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Fairview, Sanford say university can take hospital back, but details still unclear

Ahead of their proposed merger, Fairview Health Services and Sanford Health have offered to return Minneapolis' east and west bank hospitals to the University of Minnesota — but the details of that transaction remain unclear, according to the Star Tribune

On March 6, Fairview CEO James Hereford and Sanford CEO Bill Gassen co-signed a letter endorsing a plan to give the healthcare facilities to the university. However, Fairview and the university have historically disagreed on whether that acquisition should be a market-value sale or a transfer of charitable assets back to the state. 

"It centers on public value rather than a commercial question of fair market value," university leaders replied to Mr. Hereford and Mr. Gassen. 

In 1997, Minneapolis-based Fairview paid $87.5 million to acquire the university's flagship medical center on the east bank and merge it with its Riverside hospital on the west bank. But once the health system shared intent to merge with Sioux Falls, S.D.-based Sanford, university officials and students raised alarms — alleging the highly rated academic medical center would lose integrity if affiliated with Sanford's unranked medical school. Additionally, community and university leaders say the taxpayer-funded university — which trains 70 percent of the state's physicians — should not be controlled by an out-of-state entity. 

In January, the university unveiled a five-point strategic plan, which included reacquisition of its flagship facilities. In February, it requested $950 million from state lawmakers to acquire and pay for initial operating costs of those facilities. 

It's unclear if the university — which is backed by state politicians and holds high negotiating power — will step aside and allow the merger to proceed once it reacquires those assets. The state continues to host hearings on the matter, and Minnesota Attorney General Keith Ellison is still reviewing potential effects on charitable and business competition laws. 

Meanwhile, controversy over the proposed merger has delayed its closing date from March to May.

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