Dayton calls Sanford, Fairview merger a 'betrayal’ unless U of M control stays in state

Two people greet each other
Former Minnesota governors Mark Dayton, left, and Tim Pawlenty greet each other before a hearing regarding the proposed merger between Sanford Health and Fairview Health Services at Minnesota Senate Building in St. Paul on Tuesday.
Stephen Maturen for MPR News

Former Gov. Mark Dayton bluntly told a state Senate committee what he believed was at stake if the Sanford Health and Fairview Health Services controlled the University of Minnesota’s medical facilities after the two health care companies merged.

“As the land grant institution, the University of Minnesota and all of its assets are obligated, both legally and morally, to be used for the benefit of our state and our citizens,” he said.

Tim Pawlenty shakes hands with Mark Dayton
Former Minnesota governor Tim Pawlenty and Mark Dayton.
Stephen Maturen for MPR News

“They should be solely governed, directed and funded by its Board of Regents and this legislature. To allow any other arrangement would be a terrible betrayal of the trust bestowed by the people of Minnesota.”

Former Gov. Tim Pawlenty, a Republican, echoed his Democratic successor. While he didn’t comment on the virtue of the merger itself, Pawlenty was clear about the University’s future.

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“As far as I know there is no precedent, there is no precedent, for an out-of-state entity owning or controlling a state's flagship medical academic hospital, or academic medical center,” Pawlenty said.

Members of the Minnesota Senate Health and Human Services Committee listen
Members of the Minnesota Senate Health and Human Services Committee listen as Pawlenty testifies Tuesday, saying, "there is no precedent, for an out-of-state entity owning or controlling a state's flagship medical academic hospital."
Stephen Maturen for MPR News

Tuesday night marked the first hearing of the proposed merger before the Senate, and it’s second hearing before lawmakers so far. The senators took no action, but heard different points of view, from those directly involved and those who may be affected.

The Twin Cities-based Fairview Health Services and South Dakota-based Sanford Health announced their intent to merge back in November. Since then, Minnesota Attorney General Keith Ellison has been looking into the deal to determine if it violates any state laws. Sanford has said the combined company would be headquartered in Sioux Falls.

Keith Ellison testifies during a hearing
Minnesota Attorney General Keith Ellison said his office is continuing to investigate aspects of the merger plan.
Stephen Maturen for MPR News

Ellison said during testimony Tuesday that his office’s investigation into the proposed merger is still ongoing. But confirmed they have moved into a “new phase” of the investigation, and are demanding sworn statements from certain individuals as part of his office’s investigative authority.

During questioning, Sanford President and CEO Bill Gassen said the AG’s office sent them subpoenas at 4 p.m. on Tuesday.

The future of the U has been one of the key sticking points in the deal. This week, University leaders side-stepped an offer by the health care companies to establish a memorandum to acquire the buildings, saying in a letter that they will “continue to work with the legislature, and the Attorney General as well, on the transfer of the assets on the University’s flagship campus.”

Members of the Minnesota Senate Health and Human Services Committee listen
Committee members listen as Minnesota attorney general Keith Ellison said his office’s investigation into the proposed merger is still ongoing on Tuesday.
Stephen Maturen for MPR News

During the hearing, University officials said the proposed merger should be put on hold until the terms of the acquisition, and a plan for strategic partnership, are settled.

“We're not proposing that these buildings be sold on an auction block to us or anyone else that happens to walk by,” said Myron Frans, senior vice president for finance and operations at the U. “What we're saying is they need to be transferred to the University of Minnesota as part of a negotiated strategic partnership.”

Two person talks before hearing start
Dr. Jakub Tolar, dean of the University of Minnesota Medical School, left; speaks with Gassen before the hearing.
Stephen Maturen for MPR News

Sanford’s Gassen and Fairview President and CEO James Hereford said in their statements that they’re willing to work with the university, and addressed some of the concerns about Minnesota charitable assets going out of state.

“The combined system will not divert or transfer from Minnesota any assets donated to Minnesota and that those donations will be used exclusively for the charitable purposes for which they have been designated,” Gassen said.

“This merger is about increasing access, it's about improving quality, and it's about expanding services. Our combined system will be better for our patients, our caregivers, our employees and our communities,” he said.

Two person testify during a hearing
Gassen, left, and Hereford testify, saying they’re willing to work with the university, and addressed some of the concerns about Minnesota charitable assets going out of state.
Stephen Maturen for MPR News

Along with the question over the future of the U’s medical campus, lawmakers questioned Gassen on abortion care, financial investments in the state and the future of long-term care facilities.

Several lawmakers noted the speed at which the deal is taking place.

“This has come very fast. And I think a lot of people, when everything moves fast, there is a lot of concerns, and rightfully so,” said Sen. Robert Kupec, a Democrat from Moorhead.

Stakeholders from the Minnesota Nurses Association, the MN AFL-CIO and the MN Farmers Union at the hearing all spoke in opposition to the merger.