UoM to reacquire teaching hospital from Fairview Health Services

The University of Minnesota plans to reacquire the academic health facilities it sold to Fairview Health Services decades ago.

In a nonbinding letter of intent signed by the U of M and Fairview, the two agreed on a plan for the university to purchase the four facilities that make up its academic hospital by the end of 2027. The university had sold the hospital to Fairview more than 25 years ago amid financial struggles. University of Minnesota Physicians also signed onto the letter. The price of the transaction isn’t yet clear, though the U last year had requested about $950 million from the Minnesota Legislature to buy back the facilities, cover associated workforce costs, and continue funding operations.

The university’s Board of Regents voted to approve the letter on Friday.

“We are grateful for the collaboration and shared successes we have experienced with Fairview Health Services over the years,” U of M interim president Jeffrey Ettinger said in a news release. “This [letter of intent], and the discussions ahead of us, are critical steps toward more fully integrating education, research, and patient care to better serve Minnesotans statewide.”

The longstanding relationship between the U of M and Fairview has grown increasingly complicated and tense within recent history. The entities currently have operating agreements that run through Dec. 31, 2026, but, in late 2023, Fairview provided notice to the U that it didn’t intend to renew them. Under those existing agreements, Fairview provides patients to university physicians and makes annual payments to the U.

Fairview, meanwhile, has been struggling financially: In 2022, the health system reported a net operating loss of $315.4 million. Fairview had considered a possible merger with South Dakota-based Sanford Health System — a deal that collapsed in July amid mounting concerns from legislators, union leaders, and other players.

Officials with Fairview and U of M said the latest agreement isn’t expected to include layoffs or changes to day-to-day patient care. In a statement, Fairview president James Hereford said the tentative agreement is an olive branch to put the partners on a mutually beneficial road moving forward.

“This is a critical first step towards a new and reimagined relationship that will better meet the current and future needs of our patients and community,” he said. “Today’s announcement is designed to provide clarity on our collaborative path forward.”

In the meantime, the U, University of Minnesota Physicians, and Fairview will continue to hash out new definitive agreements by Sept. 30, 2024, though there is an option to extend the negotiating period.

Pending “necessary regulatory processes,” ownership transition will begin early next year, when Fairview and the University share management of the facilities and phase out Fairview’s involvement. Twin Cities Business