With two public meetings to go, Attorney General Keith Ellison explains review of Sanford/Fairview merger

CATHY WURZER: Our top story, Minnesota Attorney General Keith Ellison is hosting a series of four public comment meetings on the proposed merger between Twin Cities based Fairview Health Services and Sioux Falls based Sanford Health. The third meeting is in Worthington tomorrow. The two companies aim to have the deal done by the end of March. But based on conversations at the meetings so far, there are a lot of open questions. We're going to talk with Minnesota Attorney General Keith Ellison in just a few moments.

But first, MPR News reporter Michelle Wiley tells us what issues have been raised so far.

MICHELLE WILEY: Attendees filled the room at Bemidji State University at a recent public comment hearing on the merger. Many in attendance, including Sanford employees supported the deal, while others were worried about how the new large company would change the health care landscape of Minnesota. Before comment began, the CEOs of both systems attempted to address some of those issues, including how the University of Minnesota fits in the merged company.

University officials say they train more than 70% of Minnesota's doctors. Sanford CEO Bill Gassen says they've tried to keep all options on the table, including the University reacquiring its teaching hospital.

BILL GASSEN (ON RECORDING): We're committed to honoring the existing agreements with the University while we work together on the terms of a repurchase and what a future partnership could look like.

MICHELLE WILEY: That's a choice the U seems to be opting for along with seeking full control of other on campus facilities with financial support from elected officials. Dr. Jakub Tolar is the dean of the U's medical school and is board chair for the University of Minnesota physicians. In an interview with MPR News, he said the plan had been in the works for a while. But the merger announcement moved the timeline up.

JAKUB TOLAR (ON RECORDING): It actually has made it obvious that we need to answer this question no matter what in the next couple of years. So now is as good as time as ever.

MICHELLE WILEY: What's still unclear is what they want their role to be in a potential Fairview/Sanford merger. The CEOs of both health care organizations told MPR News that they plan to go forward with or without the University.

Meanwhile, the U's partnership with Fairview runs through 2026, something Tolar says they plan to honor. He also says they don't necessarily want the U removed from the deal.

JAKUB TOLAR (ON RECORDING): I want the University to be a part of the deal because the University is the center of gravity of the deal. The reason why the enormous amount of revenue that comes to Fairview comes from the hands of my clinicians.

MICHELLE WILEY: What they want it seems is assurances. For example, one of the concerns is what kind of partnerships U of M physicians could pursue in a combined system. Tolar, who sits on the Fairview board, says it's a key issue.

JAKUB TOLAR (ON RECORDING): It was pretty clear that the view of the platform that Sanford and Fairview put together was an exclusive relationship with University of Minnesota physicians via contract or direct employment. But either way, it would be limiting our ability to partner with others.

MICHELLE WILEY: In response, Fairview officials said they're not proposing any exclusive relationship for University physicians. Still, Tolar says the end of March is too soon, and the deal should slow down.

The CEOs of Fairview and Sanford told MPR News that anything's possible, but they're not actively contemplating slowing down the merger timeline. They say the deal is lawful and that every day it's delayed is a missed opportunity to provide better care to Minnesotans. Fairview CEO, James Hereford.

JAMES HEREFORD (ON RECORDING): That's why we want to continue to push this while we have conversations with the University to say how can we collaborate with you in a way that serves your vision and your mission?

MICHELLE WILEY: Recently, the credit rating agency Moody's Investors Service downgraded Fairview's credit rating due to the company's financials. In a statement, Fairview says that report reflects the urgency of the situation and that combining with Sanford would strengthen their quote, "financial footing."

Meanwhile, some observers have raised other questions about the deal from what it will mean for Union workers to concerns about pricing. In Bemidji, attorney General Keith Ellison noted his office is interested in those issues as well.

KEITH ELLISON (ON RECORDING): And in health care mergers, where in some cases hospitals and clinics expanded services, there have been others where they've closed or reduced services. And we want to know which effect this one will have.

MICHELLE WILEY: Ellison's office is still reviewing the proposed merger and expects to complete their assessment around the end of the month. Michelle Wiley, MPR News.

CATHY WURZER: Now for more on this potential merger is Minnesota's Attorney General Keith Ellison, who's on the line. Welcome to the program.

KEITH ELLISON: Thank you, Cathy. How are you?

CATHY WURZER: I'm good. Thanks for being here. So there was a quote in that piece by Michelle Wiley. One of the participants, one of the CEO says the deal is lawful. Is that your read, too?

KEITH ELLISON: I think that's a premature determination. At this point, we are reviewing this deal for where it squares with our charitable assets and trustees act, where it squares with our antitrust law, and even federal law, like the Clayton Antitrust Act. We are doing a review right now. So I think I would not say that today it is [INAUDIBLE]. I also would not say that it's apparent and obvious that it's unlawful.

I think that we are amassing information. We are gathering that information right now. And by the end of the month, I'm confident that we will come to a conclusion as to what the status of this merger is relative to the law.

CATHY WURZER: Had the chance to talk to former AG Lori Swanson about what happened back in 2013 when both entities tried to merge at that time. And she mentioned-- and you touched on this-- the stumbling blocks last time were shifting control of the University of Minnesota Hospital to an outstate entity, Sanford, and Fairview's control over a billion dollars at that time-- it's much larger now-- of charitable assets that existed and grew because of the support of Minnesota taxpayers. What's different this time?

