Fairview-Sanford merger: CEOs rebuff calls for delay from AG, U of M, lawmakers

ST. PAUL, Minn. (FOX 9) - The leaders of Fairview Health Services and Sanford Health said Monday that they want to close their proposed merger by the end of March despite opposition and concern at the state Capitol

Democratic lawmakers who control two Minnesota House committees called a legislative hearing to seek guarantees from the two health systems' chief executives about what would happen post-merger. The executives gave some assurances on gender-affirming care and abortion services but said they remain committed to closing the deal quickly.

Several lawmakers said they were concerned about patient care if the two health systems combine, and state Rep. Robert Bierman, DFL-Apple Valley, floated legislation that would give Minnesota's health commissioner oversight over such deals in the future. Meanwhile, officials at the University of Minnesota, who want out of their existing partnership with Fairview, made their most definitive statement to date against the merger. 

"We will oppose this at this time," Dr. Jakub Tolar, dean of the University of Minnesota Medical School, told lawmakers. Tolar said Fairview and Sanford view the transaction as a "private business deal" without focusing on the university's mission of medical education and patient care. The university wants its campus facilities back from Fairview, which could require significant spending from the Legislature.

The proposed merger between Minneapolis-based Fairview and Sioux Falls, S.D.-based Sanford has presented a web of legal and operational questions. Minnesota Attorney General Keith Ellison, whose office has regulatory oversight, has opened an investigation into whether the proposed tie-up violates the state's anti-trust or charities laws. Twelve people from Ellison's office are assigned to the case, Ellison said Monday.

Ellison said the March 31 target date for the merger is "not in the best interests of the state" and said he'll need more time to finish the review. Fairview and Sanford have cooperated but haven't yet turned over all of the information that the attorney general's staff is seeking, Ellison said.

Asked by state Rep. Zack Stephenson, DFL-Coon Rapids, if they would "get rid of" the March 31 target date, the two health system CEOs declined.

"What I would say is, not yet," said Bill Gassen, Sanford's chief executive. "I'm not willing to call it quits two months before (the target date)."

Stephenson, the House Commerce committee chairman, said he found the answer "extremely disappointing." Later, Health committee chairwoman Tina Liebling, DFL-Rochester, asked, "What's the rush?"

"Every day we delay is a day we’re not making progress," said James Hereford, Fairview's chief executive. "Is there something magical about March 31? Of course not. But we cannot fool ourselves to think the status quo is going be maintained."

Hospitals have been hurt by the growth of the pharmaceutical and managed care industries during the pandemic, the two health systems' leaders said, and a combined organization would create cost savings in medical technology, pharmaceuticals, and information technology. Taken together, those three items account for one-third of Fairview's overall costs, Hereford said.

In response to questions from Democrats about gender-affirming care and abortion care, both CEOs said current services would not change as a result of the merger. Abortion is illegal in South Dakota, where Sanford is based. 

Gassen, Sanford's chief executive, said the merged health systems would create bylaws governed by a Minnesota-based board. The Minnesota Supreme Court has found that abortion is a constitutional right in the state. On Tuesday, DFL Gov. Tim Walz will sign legislation that guarantees abortion access in state law. 

Republicans were more muted in their criticism of the proposed merger. State Rep. Tim O'Driscoll, R-Sartell, said it could be beneficial to patients to have in-network facilities in both the Twin Cities and in rural areas.

Minnesota’s unionized nurses and hospital support staff oppose the proposed Fairview-Sanford tie-up. During a news conference ahead of Monday's hearing, they raised questions about job security, wages, and Sanford's out-of-state headquarters.

"They're a rural health care (provider)," said Kara Pratt, a nurse at St. John's Hospital in Maplewood. "They're not used to taking care of urban hospitals. They don't have urban hospitals."