Fairview, Sanford call off health systems merger

Two person talks before hearing start
Dr. Jakub Tolar, dean of the University of Minnesota Medical School (L) speaks with Bill Gassen, Sanford Health CEO before a March hearing on the proposed merger between Sanford Health and Fairview Health Services. The two systems said Thursday that merger talks have ended.
Stephen Maturen for MPR News

Updated 5:44 p.m.

Sanford Health and Fairview Health Services said Thursday they are dropping plans to merge, ending a proposal that would have created a health care system giant in the Upper Midwest.

A spokesperson with Sanford Health said Sanford’s board of trustees made the decision to stop the process at a noon meeting Thursday and informed Fairview CEO James Hereford a few hours later.

In his statement, Sanford president and CEO Bill Gassen said his system had pursued the merger because of the “significant benefits” of combining with Fairview. “However, without support for this transaction from certain Minnesota stakeholders, we have determined it is in the best interest of Sanford Health to discontinue the merger process.”  

The statement did not specify the “certain Minnesota stakeholders.” Hereford also said without elaborating that the deal did not have the support of the needed “certain stakeholders.”

The announcement was a significant turn from just a few days ago. On Tuesday, a Fairview representative sent an MPR News reporter a statement that seemed to signal merger plans were on track.

“We continue to engage in a robust and thoughtful public dialogue with our people, stakeholders in our communities, regulators, elected officials and with the University of Minnesota about our plans to combine with Sanford,” the statement said, adding, “We remain confident in the benefits of the merger for our people, patients and communities and our shared vision to advance world-class health care for all we serve.”

The two systems first made public their plans to combine in November. Since then, there have been concerns raised by union leaders, legislators and others about how the merger would affect health care access in the state, including how it might impact the University of Minnesota’s teaching hospital.

The two companies originally set an end-of-March goal but pushed that date back several times amid pushback from Minnesota Attorney General Keith Ellison and calls for the state to exclude the University of Minnesota from the merger.

The deal drew opposition particularly over concerns it would put ownership of the University of Minnesota medical school's teaching hospital in the hands of out-of-state ownership.

That and other issues drew scrutiny from Ellison, who held public forums on the issue. Minnesota legislators also passed a law last session that put new restrictions and oversight on health care mergers.

Others opposed the merger as well, including a key labor faction: the state’s unionized nurses.

“I personally am relieved that this merger has been called off,” said Mary Turner, a University of Minnesota regent and president of the Minnesota Nurses Association. “I don’t feel that it was in the best interest of the communities across Minnesota.”

The university said its medical operations remain focused on patients and providing “world-class health care for the entire state.”

Ellison in a statement said that Fairview and Sanford made the decision to that ending merger talks “is right for them.” He noted his office had been investigating the merger and whether it would have been in the public interest.

The two entities are huge employers and care providers. Minneapolis-based Fairview Health has 35,000 employees, and more than 5,000 medical providers and nearly a dozen hospital campuses. Sioux Falls, S.D.-based Sanford has 46 medical centers, more than 220 clinic locations and 44,000 employees.

Had the merger gone through, the combined company would have been based in Sioux Falls and lead by Sanford management.

This was the second time in a decade that Sanford and Fairview have failed to complete a proposed merger amid opposition in Minnesota.

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