The president and board chairman of the University of Minnesota expressed concern Friday about a proposed merger between the Sanford and Fairview health systems, describing the combination as driven by financial interests.
At the Board of Regents meeting Friday, U.S. President Joan Gabel warned that the deal could not reduce the university’s medical education, research and patient care.
Gabel said the university has three members on Fairview’s board of directors, all of whom have expressed concerns that any merger must ensure the independence of the US medical faculty and recognize the importance of continued teaching and financial support.
Minneapolis-based Fairview owns the U of Minneapolis teaching hospital and is giving more than $80 million this year to support the academic mission at the university’s medical school. The health system and U Physicians jointly market services under the M Health Fairview brand.
“We will not compromise our mission in any way as we work with Fairview on their clear business and financial challenges,” Gabel said.
“We are committed to working with Fairview as they explore this option, but we want to make sure it is clear that we will not compromise our core commitments to Minnesota and Minnesotans,” Gabel added.
The U’s medical school trains more than 70% of the state’s physicians, board chairman Ken Powell said during the meeting.
“The right question is: What’s best for Minnesota in the years ahead, not what might be best for Fairview financially,” Powell said.
“Minnesota must support a future where its university — and, by extension, Minnesota — governs and controls its own destiny,” he added. “This does not necessarily rule out a connection to Sanford, or others, but we ask our public officials to judge any proposed reformation of Fairview on whether it is designed to serve the teaching, research and clinical care needs of the single medical school. public of this state.”
Fairview Health Services did not immediately respond to a request for comment. The health system has posted operating losses every year since 2019, but 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 feel confident that there is a path for us as we stand today,” Hereford said in an interview.
In November, the health system proposed a merger with Sioux Falls-based Sanford Health about a decade after state political concerns blocked a similar deal.
Sanford and Fairview executives say the deal will inspire innovation, improve patient care and protect health systems against growing economic challenges.
The merged system would be based in Sioux Falls, S.D. It would stand as one of the largest health care providers in the Upper Midwest, consisting of 78,000 employees and more than 50 hospitals, including the University of Minnesota Medical Center.
Shortly after the merger was announced, Minnesota Attorney General Keith Ellison announced an investigation into possible anti-competitive aspects of the deal and whether the merger would comply with Minnesota’s law on the use of nonprofit and charitable assets. Ellison has planned a series of public hearings which is likely to start in January.
Governor Tim Walz he expressed openly about the proposed merger during a November interview with the Star Tribune. The comments signal friendlier political waters than the nonprofit health giants encountered when they tried to combine in 2013, though Walz said, “There’s a lot of work to be done.”
Economists say the combination can increase health care costs giving the consolidated medical carrier more leverage when negotiating payment rates with health insurers. Sanford and Fairview executives have countered that they hope to make health care more affordable — not more expensive — through a merger they hope to complete in 2023.