The University of Minnesota's Board of Regents is pushing back on a proposed $1 billion deal between Fairview Health Services and University of Minnesota Physicians, saying the university was excluded from the negotiations.
Last week, Fairview Health Services inked a proposed deal with University of Minnesota Physicians (M Physicians) for a 10-year partnership that supports physician training and provides a hefty capital investment in the University of Minnesota Medical Center.
M Physicians, which is the clinical practice for the University of Minnesota Medical School faculty and a distinct entity from the U of M, said in a statement that the new partnership is designed to "sustain and strengthen care for Minnesotans, expand patient access, advance medical education and research, and ensure long-term stability for the state’s academic healthcare workforce."
The partnership framework is slated to begin on Jan. 1, 2027, for an initial term of 10 years, with a provision for subsequent renewal periods.
The two organizations have executed a binding agreement, which includes a detailed term sheet and expect to complete a definitive agreement by the end of 2025, the organizations said.
M Physicians comprises of more than 2,000 physicians, advanced practice providers, and 2,000 staff.
Fairview has been the University of Minnesota's academic medicine partner since 1997, when it acquired the University of Minnesota Medical Center and Masonic Children’s Hospital. The two organizations run a joint clinical enterprise called M Health Fairview, which is set to expire at the end of 2026.
"Fairview remains open to conversations with the University regarding additional aspects of the relationship between both organizations. The door remains open for collaboration," the nonprofit group said.
Minnesota Attorney General Keith Ellison welcomed the deal, saying in a statement issued Wednesday that the agreement "ensures that the University of Minnesota remains a great place to practice medicine, conduct research, and train the next generation of physicians, and provides community and faculty physicians with the assurance and stability they have been asking for."
As part of the 10-year deal, Fairview will continue to own and operate the University of Minnesota Medical Center and Masonic Children’s Hospital, according to Fairview and M Physicians.
Under the framework, Fairview will commit $1 billion in capital to support academic sites, including the University of Minnesota Medical Center, Masonic Children’s Hospital and other clinical sites.
M Physicians providers will continue practicing and leading operations with Fairview leadership, the two organizations said.
The partners will support faculty physicians, researchers and trainees through commitments to academic funding and opportunities to increase investment through shared goals for growth and efficiency. The two organizations will also focus on efforts to address challenges in rural health care delivery.
But the University of Minnesota is crying foul over the deal, according to media reports, calling the partnership a "hostile takeover" of the university's medical school.
The university was kept “on the sidelines and in the dark,” the Star Tribune reported, citing a letter from three University of Minnesota regents to Ellison's office that the publication obtained and reviewed.
Fairview officials said the regents’ letter included factual inaccuracies and misrepresented both the process and the intent of the health system’s newly proposed partnership, the Star Tribune reported.
On Thursday, the University of Minnesota's Board of Regents approved a resolution at a special meeting affirming its view that UMP (University of Minnesota Physicians) does not have the authority to negotiate agreements affecting the Medical School without University approval.
The approved resolution says that UMPhysicians’ board and management excluded the University from its negotiations, impacting the Medical School, "erroneously and unlawfully represented its ability to negotiate for the University’s missions with Fairview, and entered into an agreement detrimental to the interests of the University.
"Fairview Health Services and UMP management announced a proposed deal Nov. 12 that would have a profoundly negative impact on the University of Minnesota Medical School and Minnesota. The terms of the proposed agreement were reached while excluding the University from negotiations. UMP, a legally separate entity from the University, is the management services company that supports delivery of patient care for medical school faculty," the Board of Regents wrote in a statement.
During the Board of Regents meeting on Thursday, University of Minnesota President Dr. Rebecca Cunningham said the deal would "radically shift UMP governance and management" and "occurred without any consultation or input from faculty or staff."
"All of it without any level of transparency, behind closed doors," she said.
In a statement, University of Minnesota Physicians said faculty physicians attended the Board of Regents meeting on Thursday and heard "strong support for the clinical, research and education missions at the core of our practice, both present and in the future."
"As faculty members of the University of Minnesota Medical School, led by faculty members of the University of Minnesota Medical School, we look forward to the University's participation at the table with us and Fairview. We are ready to continue the discussions we’ve been having, led by Strategic Facilitator Lois Quam," M Physicians said.
"As part of those discussions, we are eager to address any misunderstandings," the physician practice said.
"University of Minnesota Physicians (M Physicians)—under the leadership of our faculty physician-led Board of Directors—is currently and will remain in charge of our practice, which cares for patients and provides significant support for the University of Minnesota Medical School. We will continue working together in caring for patients with Fairview and our other 46 clinical partners across Minnesota and the Upper Midwest, where we serve as a major resource for primary and specialty care," M Physicians said. "All of these partnerships, including our new partnership with Fairview, are clinical in nature and have been established with M Physicians' individual authority over the past 25 years."
James Hereford, president and CEO of Fairview Health Services, said in a statement issued last week that the agreement with M Physicians is about "doing what’s right for our patients and for Minnesotans."
"Our shared success depends on putting patients first, supporting physicians and advanced practice providers, and ensuring that Minnesota’s academic health system remains strong and sustainable. We’re grateful to M Physicians for their partnership and to our teams who—together—have proven the power of this collaboration for nearly three decades," Hereford said.
“M Physicians is the preeminent faculty practice for the academic physicians at the University of Minnesota Medical School, and Fairview remains an essential partner in our statewide mission. Together, we opened one of the nation’s first COVID hospitals and we continue to advance our region’s complex primary and specialty care,” said Dr. Greg Beilman, M.D., interim chief executive officer of M Physicians, in a statement. “This next chapter builds on that shared history and affirms what’s possible when we focus on what truly matters: patients, learners, and the future of health care.”
Minnesota's AG helped broker the deal between Fairview and M Physicians to maintain stability for the university's academic health programs.
"With the longstanding agreements between the University, UMP, and Fairview soon to expire and the parties seemingly far apart, the possibility of an unwind of the agreements that would have been devastating for all three parties, their staff and patients, and the provision of medicine in Minnesota at large, was real and growing," Ellison said in a statement issued Wednesday. "And with the waters of healthcare in America already deeply troubled, it was and remains critically important that we not sit back and allow the uncertainty of an unwind to swirl around the state that we love."
In a statement to the Star Tribune last week, Ellison said the University of Minnesota informed him it no longer wished to negotiate with Fairview and instead wanted to explore options other than a relationship with Fairview. "It was clear that we were at great risk of a highly damaging unwind of the 30-year relationships between the parties,” Ellison said, the publication reported.
But on Thursday, Cunningham pushed back on what she called "inaccurate" reports that the university walked away from negotiations with Fairview and M Physicians.
"We did not walk away from these negotiations at any point. In September, the strategic facilitator declared an impasse and sent the university and all parties home. We did not walk away. The strategic facilitator then called the other parties together. We repeatedly requested that a three-party negotiation would yield the best results for the state of Minnesota, and yet the strategic facilitator continued to exclude us for seven weeks," she said during the Board of Regents meeting.
Cunningham said there were similar reports that Essentia Health walked away from negotiations over the summer with the University of Minnesota and Fairview Health to form a new "all-Minnesota health system solution."
"To the contrary, the strategic facilitator excluded Essentia from the process this summer, never once bringing the three parties together," Cunningham said Thursday.
That failed proposal comes about two years after Fairview Health Services' failed merger attempt with Sanford Health, a planned arrangement that raised red flags among local stakeholders and the University of Minnesota over concerns that an out-of-state entity would take control.