Fairview elects not to renew agreement with U of M but negotiations continue
Fairview Health Services notified the University of Minnesota on Monday that it will not renew their current contract agreement, citing an “unsustainable” financial commitment to the U’s teaching hospitals.
With the current agreement set to expire in 2026, the future of the M Health Fairview partnership is now in question. The agreement would have been automatically renewed for another 10 years had Fairview not given notice by Dec. 31.
Fairview said it is working to find a way forward with the U of M, but the terms of the current agreement are too lopsided to continue.
“While we have achieved remarkable successes together, the challenges of today’s healthcare delivery landscape necessitate a new partnership agreement that aligns with the changing nature of care delivery in the current health care marketplace,” Fairview said in a statement.
Both Fairview and the U of M emphasized that they do not foresee this development affecting patient care in the immediate future.
“Today’s news does not affect the clinical partnership we have with Fairview today. The world-class care patients receive in M Health Fairview hospitals and clinics will continue,” a U of M spokesperson said in a statement. “Our focus remains on delivering the health care services Minnesotans need and expect from us in these facilities, while educating and training our future physicians and advancing the University research that leads to breakthrough innovations and discoveries.”
Fairview’s notice of nonrenewal comes months after its proposed merger with South Dakota-based Sanford Health failed and as the health care system faces increasing financial pressure.
Figures provided by Fairview show the company has invested $1 billion into U of M hospitals since 1997, and it has steadily lost money since the M Health Fairview agreement between Fairview, the U of M and M Physicians was formed in 2018. Earlier this month, Fairview announced it was eliminating roughly 250 positions by the end of the year through a combination of layoffs and attrition.
The Sanford-Fairview merger talks prompted U of M leaders to explore new options for its medical school operations, including lobbying the Minnesota Legislature for nearly $1 billion to purchase its two teaching hospitals owned by Fairview — University of Minnesota Medical Center and Masonic Children’s Hospital.
The U of M on Monday expressed once again that its relationship with Fairview needs to look different if it is to continue and that the university will work with a task force convened by Gov. Tim Walz this year to navigate the medical school’s future.
Fairview asserted that the state needs to step in and support the U of M Medical School, which it says trains 70% of all physicians practicing in Minnesota.
“Fairview plays a unique and outsized role in supporting that work as the largest contributor of academic support by far,” the company said in a news release. “It’s time for the state to share in that important financial commitment.”
“I think each entity has helped each other to grow to what they are today,” Mary Turner, member of the University of Minnesota’s Board of Regents, said.
Turner is also a nurse and president of the Minnesota Nurses Association. She says as the U of M charts its path forward in health care, as a regent, she’ll lean on her experience to help guide it.
“Whatever they come up with, I’m going to be right there to go, ‘But how is it helping the front line [workers]? And, how is it helping the patients?’ I will be forever asking those questions,” Turner said.