Jan. 11, 2023

The first hearing held by the Minnesota attorney general’s office on the proposed merger of Sanford Health and Fairview Health drew nearly two hours of public input and revealed a look at the issues being reviewed as part of the state’s investigation.

Attorney General Keith Ellison said his office is conducting an investigation to understand “what exactly the significant impact is going to be” from the merger, which would create a more than $13.5 billion health system with more than 75,000 employees. It would be called Sanford Health and based in Sioux Falls, with Sanford Health CEO Bill Gassen becoming CEO following a transition.

Minneapolis news organizations reported about 100 people attended the hearing in St. Paul. The majority spoke about concerns related to the merger.

In his introductory comments, Ellison told the crowd “there’s much more to our investigation than the public part,” while adding he’s unable to disclose any initial findings.

“I want to assure you we are conducting a robust internal investigation,” he said. “I don’t want to show you a half-baked cake. We want to learn what’s going on.”

Among the many issues being evaluated are how the merger will affect employees, service in rural communities, insurance rates, nonprofit assets held in trust in Minnesota, the impact of the University of Minnesota’s teaching hospital and market competition.

The university’s involvement in the deal appears to be unresolved.

In his opening comments, Gassen said “we have put all options on the table,” including an option for the University of Minnesota to repurchase the existing medical center.

“Ultimately, it is the university’s decision to make, and we’re supportive and committed to continuing to work alongside them,” he said.

Dr. Jakub Tolar, dean of the University of Minnesota Medical Center, said the university was not involved in conversations leading up to the announcement of the proposed merger.

He called on the attorney general’s office not to endorse the merger “until Fairview and Sanford work with the university to address and resolve how we will continue to use all of our public resources in service to Minnesota and in particular how we will advance the university’s vision for how we can best serve the state,” he said.

“This is not about the business of health care. That’s not what we do. This is about leadership in health care. It’s about advancing health care.”

The university’s vision includes development of “a new world-class hospital and university campus,” he added, while saying the proposed merger “should not be considered as a narrowly focused business deal. … It is a chance to create the opportunity for a different approach to the university’s health care mission.”

Several of the public comments related to access to reproductive and gender-related health care, including abortion. Multiple people who gave testimony expressed concern about South Dakota state government policy decisions impacting care in Minnesota.

Fairview CEO James Hereford said in his opening comments that “we believe strongly in providing evidence-based health care to all our patients, including gender-affirming care and comprehensive reproductive care. Protecting this access ensures that our patients have the ability to make important decisions about their health care in consultation with their trusted health care providers. This trusted relationship between patients and their providers is fundamental to who we are and what we do and will not change.”

He added that “both Sanford and Fairview have long had unionized workforces in Minnesota, and we’ll continue to honor and respect our collective bargaining agreements.”

Union-related concerns also were voiced by the public at the hearing, along with access to care and the prospect of facilities closing post-merger.

Hereford and Gassen both highlighted Sanford’s investments in Minnesota and following previous mergers.

“When we say patients will have access to better care, we mean it,” Gassen said, adding Sanford invested more than $100 million in Bemidji, Minnesota, to increase access to care and more than $1 billion in capital following its merger with MeritCare in Fargo.

“The status quo isn’t sustainable,” Hereford added. “The ongoing challenge and pressure on care delivery demand we do things differently.”

According to Becker’s Hospital Review, Fairview said in a filing earlier this week that reversing its financial losses will involve “decisive and measured actions” that could take years. It reported a net operating loss of $248.5 million for the first nine months of 2022, with a 5.5 percent year-over-year increase in operating expenses and reimbursement up less than 2 percent.

“Management is committed to improving the financial condition of the organization and getting back to profitability but expects this will be a multiyear process,” the report said in citing the filing.

“Joining forces with Sanford is a proactive, bold change that will ensure we can continue to provide care for Minnesotans for decades to come,” Hereford said at the hearing.

Still, “mergers have certain predictable consequences” on market access and service delivery, Ellison said in his opening comments. “Some are good and some are not.”

That’s not meant “to foreshadow my views on this particular merger,” he said.

The Minnesota attorney general’s office has organized three additional input sessions this month in Bemidji, Worthington and Grand Rapids.

A website and call line also have been set up for community input. It has received more than 3,000 separate pieces of communication, Ellison said.

Click here to learn more. 

To view the full testimony on the merger at Tuesday’s hearing, click here.