The University of Minnesota and Essentia Health are in early discussions to form a nonprofit entity that aims to boost financial support for the school and improve rural healthcare.
The university and the Duluth, Minnesota-based integrated health system said in a news release Friday they are in talks to create an “all-Minnesota health solution,” although the release included minimal details about how the proposal is structured. The organizations did not say whether the plan includes formal integration or ownership changes, and did not describe the proposal as a merger. The University of Minnesota and Essentia have yet to sign a formal agreement.
Related: University of Minnesota approves proposed hospital purchase
The university and Essentia will pump $1 billion over five years into the proposed nonprofit, according to the release. That investment "would be possible by leveraging the assets of the combined proposed system to unlock financing, and the vision for our shared future to inspire philanthropic support," the release said.
The University of Minnesota and Essentia did not provide additional details.
"With nearly 70% of all Minnesota physicians having been trained at the university, we know that continuing to deliver excellent patient outcomes while building a sustainable health care future rests on the foundation of a strong medical school,” Essentia Health CEO Dr. David Herman said in the release.
The university unveiled its plans with Essentia amid ongoing negotiations with Fairview Health Services.
The University of Minnesota and Minneapolis, Minnesota-based Fairview signed a letter of intent in February for the school to buy back the University of Minnesota Medical Center from Fairview. That proposal, which was initially expected to close in September, is still in the works, representatives said.
Fairview and the University of Minnesota also continue to rework the 2018 contract that formed the clinical joint venture known as M Health Fairview. In 2023, Fairview declined to automatically renew the contract, which is set to expire in 2026.
The impact of the University of Minnesota-Essentia announcement on contract negotiations and proposed deals between the university and Fairview is unclear.
A Fairview spokesperson said the organization became aware of the university’s discussions with Essentia within the last 24 hours and had not been provided with details on the nonprofit's concept.
“Over the last year, we have worked in good faith towards the university’s desire to purchase the academic assets. Today’s announcement by the university reflects a sudden change in their stated desire,” the spokesperson said in a statement.
The state will review the University of Minnesota-Essentia proposal, a spokesperson for Minnesota Attorney General Keith Ellison's (D) office said.
In 2023, the legislature passed a law that ramped up oversight of healthcare transactions. The law gives Ellison the authority to rebuff any deal that does not serve the public interest, such as by limiting competition or creating a monopoly. The parties involved must include any potential areas of expansion and plans to close facilities, reduce their workforce or cut services, among other transaction-related impacts.
Ellison investigated Essentia’s proposed merger with Marshfield Clinic Health System in Wisconsin. Essentia and Marshfield called off the deal in January 2024, saying it was not the right time to combine.
Both systems have since been looking for other partners, and Marshfield completed a merger with Sioux Falls, South Dakota-based Sanford Health earlier this month.