KEITH ELLISON: Well, there are a number of things that are different. But I think that General Swanson may have a point. There might be some differences. But the core issue could well be the same. That's what we're trying to make sure we understand.

I would say that this time the parties seem to be prepared for people who will raise questions. They've been-- the CEOs of both entities have been at the meetings that I've been holding, and they're making their case. But at the end of the day, we could determine that what General Swanson said 10 years ago is still the case.

We are in a research mode right now with both a public and a very robust internal investigation going on right now, which is why I think that the self-imposed deadline in the letter of intent of March 31 is too quick. I think that we need more time. I can tell you that we have asked the parties for more time. They're contemplating our response, and we'll see what happens.

But this is moving along at a pace that I think is not giving my office the time it needs to review how this is going to affect health care in our state, workers who work for the system, patients, costs, consolidation. There's still a lot of things on the table, including University Hospital, which has a research academic teaching mission, which is extremely important in Minnesotans.

And I think I'd rather know what's going to happen with that before a merger goes through than after.

CATHY WURZER: So because-- and you mentioned the timeline here and that you have an active internal investigation going on. With so much to wade through, what are the chances you might file a temporary restraining order?

KEITH ELLISON: Cathy, that's a good question. And I thought you might ask me that. I don't want to lay odds on that question right now. I'd rather just do the investigation. I have to take the clearest look at the evidence that we can and then come down to a conclusion at the end of the month, which is coming up pretty fast.

It's the 24th today. And so we should be at the end of the month in a few days from now.

CATHY WURZER: So help us out here. Who has the ultimate veto power over this deal? Is it you?

KEITH ELLISON: Well, if the merger-- if my office deems the merger to be in violation of any of the statutes or laws that I mentioned, we could file a lawsuit. We might also file a temporary injunction or preliminary injunction. And so that would be the mechanism. Also, the Federal Trade Commission has a role to play here, too.

But if theoretically if everyone thought that this merger comported with the law, then it would just go through. But if we find otherwise, we have legal tools to interfere. Ultimately, then if we did file a lawsuit, a court would decide whether it would go forward or not.

CATHY WURZER: So you've had these public hearings. You're going to have some more. What surprised you so far about what you've heard?

KEITH ELLISON: I can't say it's surprised me. But I have been impressed by how much people care. I mean, folks have driven long distances to get their points of view out. And it has been workers. It has been people who-- residents. It's been patients. It's been people who have benefited from the charitable activities of the two entities. It has been the broad community.

The University folks have been very active and focused on this matter. I've been impressed at how Dean Tolar has made this apparently one of his top priorities. And of course, I've been impressed with how the CEOs have really been hands-on on this as well. They're not sending anybody to testify for their institutions. They come themselves, which really lets you know how high stakes this thing is.

CATHY WURZER: See, for just a quick second, can I switch gears on you for a few minutes. Your office recently filed a lawsuit against Think Tech Act Foundation for its connection to the Feeding Our Future scandal. Are you planning to investigate other non-profits in that case?

KEITH ELLISON: I would say yes. But if we haven't filed it yet, then they're under investigation. And it's generally our practice not to announce investigations until we file the lawsuit.

But this is a very serious matter. We have to safeguard the charitable assets of this state. And this lawsuit is just one expression of us doing it. And I guess I can state, Cathy, that we are still looking into this entire matter, which is sprawling. And we're not done with our review yet.

CATHY WURZER: What's the value of this lawsuit given how large the criminal investigation is?

KEITH ELLISON: It's multi-millions, and we're not done with the discovery process yet. But it'll be very substantial, certainly north of-- it'll be in the millions.

CATHY WURZER: And finally, before you go, this came up on the campaign trail a number of different times. Lawmakers are looking at a bill that would give your office money to hire seven more criminal prosecutors. And that was obviously a big--

KEITH ELLISON: And two paralegals.

CATHY WURZER: And two paralegals. OK. So the number of staff working on criminal cases was this big topic on the campaign trail. How did you arrive at seven new prosecutors? What needs would they fill?

KEITH ELLISON: That's a great question. Thank you for asking. So the AG's office works with the Minnesota County Attorney's Association. We go to their meetings, and we had a series of conversations with them throughout the years. And then, of course, we looked back on history. When Skip Humphrey was the attorney general, there were 12 criminal prosecutors.

Our population has increased by maybe about 800,000 since he was the attorney general. And so we still wouldn't even be back to the status quo. So based on history and based on review with our colleagues and our partners, we think this is the right number, seven plus two paralegals.

CATHY WURZER: All right.

KEITH ELLISON: And then based on the number of cases that we get, of course.

CATHY WURZER: All right. Well, we covered a lot of ground. Thank you, General Ellison. I appreciate your time.

KEITH ELLISON: Any time. Thank you.

CATHY WURZER: Attorney General Keith Ellison. We were talking about the proposed Sanford/Fairview merger. He's holding two more public meetings on that merger between those two big health care providers in the state, Sanford Health and Fairview Health Services.