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Sanford suspends Fairview merger negotiations

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news Detroit Lakes, 56501
Detroit Lakes Minnesota 511 Washington Avenue 56501

FARGO – Sanford Health, faced with sharp political opposition from the Minnesota capitol, is suspending merger talks with Twin Cities-based Fairview Health Services.

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Today’s announcement follows strong criticism about a possible merger from the Minnesota attorney general and lawmakers concerned about what they characterized as a “takeover” of the University of Minnesota Medical Center.

“Sanford Health has a philosophical policy of ‘only going where we are invited,’ and it seems as though the incredibly positive beginnings to discussions of the merger of Fairview Health and Sanford Health has turned into a situation that finds us being unwelcome by some interested parties and key stakeholders of our proposed merger partner,” Kelby Krabbenhoft, Sanford’s chief executive officer said in a statement.

Fairview assumed control of the university medical center in 1997, and its acting chief executive has said no merger with Sanford would happen without the university’s approval.

Since the Sanford-Fairview talks exploring a possible merger recently became public, the University of Minnesota has revealed it made a competing offer to merge with Fairview.

Krabbenhoft said a possible union with Fairview would have a "merger of equals," and rejected suggestions of one organization "acquiring or controlling" the other.

"Those terms were never contemplated becuase they would be rejected on their face as unacceptable to each of these historic, charitable, and successful organizations," he said in the statement.

"Nonetheless, this misperception has been created to serve an agenda that undermines the good faith and emerging trust that is essential in any contemplated merger of this sort."

Minnesota Attorney General Lori Swanson, who held an informal hearing Sunday about the possible merger – the day before a Fairview board meeting – has raised questions about charitable assets going to an out-of-state organization.

Gov. Mark Dayton publicly expressed support for Swanson’s actions and endorsed a Fairview-University of Minnesota merger.

In another setback, Minnesota lawmakers have proposed legislation to block health system mergers involving out-of-state suitors.

In his statement, Krabbenhoft noted resistance to the possible merger with Fairview, which he said has been damaging to Sanford:

“I am now concerned that the good reputation of Sanford may be injured by a process that only intended the highest of ideals and integrity for what we believed to be a compelling solution to the challenges facing health care delivery today and in the future. As such, I think it’s time for Sanford to withdraw from this process, and only re-engage if Fairview and the University of Minnesota have sufficiently resolved issues within their relationship and secured a positive understanding by Attorney General Swanson of their intentions and plans.”

The political firestorm over a possible Sanford-Fairview merger erupted at the same time the Mayo Clinic, which has locations in Arizona and Florida, has been asking Minnesota to lend financial support for a planned multibillion-dollar expansion of its headquarters campus in Rochester.

In a review of merger “synergies,” Sanford and Fairview estimate the two health systems would realize cost savings of $40 million to $60 million a year through bulk purchasing of supplies and sharing of electronic medical records.

Sanford is incorporated as a nonprofit in North Dakota and has its principal corporate headquarters in Sioux Falls, S.D. It has significant operations in western Minnesota, where it employs 6,000.

Formerly Sioux Valley, Sanford merged with the former Fargo-based MeritCare in 2009, and later with health systems based in Bemidji, Minn., and Bismarck.

Article written by Patrick Springer of the Forum News Service

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