U of M seeks to regain control of campus health care facilities

University of Minnesota leaders have announced plans to regain ownership of the health care facilities on the Twin Cities campus and build a new hospital.

Currently, the university and Fairview Health have a partnership, which transferred the University of Minnesota Medical Center to Fairview ownership in 1997. The terms of that partnership have been updated throughout the years, including an option for a 10-year extension in 2023.

The current agreement expires in 2026. University leadership announced Thursday it is looking to take control of the University Medical Center East and West Bank facilities, the Masonic Children’s Hospital and the Clinics and Surgery Center, then build a new medical center on the East Bank of the Twin Cities campus.

“We must own, govern and control the flagship healthcare facilities on our Twin Cities campus,” said U of M President Joan Gabel. “We’re calling on Attorney General Ellison, Governor Walz and the Minnesota Legislature to support shifting these facilities to the University.”

Myron Frans, the senior vice president for finance and operations, called it a “reacquisition” of the University of Minnesota Medical Center.

“More of a transfer of assets from one 501 c (3) organization to another, and that’s governed by different kinds of rules that we have to work through,” said Frans. “We’re not prepared at this point to talk about what fair market values might be out there. We need to discuss sort of the nature of the transfer with the Attorney General.”

As of posting, Attorney General Keith Ellison’s office has not responded to KSTP’s requests for comment.

The University wants to upgrade facilities once it gains ownership as it develops plans for a new state-of-the-art hospital.

RELATED: University of Minnesota to announce “new vision” for future of health system

“Given the age of our East and West Bank hospital facilities, we have concerns about their ability to provide the platform for this world class academic medical center, so while the new hospital is under design and construction, we’ll seek legislative and community investment to bridge the present facilities to the future hospital,” said Gabel.

The new hospital is a 5-10-year project, according to Frans. It’s expected to cost more than a billion dollars.

A map of the planned medical district can be found below.

Changes to the partnership that would result in buying UMMC or building a new facility will need to be approved by the university’s Board of Regents. As of posting, Chair Powell has not responded to KSTP’s request for comment.

To meet its infrastructure goal, university officials are asking elected leaders for short- and long-term partnerships.

“There’s a lot of complexity here, a lot for us to understand,” said Rep. Tina Liebling (DFL-Rochester), who is the chair of the Health, Finance and Policy Committee. “If they want us to give them any assistance financially, we’ll have to be quite involved.”

Liebling said it’s her expectation that the University will also contribute funding to its project and seek community donations.

“I wouldn’t expect it to be just put in a bill and have a capital investment for a billion dollars, that just wouldn’t seem to me the way it would work,” said Liebling. “It could also be a multi-year project so we have, in the past, done some significant capital investment for the University for research labs and things like that, but it’s an investment over a period of time.”

Liebling expects the university’s plan will be addressed in her committee after it reviews the proposed Fairview-Sanford merger.

“We kind of do need to stop the train on the merger so that we can really know what will happen to the university and its facilities and its interests under that merger,” said Liebling.

University leaders also called for the merger to be paused while its plan moves forward. 

In response to the university’s plan, Gov. Walz said, “We’re certainly tracking now and working with them. My obvious concerns and priorities always are the best interest of the patients, the best interest of the University of Minnesota and the teaching hospital, and making sure Minnesota taxpayers are best served. We’ve not had time to vet the whole proposal, as it was announced today, but I’m certainly tracking on this.”

Sanford Health and Fairview released a joint statement Thursday morning, saying they “remain interested in a clinical partnership” with the university. Their full statement is below.

In 1996, the University of Minnesota sought partners to purchase the University of Minnesota East Bank Medical Center Campus.  At the time, directly across the river from the East Bank facility was Fairview-Riverside and St. Mary’s Campus, two hospitals owned by Fairview. Under Fairview ownership, both St. Mary’s and Fairview-Riverside were consolidated by Fairview with the University East Bank hospital, resulting in what is now called the University of Minnesota Medical Center East Bank, University of Minnesota Medical Center West Bank, and Masonic Children’s Hospital (which encompassed the former St. Mary’s and Fairview-Riverside buildings). Since 1997, Fairview has invested significantly in capital improvements in both East Bank, West Bank and at Masonic Children’s Hospital.

As we stated at this week’s community meeting with Attorney General Ellison, we remain interested in a clinical partnership between the University and the combined Fairview/Sanford system. Since August, we have engaged in good faith with the University of Minnesota and brought forward many options for partnership. Despite repeated requests since August of last year, we have had no opportunity to meet with President Gabel or Regent Powell.

In the interest of partnership, we put many options on the table, including the University repurchasing the East Bank academic medical center from the combined system.

We look forward to working together with the University to better understand the details of their vision and determining fair market value for the assets they may seek. We also hope to learn more about their financial and operating plans in addition to the care partnerships necessary to support the University’s teaching and academic missions. Our ultimate priority is supporting our staff and ensuring continuity of care for the patients we serve.

We look forward to completing this merger and working with the University post-close. We are ready and willing to meet with President Gabel, Regent Powell, and other University leaders who are interested in working together to advance care for Minnesotans. We remain excited about what a combined Fairview/Sanford health system will bring to the Minnesotans we are proud to serve.

Sanford Health and Fairview Health Services joint statement

Follow along as 5 EYEWITNESS NEWS tracks developments to conversations between the university, the hospital systems and state leaders.