

The president and chairman of the board of the University of Minnesota raised concerns Friday about a proposed merger between the Sanford and Fairview health systems, describing the combination as driven by financial interests.

At Friday’s Board of Regents meeting, U President Joan Gabel warned that the deal cannot diminish the university’s medical education, research and patient care.

Minneapolis-based Fairview owns the U’s teaching hospital in Minneapolis, provides financial support to the university’s medical school, and markets health care services jointly with U physicians under the M Health Fairview brand. .

“We will not compromise our mission in any way as we work with Fairview on its clear business and financial challenges,” Gabel said during the meeting in Minneapolis.

The U, he said, is “committed to working with Fairview as they examine this opportunity.” But Fairview officials told the Star Tribune they requested to meet with Gabel and board chairman Ken Powell “more than once and have not received a response.”

“We reached out in advance … and invite you to meet with health system leaders in person to discuss your concerns and share our vision for best-in-class patient care,” Fairview said in a statement Friday. “We appreciate the opportunity to discuss the future of a health system that includes the University of Minnesota beyond our existing 2026 agreement.”

The university has three representatives on the Fairview board, including two who report directly to Gabel, and those leaders have expressed the same concerns and positions in meetings over the past few months, the U said in a statement Friday.

“We have also made it clear to Fairview and Sanford that … others are working closely with the president and board leadership as the university engages extensively with Fairview and Sanford on their proposal,” said the U. “That is the proper forum to evaluate what Fairview and Sanford are proposing.”

Fairview makes annual payments to the U and a related nonprofit organization for university physicians as part of an affiliation agreement that runs through the end of 2026. The health system has provided about $70 million or more annually since 2019 to support the academic mission of the U School of Medicine.

The parties are scheduled to decide next year whether to continue the affiliation beyond the current contract term. It dates back to 1997 when Fairview bought the university hospital, which was experiencing financial difficulties.

In November, Sanford and Sioux Falls-based Fairview announced merger plans. That move came about a decade after state political concerns blocked a similar deal. The combined system would be based in South Dakota, with some 78,000 employees and more than 50 hospitals, including the University of Minnesota Medical Center.

At Friday’s Board of Regents meeting, Gabel said the U’s medical school trains more than 70% of the state’s doctors. The university has emphasized, she said, that any merger must guarantee the independence of the U medical school and recognize the importance of teaching and continued financial support.

“The right question is what’s best for Minnesota in the years ahead, not what might be best for Fairview financially,” Powell said during the meeting.

“Minnesota must stand behind a future where its university, and therefore Minnesota, rules and controls its destiny,” he added. “That does not necessarily preclude affiliation with Sanford or others, but we ask our public officials to judge any proposed reform of Fairview based on whether it is designed to meet the teaching, research and clinical care needs of the only public medical school. of this state.”

Fairview has posted operating losses every year since 2019. During the first nine months of this year, a period when many healthcare systems have struggled financially with rising labor costs, Fairview reported an operating loss of $248, 5 million on $4.9 billion of revenue.

But Fairview chief executive James Hereford told the Star Tribune in November that a merger was not required to address financial challenges.

“As a management team and with our board, we are confident that there is a path for us, just as we are today,” Hereford said in an interview.

Sanford and Fairview leaders say the agreement would inspire innovation, improve patient care and protect health systems against growing economic challenges.

“While we remain proud of our clinical joint venture that forms M Health Fairview, the fact remains that…we have a duty to assess and consider the long-term sustainability of our state’s health care sector and how we can continue to better serve our community and our patients,” Fairview said in a statement.

Shortly after the merger announcement, Minnesota Attorney General Keith Ellison announced an investigation into the possible anti-competitive aspects of the deal and whether the merger would comply with Minnesota law on the use of non-profit and charitable assets. Ellison has programmed a series of public hearings which will probably start in January.

Governor Tim Walz voiced opening to the proposed merger during a November interview with the Star Tribune. The comments pointed to friendlier political waters than the nonprofit health giants found when they tried to combine in 2013, though Walz said: “There’s still a lot of work to be done.”