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Minnesota AG's office investigating proposed Sanford, Fairview merger

In 2013, a proposed merger between Sanford and Fairview derailed after Minnesota officials expressed concerns.

Sanford Medical Center is seen Tuesday, Nov. 28, 2017, in Fargo. Michael Vosburg / Forum Photo Editor
Sanford Medical Center is seen Nov. 28, 2017, in Fargo.
Michael Vosburg / Forum Photo Editor
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ST. PAUL — The Minnesota Attorney General’s Office is investigating the proposed merger between Sanford Health and Fairview Health Services and its compliance with state laws governing charities and nonprofits.

Sanford and Fairview announced on Tuesday, Nov. 15, that they have signed a nonbinding letter of intent to explore a merger , with the goal of completing the transaction by the end of 2023.

The concerns expressed by the office of Attorney General Keith Ellison echo those cited by then-Attorney General Lori Swanson in 2013, when Sanford and Fairview explored a possible merger — a deal that was abandoned in the face of criticism by Minnesota officials.

"We are aware of the proposed merger between Fairview and Sanford,” John Stiles, a spokesman for the attorney general’s office, said in a statement. “We have opened an investigation into the proposed transaction’s compliance with charities and nonprofit laws. We are also evaluating any possible effects on competition along with state and federal partners."

The office declined to make further comments about the investigation.

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In 2013, Swanson cited concerns that Fairview’s assets stemmed from tax breaks and donations from Minnesota and Minnesota residents helped to develop the health system, which includes M Health Fairview University of Minnesota Medical Center, a partnership that includes the University of Minnesota.

M Health Fairview University of Minnesota Medical Center East Bank Hospital.jpg
M Health Fairview University of Minnesota Medical Center, East Bank Hospital in Minneapolis.
Photo courtesy of Fairview Health Services

In announcing the current proposed merger this week, top executives of the two health systems said joining together would improve services to patients, support health equity, help support more affordable care in the communities they serve and provide opportunities for continued employee growth and clinical advancement.

Some members of the Minnesota Legislature, including Rep. John Huot, DFL-St. Paul, vice chairman of the House Health Finance and Policy Committee, expressed concerns about the merger’s impact on health care.

“Our biggest concern is the people of Minnesota and their access to health care,” Huot said. “Right now we have access issues all over our state.”

Sometimes, mergers or acquisitions in health care result in service cutbacks, including closing clinics or hospitals, he said.

“I hope Fairview and Sanford are able to put us at ease to say they are going to do everything they can to maintain service levels or improve service levels,” Huot said. “We’re looking forward to the dialogue. If we need to hold hearings, we’ll hold hearings.”

Sanford and Fairview weren’t immediately available for comment on the investigation by Ellison’s office or concerns raised by Huot.

Bill Gassen, Sanford’s president and CEO, said earlier this week that the current merger proposal is happening in a “different environment” than in 2013.

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Asked whether the current merger proposal could encounter resistance, Gassen said the leadership of both Sanford and Fairview has changed in the past nine years.

“We both believe this is a much different situation,” Gassen told The Forum. “We have different leadership teams in both organizations. It’s a different environment.”

Patrick Springer first joined The Forum in 1985. He covers a wide range of subjects including health care, energy and population trends. Email address: pspringer@forumcomm.com
Phone: 701-367-5294
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