Fairview, Sanford call off planned merger
Eight months after announcing their intention to combine operations, the merger between Fairview Health Services and Sanford Health appears to be off.
Minneapolis-based Fairview confirmed Thursday that it is ending the merger process with the Sioux Falls, South Dakota-based health system.
“Our aligned missions, our shared commitment to health and healing, and our deep roots in our communities positioned us well to transform the future of healthcare,” Fairview President and CEO James Hereford said in an announcement. “However, without support for this transaction from certain stakeholders, we have determined it is in the best interest of Fairview Health Services to discontinue the merger process.”
The announcement comes after multiple delays by the companies amid protests from medical professionals, students and community members, as well as a review from the Minnesota Attorney General’s Office. In their most recent delay in April, Fairview still expressed confidence the deal would get done and was in the best interests of all parties.
Sanford President and CEO Bill Gassen said in a statement that the health care system “exhaust[ed] all potential pathways to completing our proposed merger” but there wasn’t enough support from Minnesota to go through with the deal.
“This is the right decision for our patients and residents, our people and the communities we serve,” Gassen said. “We remain committed to providing world-class care to patients across our footprint. We are extremely grateful for the support we have received from many Minnesotans who share our vision to invest in health care delivery and enhance access to care in both rural and urban areas.”
Fairview runs 11 hospitals and employs 31,000 people while Sanford has 47 hospitals and 48,000 employees. Under their plan, the new company would’ve operated out of Sioux Falls.
“While we wish the outcome were different, we know that the best thing for our patients, our people and the communities we serve is to continue our focus on delivering world class care, now and into the future,” Hereford said.
Since the companies’ initial announcement back in November, the plan was met by skepticism and criticism.
It also led the University of Minnesota to re-evaluate its partnership with Fairview as concerns arose about the possibility of the university’s health care facilities being controlled by an out-of-state entity. In fact, that led state lawmakers to pass a bill this spring to prevent that very scenario unless the attorney general deemed it to be in the public interest.
Still, that didn’t kill the deal or even appear to put a damper on the companies’ plan. In late May, Fairview released a statement saying in part, “This new law does not change our desire to combine with Sanford Health.”
The U of M had requested nearly $1 billion from the state to buy back their health care facilities on the Twin Cities campus and build a new hospital, something the CEOs of Fairview and Sanford expressed support for.
“Today we became aware of the news that Sanford would not be proceeding with its proposed merger with Fairview,” U of M spokesperson Jake Ricker said. “As we move forward from here, we remain focused on our public mission to provide high quality, innovative and leading-edge care to patients across Minnesota, and how we can best support access to world-class health care for the entire state.”
The top executives also testified before Minnesota lawmakers, who seemed skeptical of the plan and questioned the companies’ desire to complete the merger quickly.
After initially setting a self-imposed deadline of March 31, the companies in February agreed to push that to May 31. Then in April, as calls from lawmakers and other stakeholders continued to urge them to slow down, the companies agreed to push the closing date until mid-summer at the earliest. However, it’s unclear what specifically caused the deal to fall apart since then. However, a Sanford spokesperson told 5 EYEWITNESS NEWS it was them who initiated the decision to end the merger.
“I was happy to see they were interested in the merger in the first place, I thought it was a great merger,” said state Sen. Paul Utke, who was the lead Republican on the Senate Health and Human Services Committee. “I think Sanford was real willing to basically work with whatever was needed but the reply from the Attorney General’s Office went above and beyond, it was nothing they could work with.”
Sanford did not disclose to 5 EYEWITNESS NEWS the reason for its decision.
In response to the criticism, a spokesperson for the Attorney General’s Office said, “The Legislature itself set the standards for the investigation through existing state laws governing charities, nonprofits, and antitrust laws, as well as through the new law the Legislature just passed giving the Attorney General’s Office authority to assess whether healthcare transactions are in the public interest. Our investigation has been confidential and non-public, as also provided for in Minnesota law. Any outside characterization, including by a legislator, of how the investigation has been conducted is not grounded in actual facts.”
Several union leaders applauded the deal’s demise Thursday.
“Today, nurses are relieved at the news that the planned merger between Sanford Health and M Health Fairview will not move forward,” said Mary C. Turner, RN, President of the Minnesota Nurses Association, “Since the merger was first announced, nurses have expressed deep concerns that a merger between these two healthcare giants would lead to the loss of healthcare access across Minnesota, but especially throughout our rural communities. Additionally, this planned merger threatened the future of healthcare in our state by putting the future of the University of Minnesota, including its medical school, into question. Minnesotans have come to expect a high standard of care and nurses are relieved that we will continue to be able to provide that care and protect our profession.”
“This news is a big win for Minnesotans who want our state to be a leader in providing world-class healthcare for families in our state. By standing up in opposition together as patients, healthcare workers and community supporters, we were able to stop this corporate consolidation that was bad for patients, bad for workers, and bad for Minnesota,” said Jamie Gulley, President of SEIU Healthcare Minnesota & Iowa. “We appreciate everyone who raised their voices, whether elected officials, healthcare workers, patients, students or farmers. Now that this bad decision is behind us, we call on Fairview’s board and leaders to focus on our mission and recommit to the patients we serve.”
“I want to credit Fairview for listening to farmers, healthcare workers, and other community members and backing down from this merger,” said Gary Wertish, President of Minnesota Farmers Union. “Our members were unimpressed from the start. They already pay too much for healthcare. And what we know is that despite the promises, this type of mega merger only results in increased prices, laying off workers, closing clinics, and otherwise reducing local services. The model in healthcare and across our economy can’t be to just keep getting bigger and bigger.”