The University of Minnesota Board of Regents on Friday approved a letter of intent for the school to buy back the M Health Fairview University of Minnesota Medical Center from Fairview Health Services.
According to the non-binding letter of intent, the university would pay Fairview 51% of the to-be-determined purchase price by the end of the year. The university, Fairview and the school’s physician group would then jointly manage the hospital until the university completes the purchase, planned by the end of 2027 pending customary regulatory reviews.
Meanwhile, Fairview and the University of Minnesota will continue to rework their 2018 contract that formed the clinical joint venture known as M Health Fairview. In November, Fairview declined to renew the contract, set to expire in 2026, saying that it wasn’t “sustainable.”
The sale of the flagship academic medical center, which comprises the East and West Bank hospital campuses, M Health Fairview Masonic Children’s Hospital and the M Health Fairview Clinics and Surgery Center, could bolster Fairview’s finances. Fairview recorded operating losses of more than $750 million from 2019 through 2022 and is expected to have lost money on operations in 2023.
Fairview has been working closely with the university since 1997, when Fairview acquired the University of Minnesota Medical Center’s East Bank hospital, which was in danger of closing.
The proposed transaction would give the university and its physician group more control over clinical operations and finances. That control was one of the main sticking points in the collapse of the proposed merger between Sioux Falls, South Dakota-based Sanford Health and Fairview, which is headquartered in Minnesota.
“We know this letter of intent leaves many questions unanswered,” Myon Frans, senior vice president for finance and operations at the University of Minnesota, said during the board of regents meeting Friday morning. “Conversations among Fairview, the university and [University of Minnesota Physicians] will continue as we work towards an eventual transition of UMMC ownership to the university. This letter of intent is a first crucial step in charting the future path for these organizations.”
Patient care and day-to-day operations will remain unchanged throughout the process and no layoffs are planned as a result of the letter of intent, the organizations said in a news release.
Robyn Gulley, regent board member, supported the proposed acquisition, but noted the associated financial expense.
“We are taking a lot of the liability from Fairview and we should keep that in mind when we’re talking about the cost to [the university] taking this over. I think Fairview should keep that in mind as well,” Gulley said during the meeting. “But I think ultimately we can do a better job—this will be a positive thing for serving our state.”