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Sanford-Fairview merger back on the table

Sioux Falls, S.D.-based Sanford Health and Minneapolis-based Fairview Health have approved negotiations for a merger — nearly one decade after their first attempt fell through, the Star Tribune reported Nov. 15. 

Both Sanford, which operates 47 medical centers in North and South Dakota and Western Minnesota, and Fairview, which operates 10 inpatient hospitals, 80 clinics and 36 pharmacies around St. Paul and Minneapolis, have signed nonbinding letters of intent to merge. The health systems said consolidation would aid in innovation — such as expanding virtual care in rural areas — and help them overcome financial challenges, according to the newspaper. 

If the deal makes it past regulatory reviews, the joint system would manage 78,000 employees and more than 50 hospitals, making it among the largest providers in the Upper Midwest, according to the newspaper. 

Sanford would be the parent company, meaning it would get top billing and operate the joint system from its South Dakota headquarters, the report said. Bill Gassen, CEO of Sanford Health, told the newspaper the health system also would maintain a "very material corporate presence" in Minneapolis and St. Paul. 

But the same forces that halted the merger in 2013 threaten the latest attempt. Officials at the University of Minnesota's hospital, which Fairview acquired in the 1990s, are concerned about having an out-of-state operator, the newspaper reported. The hospital is funded by taxpayer money, and most of Minnesota's physicians train there. This was a problem in the eyes of the state's attorney general in 2013. 

A spokesperson for Minnesota's current attorney general told the newspaper the office is investigating a potential merger's effects on competition. 

Myron Frans, the University of Minnesota's senior vice president of finance and operations, said the university has been engaged in conversations with Sanford and Fairview since August. But he is still unclear on how the merger will solve its financial challenges and support teaching and research at the university, he told the newspaper. 

"We're in the very beginning stages of the discussion, and we need to understand more," Mr. Frans told the newspaper. 

Sanford recently failed to close mergers with both Salt Lake City-based Intermountain Healthcare and Des Moines, Iowa-based UnityPoint Health. 

"I would just like to say that 2013, while only a decade ago, is forever ago. Different conditions. Different people. Different organizations. Different relationships," James Hereford, CEO of Fairview Health, told the newspaper. "And I think all of those differences dictate a very different outcome."

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