UPDATE: Feb. 12, 2024: The University of Minnesota plans to purchase four facilities from Fairview Health Services, months after the health system reported it couldn’t renew its operating partnership with the university.
Under the letter of intent signed Friday, the university would reacquire the M Health Fairview University of Minnesota Medical Center, which includes East and West Bank campuses, M Health Fairview Masonic Children’s Hospital and the M Health Fairview Clinics and Surgery Center.
The University of Minnesota plans to complete the acquisition by the end of 2027.
Dive Brief:
- Fairview Health Services notified the University of Minnesota on Monday that it would not renew their current partnership, saying the present contract is “unsustainable” for the health system.
- The organizations have worked together on the M Health Fairview brand since 2018. The deal was set to automatically renew for another ten years unless notice was provided by Dec. 31, according to an email from Fairview president and CEO James Hereford.
- The current agreement remains in effect through the end of 2026. Negotiations will continue toward a new contract, Hereford said.
Dive Insight:
Fairview and the University of Minnesota have had a relationship since 1997, when the nonprofit system purchased a “financially strained” hospital in Minneapolis from the university, according to Fairview.
The organizations agreed to form M Health Fairview in 2018, as a partnership between the university, University of Minnesota Physicians and Fairview that aimed to market clinical services and increase support for the medical school.
But Fairview has struggled financially for years, and it recently announced it would cut about 250 positions from its hospitals and clinics by the end of 2023.
The system said it had invested over $1 billion to upgrade on-campus facilities, as well as hundreds of millions toward teaching and research at the medical school. Funds sent to the university, including professional services payments, have doubled under the contract, according to the nonprofit.
Fairview also attempted to merge with South Dakota-based Sanford Health, but the deal fell through amid pushback from the Minnesota attorney general and opposition from university educators and medical students, who were worried about out-of-state influence on the school.
The parties have now been in negotiations about the future of their contract for over a year, according to Fairview.
“We have previously said, as has Fairview, that our current agreement would have to change for the future. Fairview's announcement today simply reaffirms those statements,” a University of Minnesota spokesperson said in a statement.
The notification won’t result in job losses and it doesn’t dissolve M Health Fairview, according to the health system, which also operates ten hospitals and ambulatory centers and more than 60 clinics across the Twin Cities and Northeastern Minnesota.
