What a bill restricting health care mergers could mean for the proposed Sanford-Fairview deal
Gov. Tim Walz indicated a special session may be possible as the legislative session wrapped up.
“I think there is going to need to be more talk on the University of Minnesota medical school,” Walz said on Sunday. “This summer, there may need to be some work once we have a little more of a vision and plan for where this goes.”
The U of M wants to reacquire the East Bank and West Bank facilities and Masonic Children’s Hospital from Fairview Health Services. The university asked the Legislature for $950 million, but the request didn’t move forward during the regular legislative session.
The U of M’s partnership with Fairview expires in 2026 and includes an option for a 10-year extension in 2023. The University announced its plan to gain ownership of the facilities in January as Fairview pursues a merger with South Dakota-based Sanford Health.
The Minnesota Legislature, meanwhile, passed a bill on Sunday that will prevent U of M health care facilities from being owned or controlled by an out-of-state entity unless the attorney general determines it’s in the public interest.
“This is a critical development toward safeguarding the University of Minnesota academic health system,” said Myron Frans, the university’s senior vice president for finance and operations. “We are grateful for the Legislature’s action in prioritizing the health of Minnesotans and improving the University’s position to continue our mission to train the next generation of health care providers, advance life-changing treatments and cures, and provide innovative care to Minnesotans in every corner of the state.”
The bill also prohibits health care systems from merging if it will “substantially lessen competition or tend to create a monopoly.” It allows the attorney general to bring action in district court if a transaction isn’t in the public interest, which includes factors such as harm to public health or increasing costs for patients.
“Our health care system has to be about the public interest,” said Rep. Tina Liebling, DFL- Rochester, before the vote.
Attorney General Keith Ellison is currently reviewing the Fairview-Sanford merger. It has been delayed twice so far. The health care systems announced in April they extended the target closing date until after May 31, 2023, and agreed to give 90 days’ notice prior to closing.
Fairview Health Services released the following statement:
“This new law does not change our desire to combine with Sanford Health, and while it creates new regulatory processes, we strongly believe that the merger is in the public interest and that we can comply with the new requirements.
“As a combined organization, Fairview and Sanford can deliver our primary, specialty and sub-specialty care to a broader and more diverse population across Minnesota and throughout the Midwest. Together, we can continue to invest in our operations across Minnesota, and enable greater innovation. And we can create new opportunities for our team members for career growth and training through access to more resources, collaboration opportunities and peer networks; as well as greater geographic career mobility across a network of 56 hospitals and 600 care sites.
“We also believe an ongoing partnership with the University of Minnesota is in the public interest. A combined organization gives the University of Minnesota Medical School access to a broader and more diverse patient population — especially in greater Minnesota – and would position them as a regional hub for medical research and education. It would expand the ability to conduct research and clinical trials and bring academic medicine to every corner of our state.
“That said, the University must decide its own future. While our preference is to continue a partnership, we remain willing to sell UMMC to the University in response to their public request, under appropriate terms, as one option for a path forward. We hope to resolve these discussions in short order, so that everyone can focus on planning for a successful future.
“As we move forward, we will continue to work closely with the Attorney General’s Office on their review and continue to abide by the commitment to provide 90 days’ notice prior to any closing date.”
Sanford Health released the following statement:
“We remain confident in the significant benefits of our merger for the patients and communities we serve across greater Minnesota. Together with Fairview, we will make historic investments to strengthen high-quality care delivery in Minnesota, address critical workforce challenges and expand access to care for the underserved in both rural and urban areas. We have worked closely with the Office of the Attorney General on their review since last fall and will continue to do so in order to comply with the new requirements should this legislation be signed into law.
Since the earliest days of our merger conversations in 2022, we have recognized the value of an academic medicine partnership and remain optimistic about our ongoing discussions with the University of Minnesota. We are hopeful that we can arrive at an agreement with the University that advances world-class care and best serves the interests of patients and communities across Minnesota.”
Attorney General Ellison released this statement:
“Minnesotans understand why fair markets and competition matter. Many people also recognize the impacts of healthcare mergers on patients, prices, medical personnel, and communities are too often negative. This bill gives the Attorney General tools to protect consumers, workers, and all Minnesotans facing healthcare mergers and to determine whether mergers are in the public interest. It creates more transparency in healthcare transactions by requiring transacting parties to provide notice to the Attorney General’s Office and the Department of Health that they were not previously required to give. The bill also codifies certain federal powers that are already in place. In addition, it allows the Attorney General’s Office to challenge a merger in court on the grounds the merger is not in the public’s interest. We now join 29 other states that have a similar public-interest standard. Our investigation into the proposed Sanford/Fairview merger continues with these new tools.”