U presses for control of campus teaching hospital ahead of Sanford-Fairview deal

U of M hospital
The University of Minnesota is planning to ask the state to help it buy back its health care facilities from Fairview Health Services.
Mark Zdechlik | MPR News 2015

Updated 7:10 p.m.

The University of Minnesota is planning to ask the state to help it acquire Twin Cities campus health care facilities from Fairview Health Services. The bid comes as Fairview is planning to combine with Sanford Health, a move that some are criticizing.

“We have a great research university, a great medical school and a great education program. It just makes sense that we have great hospital facilities in which we can combine all three in the same place,” Jakub Tolar, dean of the University of Minnesota Medical School and vice president for clinical affairs, said in a statement Thursday.

University officials said they will ask elected officials to help them achieve this goal and others, by “helping the university fund the shifting of health facilities to university ownership, upgrading the facilities, and joining in the planning for a new, world-class medical center on the East Bank of the Twin Cities campus.”

The U would seek control of the University of Minnesota Medical Centers on the east and west banks, the M Health Fairview Clinics and Surgery Center and the Masonic Children’s Hospital.

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Asked about the U’s move, Gov. Tim Walz said his office has not had a chance to review the entire proposal, but said his administration is “certainly tracking now, working with them.”

“My obvious concerns and priorities always are the best interest of the patients, the best interest of the ability of the University of Minnesota and that teaching hospital, and making sure that Minnesota taxpayers are best served,” Walz said.

Some lawmakers say they want to move the plan forward.

“If ever there was a time to take a part of a surplus, and restore Minnesota’s greatness in the medical health care arena internationally, this is the time,” said Anoka Republican Sen. Jim Abeler.

Rep. Tina Liebling, a DFLer from Rochester, who chairs the House Health Finance and Policy committee, said she’s excited about the idea, but that there are many demands on the projected $17.6 billion surplus, and she’d like to see more details about the University’s plan.

“I can see us investing in the U to help them continue to do this really important work,” she said. “But I also think I'd like to see back some real partnerships and real transparency, some real assurances that we're all looking toward the same goals, which is to serve the public absolutely the best way we can.”

Both legislators have been critical of Fairview’s proposed merger with South Dakota-based Sanford, writing in a joint op-ed, “Whatever happens with this merger, it must not include putting any part of the University of Minnesota under Sanford's control or at its mercy.”

The proposed merger of the two health care companies, announced in November, has drawn concerns from health care workers, union leaders and others for a multitude of reasons, particularly the impact on the university’s hospitals and clinics, especially since the institution is taxpayer-supported.

At a listening session hosted by Attorney General Keith Ellison Tuesday night, Tolar said in no uncertain terms that there should be opposition to the merger until there are assurances for the university and its mission.

“It is our view that because the flagship medical facilities on our campus are a part of this proposed acquisition that [what] you have in front of you is not a private transaction, but a public question for the future for public academic medicine in Minnesota, and public responsibilities for those facilities,” he said.

During the Tuesday meeting, Sanford Health president and CEO Bill Gassen said that there was an option for the university to repurchase the academic medical center.

“Ultimately, it is the university's decision to make, and we're supportive and committed to continuing to work alongside with them,” he said.

In a joint statement Thursday, Sanford and Fairview said the systems “remain interested in a clinical partnership” with the university following the merger and are “ready and willing” to meet with University of Minnesota President Joan Gabel and other U leaders.

University officials say they remain “committed to continued partnership with all health care providers in Minnesota to ensure teaching, research and innovation are provided to medical professionals and patients statewide,” including Fairview, and would continue to contribute to conversations about the merger.

Steve Parente, a professor of healthcare finance at the U’s Carlson School of Management who is not involved with the administration’s efforts to reacquire the medical center, said it's rare for a major university not to control its affiliated hospital.

“If they’re trying to recruit people globally as stars to really advance the institution, probably making it look more like what everyone else is used to might be the way to go. That’s my sense of what they’re trying to do.”

Fairview pays around $80 million a year to support the U’s academic medical mission. As part of Fairview, the medical center is able to draw patients in need of specialized care from a clinic network that spans Minnesota.

Because the bulk of hospitals’ income is from health insurers, Parente says U medical center managers will have to figure out new business arrangements.

“You need to have a pretty clear idea of where the revenue of your new institution is going to lie and how that will allow you to thrive and grow, pay your debt, and really be the star enterprise you want to be.”

MPR News reporters Matt Sepic and Dana Ferguson contributed reporting to this story.