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Fairview to Repurchase Teaching Hospital from University of Minnesota

The university intends to take back control of its academic health facilities, according to a letter of intent that the Board of Regents authorized on Friday.

The academic health facilities that the University of Minnesota sold to Fairview Health Services many years ago will be repurchased.

The U of M and Fairview agreed on a plan for the institution to buy the four buildings that make up its academic hospital by the end of 2027 in a nonbinding letter of intent. Amidst financial difficulties, the university had sold the hospital to Fairview almost 25 years prior. The letter was also signed by physicians from the University of Minnesota. Although the exact cost of the deal is unknown, the U asked the Minnesota Legislature for around $950 million last year in order to repurchase the buildings, pay for related labor expenses, and keep up with operations.

On Friday, 9th Feb 2024, the Board of Regents of the institution decided to approve the letter.

U of M interim president Jeffrey Ettinger stated in a news release, “We are appreciative for the partnership and shared triumphs we have achieved with Fairview Health Services over the years.” “To better serve Minnesotans throughout the state, this [letter of intent] and the conversations that lie ahead are essential steps toward more thoroughly integrating education, research, and patient care.”

In recent times, the long-standing relationship between Fairview and the University of Minnesota has become more complex and hostile. The entities’ operating agreements expire on December 31, 2026, but Fairview informed the U in late 2023 that it would not be renewing them. As per the current arrangements, Fairview pays the U.S. annually and sends patients to university physicians.

Fairview, on the other hand, has been having financial difficulties; the health system declared a $315.4 million net operating deficit in 2022. A potential merger between Fairview and Sanford Health System, located in South Dakota, was contemplated; however, the agreement fell through in July due to growing concerns from lawmakers, labor groups, and other stakeholders.

According to Fairview and U of M officials, there won’t be any changes to daily patient care or layoffs as a result of the most recent agreement. Fairview president James Hereford described the tentative deal as an olive branch meant to set the parties on a path toward future mutual benefit in a statement.

He said, “This is a crucial first step towards a new and redesigned partnership that will better fulfill our patients’ and the community’s needs now and in the future.” “The purpose of today’s announcement is to shed light on our cooperative future route.”

Though there is a chance to extend the negotiation term, the U, University of Minnesota Physicians, and Fairview will continue to work out new, final agreements by September 30, 2024.

Early next year, subject to “required regulatory processes,” Fairview and the University will share operation of the facilities and gradually reduce Fairview’s role.