Many Questions Raised About Fairview/Sanford Merger

A day after Attorney General Lori Swanson pressed for information at a hearing at the state Capitol, state lawmakers reportedly introduced bills that would place a moratorium on the sale of University of Minnesota hospitals to an out-of-state company.

Since news spread two weeks ago that Fairview Health Services is in discussions about the possibility of being taken over by Sioux Falls, South Dakota-based Sanford Health, the University of Minnesota has reportedly proposed its own takeover of Fairview and multiple questions and challenges have arisen.
According to a Star Tribune report, several lawmakers on Monday sponsored bills that they claim would put a moratorium on the sale of U of M hospitals to any out-of-state company—a move that would halt a Sanford takeover. Additionally, the chair of the House Commerce Committee is reportedly calling on Fairview executives to appear before a legislative hearing next week to discuss their plans.
Minneapolis-based Fairview owns seven hospitals and operates more than 40 primary care clinics. It has controlled the University of Minnesota Medical Center, a research and teaching hospital that trains about 70 percent of Minnesota doctors, since 1997.
Lawmakers’ reactions to the possible Fairview/Sanford merger come a few days after the public learned that U of M officials unveiled their own proposal to take over Fairview in a move that would pre-empt a possible Fairview/Sanford merger.
According to a Star Tribune report, U of M President Eric Kaler said in a January 28 letter to Fairview’s top executive that a deal that excludes Sanford would be the “best choice for our patients and communities, our state, and our physicians, staff, and students.” He reportedly added that the university would use its financial resources to “invest to meet community needs.”
Minnesota Attorney General Lori Swanson, who late last month voiced concerns about the possible merger, reportedly pressed for information Sunday at a hearing at the state Capitol—which provided the first opportunity for public input on the possible merger.
According to a Pioneer Press report, Swanson questioned whether discussions surrounding a merger have been inappropriately intertwined with conversations about University of Minnesota efforts to raise money for its athletics department.
Sanford Health was created in 2007 thanks to a $400 million gift given by retired banker T. Denny Sanford, a wealthy U of M alumnus who is now a major donor to the Golden Gopher Athletic Fund.
Swanson reportedly pointed to a recent e-mail that a Sanford Health official sent to Kaler. According to the Pioneer Press, it mostly focused on the merger but ended with a brief mention of fundraising efforts for university athletics.
“Sports and athletic donations have nothing to do with the merger of a hospital system,” Swanson reportedly said of the e-mail. “It doesn’t look good.”
In response, Mark Rotenberg, the U’s general counsel, reportedly said Sunday that the U of M has suspended discussions with donors linked to the potential Fairview-Sanford merger until the future of the University of Minnesota Medical Center is resolved. According to the Star Tribune, Swanson welcomed the moratorium, which covers potential gifts from T. Denny Sanford, saying that Minnesota taxpayers have a major stake in both the medical center and Fairview.
Fairview formed more than a century ago as a Minnesota charitable trust. It is exempt from property, income, and sales taxes and has received public and private gifts of land and money over the years.
Swanson previously said that Fairview “exists because of 100 years of goodwill, generosity, and financial support of the people of Minnesota.” She also pointed out several weeks ago in a letter to Fairview Chairman and Acting CEO Chuck Mooty that when Fairview acquired the University of Minnesota Medical Center in 1997, it agreed to maintain the facility as a “flagship, world-class institution and to provide resources to support world-class education and research” there.
According to the Star Tribune, Governor Mark Dayton praised Swanson’s examination of the possible takeover and voiced support for a U of M proposal to take over the hospital system.