Minnesota lawmaker seeks authority over mergers in response to Sanford-Fairview plan

Minnesota House Democrats on Monday warned a merger between Fairview Health Services and Sanford Health could increase health care costs or lead to hospital and clinic closures.

In November, Fairview and Sanford announced their intention to merge into one health care system run by Sanford’s current CEO Bill Gassen. The target date to complete the deal is March 31, which DFL lawmakers and health care advocates have repeatedly said was too soon.

Rep. Robert Bierman, DFL-Apple Valley, proposed a bill on Monday to the joint House Commerce and Health Finance and Policy committees that would require health care providers to get approval from the state health commissioner before mergers.

“Because of the rush to close the deal, this issue has become paramount now,” Bierman said. “This is not simply a case where speed of a deal getting done will enhance public health policy. Our central focus … should be the improvement of delivering quality health care for Minnesotans across the state while improving access and affordability.”

Sioux Falls-based Sanford and Minneapolis-based Fairview said they will remain nonprofits and retain their own leadership and regional boards. Attorney General Keith Ellison is investigating the merger and has held public hearings on whether Minnesota residents believe the merger would be beneficial. Earlier this month, he asked the health care providers to delay the March 31 deadline.

One of the major concerns among lawmakers is about the University of Minnesota Medical Center, which Fairview owns and is the university’s primary teaching hospital.

Medical School Dean Dr. Jakub Tolar told the committee the merger has proceeded without the health care providers considering its potential impact on the university. In a previous statement to the Reformer, a Fairview spokesperson said the university has been an “active participant” in merger discussions and to imply the university hasn’t been fully involved is “false and disingenuous.”

Myron Frans, the university’s senior vice president of finance and operations, asked lawmakers to delay the merger and require the university’s involvement in any agreement between Sanford and Fairview.

Sanford CEO Gassen and Fairview CEO James Hereford told House members that “at this time” they would not delay the date of the merger.

Gassen said they could delay the merger, however, based on the feedback they receive from stakeholders and the Attorney General’s Office.

Rep. Zack Stephenson, DFL-Coon Rapids, told Gassen his answer was “disappointing.”

“All of the stakeholders … seem to be pretty united in asking you to allow more time for this,” said Stephenson, who chairs the House Commerce Finance and Policy Committee.

Rep. Tina Liebling, DFL-Rochester, asked the CEOs, “What is the rush?”

Hereford said it was in the public’s interest to get the merger completed quickly.

“Health care delivery has fundamentally changed and it is imperative upon us in our role to serve Minnesotans to make sure that we adapt, we innovate and we continue to progress,” Hereford said.

Republican House members appeared more open to the merger, emphasizing that Sanford has many clinics in rural Minnesota and a merger could bolster these facilities.

In 2013, Sanford and Fairview announced a similar deal, but state lawmakers and then-Attorney General Lori Swanson squashed it. Swanson said her main concern at the time was that Sanford, an out-of-state organization, would be running the Fairview-owned University of Minnesota hospital and could use Minnesota taxpayer dollars to expand into other states.

Fairview employs more than 31,000 employees across 11 hospitals, and Sanford has 47 medical centers employing 2,800 physicians and providers across the Dakotas and in greater Minnesota.

The House committees will discuss the bill again on Wednesday.

*This story has been corrected to reflect that Fairview owns the University of Minnesota Medical Center not the U’s medical school.