Feb. 27, 2023

The University of Minnesota is asking its state government for nearly $1 billion to acquire flagship health care facilities that otherwise could be part of a merger between Sanford Health and Fairview Health Services.

The preliminary request includes acquiring the University Medical Center’s East and West Bank facilities, the Masonic Children’s Hospital, clinics and a surgery center. In addition to the facilities, that includes funding for workforce, union contracts and new leadership in a university-operated organization, estimated at $300 million.

The West Bank building and land are owned by Fairview.

The balance of the request, $650 million, is for operating costs, including an injection of 90 days of operating capital, which the university called “a common level for hospitals,”  to cover payroll, supplies and professional services.

“The funding will also provide time to turn around operating losses and begin generating positive financial results,” the university said in a statement that also called the proposal a way for UMN Health to “take bold steps to accelerate increased access, equity and quality to the university’s leading research and clinical care while safeguarding Minnesota’s public academic health assets.”

The Masonic Children’s Hospital building and land are owned by Fairview.

“Before us is a once-in-a-lifetime opportunity to channel the university’s 170-plus year legacy of discovery, service and world-class impact to elevate the health of Minnesotans for generations to come,” University of Minnesota President Joan Gabel said. “But we can only do so through a strong partnership with the state. The positive return on this investment is clear.”

The request is subject to formal Board of Regents action, expected March 10. Initial estimates are subject to change and are dependent on many factors, the university said.

“We must forge a new path: one that centers on the needs of Minnesotans’ health care now and for decades to come. One that recognizes the economic benefits of continuing our best-in-class health care sector, including the education and training of future health care professionals. And one that recognizes the treatments and cures U of M researchers will discover,” said Myron Frans, senior vice president for finance and operations.

Ownership of the East Bank hospital was transferred to Fairview in 1997, with the university retaining the land.

The university opposes the proposed merger between Minneapolis-based Fairview and Sioux Falls-based Sanford, which currently has a target date of May 31. During the Minnesota attorney general’s public hearings on the merger, the systems’ leaders said they were open to the university acquiring its related facilities.

“Control of Minnesota’s academic health care assets by a South Dakota-based entity is a non-starter,” said Dr. Jakub Tolar, dean of the U of M Medical School and vice president for clinical affairs. “The charitable assets of the university’s academic health facilities and operations have been supported by Minnesotans and must be governed by the University of Minnesota.”

The Clinics and Surgery Center building is owned by the university with a lease that includes Fairview.

The university collaborates with Fairview under the M Health Fairview system that is scheduled to operate through 2026.

Earlier this year, the university announced its vision to acquire the properties in addition to more long-term plans for its campus, including  a new hospital.

University of Minnesota announces plan to buy back medical center in Sanford-Fairview merger