The University of Minnesota and Duluth-based Essentia Health on Friday unveiled early plans to create a new nonprofit entity they say would better serve patients and future health professionals.

In a news release issued Friday, the U and Essentia said their aim is to create a new “all-Minnesota health system.” The pair said they’d invest $1 billion over the next five years to “bring this vision to life.”

Details on the precise nature of the agreement remained sparse as of Friday morning, and its effect on the U’s current affiliation agreement with Fairview Health Services was equally unclear. The university’s agreement with Fairview expires at the end of 2026.

But the U made clear that the proposal is still in its very early stages. Friday’s announcement, the university said, is “just the start of transparent and comprehensive discussions” between the U and Essentia.

“We are at an inflection point in our relationship with Fairview Health Services that requires an urgent and innovative solution,” said Rebecca Cunningham, the U’s president, in the release. “We envision this model as a new path forward in our relationship, one that builds on the momentum all those at M Health Fairview have built and that continues to put patients first, consistent with our organizations’ shared priorities. We have begun conversations and invite further discussion with Fairview to bring this concept to life for Minnesota.”

As of Friday morning, though, Fairview leaders were apparently in the dark on the proposal. In a statement, Fairview said it “became aware of the University’s discussions with Essentia within the last 24 hours and has not been provided with details on the concept.”

Fairview noted that any decisions about its future “will remain under the purview of our board of directors and leadership team.”

Last year, the U began laying the groundwork to buy back the teaching hospital it sold to Fairview decades ago. The two had signed a nonbinding letter of intent in February 2024, but they failed to reach a definitive agreement by a deadline last fall. The February letter followed Fairview’s failed bid to merge with South Dakota-based Sanford Health System.

Fairview said that the U’s latest announcement marks a “sudden change” in the university’s original plan to buy back its academic assets. “Over the last year, we have worked in good faith towards the University’s desire to purchase the academic assets,” Fairview said.

In an email to TCB, a U of M spokesman said that the university and Fairview have been in talks about a new agreement since February. “Thus far, those talks have not been successful,” the spokesman said. “What we know with certainty today is that our existing agreements with Fairview continue M Health Fairview through 2026. What our relationship looks like past 2026 is a matter of ongoing conversation.”

If the U hopes to make good on its promise to create an “all-Minnesota health system,” it will likely need buy-in from Fairview or another health provider in the Twin Cities. Essentia mainly operates in northern Minnesota, and, according to the Star Tribune, is the eighth largest nonprofit in the state. Fairview, meanwhile, operates largely in the Twin Cities, and it’s the fourth largest nonprofit in the state, according to the Strib.

The University of Minnesota and Essentia did not disclose a budget outline for their proposed $1 billion investment in the planned partnership.

A spokesman for the U of M confirmed that the university does not plan to seek funding from the Legislature in the 2025 session. At the outset, the U and Essentia aim to leverage “the assets of the combined proposed system to unlock financing and inspiring philanthropic support. No additional taxpayer dollars or state legislative budget request would be needed to make the initial transformation possible.”

However, he noted, “future support from the State of Minnesota will be essential as we look to build new facilities down the road or bring innovation to advance care and health across the state that the University, Essentia and other partners can uniquely provide.”

During the 2025 session, Minnesota legislators will need to approve a two-year budget. The Senate is now operating under a power sharing agreement because the chamber is split 33-33 between Democrats and Republicans. The state’s Supreme Court is currently weighing a case over what constitutes a quorum in the Minnesota House.