Minnesota AG’s office asks Sanford, Fairview to delay merger

Jan. 26, 2023

The Minnesota attorney general’s office has asked Sioux Falls-based Sanford Health and Minneapolis-based Fairview Health Services to delay finalizing their planned merger.

The closure of the deal had been planned by March 31, chief deputy attorney general John Keller said Wednesday at the third of four public hearings in the state.

“It’s more important to do this right than to do it fast,” Keller said, adding that the existing timeline “concerns the attorney general’s office.”

In addition to the public hearings and submitted comments, which have exceeded 3,500, the attorney general’s office is conducting an internal investigation into the merger’s projected impact on a multitude of factors, including access to care, health insurance, staffing and charitable support.

“We are waiting for substantial information from the parties that will help us analyze the situation,” Keller said.

The University of Minnesota has communicated that “the proposed merger is moving too fast and their interests have not been appropriately considered,” and hearings in the Minnesota Legislature are forthcoming, Keller said.

“The proposed merger we know will have significant impact on Minnesota,” he said. “What we don’t know is exactly what that significant impact will be, but we’re confident there will be one.”

Sanford CEO Bill Gassen addressed the timeline of the proposed merger in his comments at the hearing.

“This merger is about doing more for those we serve, and every day we delay merging Sanford and Fairview is a missed opportunity to realize the significant benefits for our patients, our people and the communities we serve,” he said.

“This merger is also about taking critical steps to provide the necessary financial sustainability to serve Minnesota communities for generations to come.”

As a combined system, Sanford commits to honoring Fairview’s agreements with the University of Minnesota through their expiration in 2026, Gassen said.

“That leaves more than enough time for the combined system to work with the university on the terms of a repurchase of the medical center it sold to Fairview in 1997 and determine what a future clinical relationship could look like,” he said. “University leaders have said publicly that this merger cannot move forward without the university. With all due respect, yes it can.”

Nothing will change for the university as a result of the merger, he added.

“The significant funding provided by Fairview – approximately $900 million in annual payments — will remain the same, their teaching mission continues, and they maintain their current clinical partnership with the combined system,” Gassen said. “In addition, our affiliation agreement with the university will continue to be governed by a local, Minnesota-based board. Finally, the university remains independent and maintains the ability to make its own decisions about its future.”

The hearing was held in Worthington, Minnesota, where Sanford serves more than 21,000 patients. Gassen said he and Fairview CEO James Hereford toured the medical center Wednesday with the attorney general’s team “and heard first-hand about the ways we have strengthened quality, increased access to critical services, including advanced cancer care and other specialties, as well as improved patient outcomes,” he said.

“Today’s rounding, as well as other opportunities we’ve had to connect with providers, administrators and staff, have reinforced my belief that bringing our systems together will benefit more Minnesota patients and the communities they call home.”

The deal is “not a choice between merger and status quo,” Hereford said.

“The ongoing challenges demand that we do things differently – we must change to provide the care our patients need. Together, we can strengthen our financial footing and improve the experience and support for both patients and providers in a way that neither Fairview or Sanford can do alone.”

The discussion has “a very significant impact on the University of Minnesota,” said Dr. Bevan Yueh, CEO of University of Minnesota Physicians.

“The university’s public health mission is at stake, and that means the stakes are high for the state of Minnesota.”

The core of the discussion is “more than a private business transaction,” Yueh said. “It’s a public question.”

The university seeks public value not market value, he said.

Being part of the combined Sanford organization would be like “owning a car but letting others tell us who can drive the car and who we can and cannot give rides to.”

The university’s land grant mission drives it to educate, research and serve statewide and to devote its resources to Minnesota’s public health, he said.

“We are now presented with a landmark opportunity to chart Minnesota’s health care future and the future of the university and its medical school.”

The university recently released a plan for building a new hospital and improved campus while purchasing back the medical center. It would require state funding.

The two-hour hearing drew some repeat testimony as well as new perspectives. Multiple longtime nurses testified that they felt their work environment and patient care had suffered since they became part of Sanford.

“Nurses are leaving their shifts crying in tears because their shifts are so bad,” one nurse said, adding that on her shift the day before, she’d received four or five texts asking if she could stay late because staffing is so low.

Multiple other Sanford employees in Worthington praised the system’s work.

Reed Fricke, longtime leader at Sanford’s Worthington facilities, shared the system’s quick response during the beginning of the pandemic to hold the state’s first mass testing event in response to an outbreak.

“The entire Sanford Health system jumped into action,” he said. “I had all the resources that Sanford had ready and willing to help.”

The final hearing will be Jan. 31 in Grand Rapids, Minnesota.