Fairview Health Services said Monday it will not renew its contract with the University of Minnesota because it "threatens the sustainability" of the nonprofit health system.
The contract expires at the end of 2026. Fairview had to issue a non-renewal notice by Dec. 31 or the agreement would automatically renew for another decade. The health system said the notice does not dissolve M Health Fairview, its joint clinical services offering; change patient care; or result in job losses.
Fairview said it has been in discussions with the university about a new agreement for more than a year, and it wants to continue those talks.
"We have discussed how the current contract with the University is unsustainable for our health system for the long term and challenges our ongoing ability to serve our patients and communities," Fairview CEO James Hereford said in a Monday email to employees. "To be clear: I see tremendous value for our patients and our community in a continued partnership with the University. Going forward, we will continue to negotiate in good faith to reach a new agreement."
Minneapolis-based Fairview has worked with the university for decades, starting when it purchased the university's struggling East Bank hospital in 1997. Fairview estimated it has invested more than $1 billion in the university for facility upgrades, teaching and research.
In 2018, Fairview partnered with the University of Minnesota Medical School and its physician group M Physicians to form M Health Fairview.
"We have previously said, as has Fairview, that our current agreement would have to change for the future. Fairview's announcement [Monday] simply reaffirms those statements," the University of Minnesota said in a statement.
Fairview, which operates 10 hospitals and more than 80 clinics across the Twin Cities and northeastern Minnesota, has struggled financially for years. Last week, the system reported a $79.8 million third-quarter net loss, compared with a year-ago quarterly loss of $181.6 million. It reported a loss of $111.4 million in the first nine months of 2023, compared with a $486.5 million loss in the year-ago period.
Earlier this month, Fairview announced it will cut 250 jobs by year's end.
Amid financial trouble, Fairview signed a letter of intent in late 2022 to merge with Sioux Falls, South Dakota-based Sanford Health. The health systems called off the deal in July, following pushback from Minnesota stakeholders, including the University of Minnesota, state legislators and Minnesota's attorney general.