As UMN officials contemplate the future of a destination academic medical system, others wait

Medical Cente is seen
Over the past year two Minnesota health systems have been trying to merge.
Kerem Yücel | MPR News

For nearly a year, one of Minnesota’s largest health systems has been trying to complete a merger. The proposed partnership between Fairview Health Services and South Dakota-based Sanford Health was contentious from the moment it was announced, drawing ire from union officials, private citizens and public officials alike.

At the center of these concerns lay the future of the University of Minnesota’s medical school and associated institutions. The U has a long-standing relationship with Fairview.

The system purchased the U’s academic hospital in a deal that closed in 1997, and the two entities are engaged in a joint clinical enterprise that runs through 2026. But since the announcement of the proposed merger, university officials have repeatedly questioned the deal, saying it cannot move forward until the U’s future is resolved.

“In order for this proposal to go forward, or any proposal to go forward involving university assets, we need to make sure that it is consistent with the mission,” said Myron Frans, senior vice president for finance and operations. “That public mission of the University of Minnesota, to provide health care for all people in the state of Minnesota.”

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That future now includes the development of a destination academic medical system, which the U announced at a press conference Jan. 12.

“We want the best for the state of Minnesota and the structure that is the best, and you can look anywhere in the United States, is a destination academic health system,” said Jakub Tolar, dean of the medical school and vice president of clinical affairs.

Two person talks before hearing start
Dr. Jakub Tolar, Dean, University of Minnesota Medical School (left) speaks with Bill Gassen, Sanford Health, President and CEO before a hearing regarding the proposed merger between Sanford Health Fairview Health Services at Minnesota Senate Building in St. Paul on March 7.
Stephen Maturen for MPR News

But months after that initial announcement, it’s still not clear what kind of shape the proposed medical system will take, or if the University will get the funding it needs to support the transition.

At a retreat of the newly-appointed Board of Regents earlier in July, members heard from a consultant working with the U about a number of examples of different governance structures that the new system could take; from a system fully controlled by the U, to one co-run by another hospital system, among others. No decisions on the structure were made during the retreat.

While some might wonder why, after more than seven months since the university announced its intentions, this question of structure and governance hasn’t been answered already, Tolar says whatever path they take isn’t as important as getting to the destination.

“It's equidistant pathways to it,” he said. “It can be done in multiple different ways, as long as you hold high the virtues and values of that final destination academic health system.”

Still, this outstanding question about how the medical system will be set up could make it difficult to move forward. During the 2023 legislative session, the U asked for significant funding from the Legislature to pursue the project — to the tune of $950 million. The university says the final number could be much lower depending on final negotiations.

The Legislature didn’t provide those funds, instead passing a bill to expand the attorney general’s powers concerning health care mergers. A special session could be called to allocate it, but the university will likely need to provide more specifics.

“The challenge right now is that the amount of funds that might be needed … we'll have to wait to see in terms of the structure. So the structure is important in that regard,” Frans said. “I mean, obviously, we've got to sit down with Fairview and Sanford — [and] we're continuing to do that on a regular basis to try to come up with what we think is the better model that Dr. Tolar described, making sure we deliver health care to Minnesota.”

Tolar said the recent conversations with Fairview and Sanford have been “of higher quality” and “much more optimistic.”

All these questions are coming at a crucial time for both institutions. The university and Fairview are currently engaged in a joint clinical enterprise that runs through 2026, but either side needs to give notice if they’re not going to renew the partnership by the end of this year.

Fairview and Sanford have said they’re committed to continuing with the merger, but officials involved say it's hard to take steps forward until they know what the U is planning to do, and until the two systems are more involved in that conversation.

But as to any argument that the U is slowing things down, Frans said they're working every day to move this forward.

“We're moving quickly — as quickly as we can. I think all parties are doing that,” he said. “So I wouldn't say there's one party or the other that's slowing things down. This is complicated. And we're working at our best to get things done as quickly as we can.”

In a statement, Fairview said they're continuing to talk with stakeholders about the proposed combination, and are confident in its benefits. The attorney general’s office said their investigation into the merger is ongoing.