Sanford, Fairview discuss potential merger
ST. PAUL – A proposal for Fargo- and Sioux Falls, S.D.-based Sanford Health to take control of Minnesota’s Fairview Health Services faces opposition, but both companies’ officials say they want to continue talks if it could benefit patients.
“We think there’s merit in us exploring it,” Fairview interim CEO Chuck Mooty said. “Whether a relationship between Fairview and Sanford Health – or any other partner – would advance our clinical, research and educational goals is yet to be determined.”
Minnesota Attorney General Lori Swanson hosted the first of a series of public hearings on the issue Sunday in a packed Capitol hearing room. The next hearing is April 21.
“There should be significant public dialogue about any potential transfer of control of this century-old Minnesota charitable institution to Sanford Health of South Dakota,” Swanson said Sunday.
She said the hearings will allow her office to determine the potential merger’s impact “on the Minnesota health care system, the Minnesota charitable community and on Minnesota patients.”
Mooty said health care organization mergers are becoming more common due to changes in the industry.
“As a result of increased competitive pressures and significant cost pressures, we’re seeing more and more health care partnerships and combinations announced across the country,” he said.
Mooty said Sanford and Fairview share similar missions, goals and histories. They also have “compatible, but not overlapping, geographies,” he said. Fairview’s facilities primarily are located in the Twin Cities and northeastern Minnesota, while Sanford’s are in western Minnesota, North Dakota and South Dakota.
Another organization affected by the potential takeover, the University of Minnesota, said the proposal raises serious questions.
“This possible merger carries very important implications for the university, for the University of Minnesota Medical Center and, most important, for the university’s medical training and medical research missions that are of vital importance to all Minnesotans,” university attorney Mark Rotenberg said.
The University of Minnesota Medical Center and clinics have been part of Fairview since 1997, though Fairview does not own the medical school or employ faculty.
Swanson said the University of Minnesota Medical School trains about 70 percent of Minnesota doctors.
“Who we work with is crucial,” University of Minnesota Medical School Dean Dr. Aaron Friedman said.
Mooty emphasized Sunday that if the university objects to the merger, Fairview would not continue to pursue it. The university has not ruled it out, Rotenberg said.
“The U of M … is committed with you to pose these very serious questions and, in the next several weeks, get some answers,” he told Swanson.
The university also has proposed a takeover of Fairview.
“Our discussion with Fairview about this is in a very preliminary phase,” Rotenberg said.
He said the university had been in talks with Fairview before the Sanford merger was discussed about ways to improve their working relationship.
Swanson said she has concerns that control of Fairview, a nonprofit organization, could come from outside Minnesota, especially with Fairview’s current lack of a permanent CEO, if it merges with Sanford. Fairview has benefited from tax exemptions, land donations and other perks from the state, she added, and it employs about 22,000 Minnesotans.
“Fairview Health Services is a treasured part of the Minnesota community,” Swanson said.
Swanson said there have been mixed messages regarding how far along the takeover discussion is, but both groups said no decisions have been made.
Sanford Senior Vice President and Chief Operating Officer Becky Nelson said meetings between the two entities have been focused on finding out whether the shift makes sense.
In a letter Nelson read Sunday, Sanford Health CEO Kelby Kabbenhoft said the companies need time to explore the possibilities.
Swanson questioned the Sanford representatives Sunday about donations to sports teams and facilities, business holdings that could benefit the company and other issues.
“We are and will continue to be transparent through this process,” Kabbenhoft’s letter stated.