Unnerved by failed merger efforts between Fairview Health Services and an out-of-state healthcare corporation, University of Minnesota officials have made official their intent to buy back the University of Minnesota Medical Center, which educates some 70% of the doctors and nurses in Minnesota and was sold to Fairview in 1997.

The U of M Board of Regents unanimously approved a non-binding letter of intent on Friday to reacquire the four campus facilities comprising the University of Minnesota Medical Center from Fairview, including the East Bank and West Bank hospitals, Masonic Children’s Hospital and Fairview’s interest in the University of Minnesota Clinics and Surgery Center.

A purchase price has yet to be determined. The goal is to have the U of M running its own medical services and facilities by the end of 2027, while expanding the medical center with a new state-of-the-art academic health facility owned and operated by the university on the east bank campus.

“I was very concerned a year ago,” said Board of Regents Chair Janie Mayeron, addressing Interim University President Jeff Ettinger, representatives of the University of Minnesota Physicians and her fellow Regents. “I am absolutely thrilled you all have gotten us to where we are.”

Ettinger said key details need to be hashed out in a negotiated “definitive agreement” by Sept. 30 and presented to the Minnesota Attorney General’s office for review by the end of December, a tight timeline that has already been approved by Fairview.

He said the letter of intent “leaves much for future consideration” as the university and University of Minnesota Physicians recraft their relationship with Fairview, which launched a combined “M Health Fairview” brand with the university and physicians’ practice in January 2019.

In a joint written statement issued after the vote, Fairview and university officials said “the future of the M Health Fairview brand remains a key consideration in ongoing conversations.” The joint operating model established under the brand expires at the end of 2026.

Friday’s decision by the Board of Regents “is a critical first step towards a new and reimagined relationship that will better meet the current and future needs of our patients and our community,” said Fairview Health Services President and CEO James Hereford, in the statement. “Our patients and our employees, who contribute significantly to our success, will remain the heart of our organizations. Today’s announcement is designed to provide clarity on our collaborative path forward.”

Failed merger talks with Sanford Health

Ettinger did not explicitly mention Fairview’s failed efforts to convince U of M officials to back a proposed merger with Sanford Health, the largest rural healthcare system in the nation. The Sioux Falls, South Dakota-based hospital network had proposed combining their 58 hospitals, but announced last July that the deal had withered under pushback from key stakeholders and regulators, including the Minnesota Attorney General’s office.

University officials had said at the time that the only way they could foresee the deal moving forward was if the state helped fund their buyback of their medical center, which they feared would lose some of its academic focus on solving complex clinical problems, including for the indigent.

“I always ask myself a question: What does it feel like to be sick, really sick, in the United States today, especially if you are poor?,” said Dr. Jakub Tolar, dean of the university’s medical school and vice president for clinical affairs. “Poor people deserve top-notch medical care.”

He added: “This is a positive reframing of an evolutionary trajectory we have started decades ago, maybe a century ago.”

A new hospital planned

Tolar said focusing on innovation, cutting-edge clinical care, controlling costs for patients, and prevention through the “social aspects” of healthcare would require greater control over operations, investments and “the programmatic developments in the care settings.”

The medical school has climbed in national rankings, he said, to No. 21 among all medical schools backed by the National Institutes of Health and No. 8 among all public medical schools, according to the Blue Ridge Institute for Medical Research. It’s been identified by U.S. News and World Report as the No. 2 best medical school for primary care.

Still, said Tolar, “clinical care without innovation … is not fulfilling the promise physicians have as mentors to the generations to come.”

Reacquiring the medical center, Ettinger said, would allow the university to focus on designing a new hospital, built from the ground up on the east bank campus with the university’s priorities in mind. The university officially laid out those goals in its “Five-Point Plan for the Future of Academic Health” in January 2023 and presented them to the Governor’s Task Force on Academic Health in December.

“The university’s vision for academic health specifically foresees a new hospital as part of the University of Minnesota medical center,” said Ettinger, addressing the Board of Regents.

Myron Frans, the U of M’s outgoing senior vice president for Finance and Operations, called for continuity during the transition.

“Nothing will change for our patients, our care teams or our employees” at any of the impacted facilities this year, Frans said.

Regent Robyn Gulley echoed those comments.

“I want to be sure that there’s continuity for the represented folks in these clinics, that their pensions aren’t affected, that their seniority isn’t affected,” Gulley said, acknowledging that the university will absorb more financial “liability” as a result of the purchase. “I think that ultimately we can do a better job. This will be a positive thing for serving our region and our state.”

Regent Penny Wheeler, a physician who recently retired as chief executive officer of Allina Health, said running the academic medical center without Fairview will require careful economic planning in a short period.

“We have a lot to sort through,” she said. “The definitive agreement, once it’s reached, that’s a big piece of work. But the work that follows that is huge.”

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