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Sanford, Fairview still intend to combine as oversight bill heads to governor

A bill that could stall the proposed merger between Sioux Falls, S.D.-based Sanford Health and Minneapolis-based Fairview Health Services is headed to Minnesota Gov. Tim Walz's desk — but the health systems are not letting it deter them. 

The bill would extend the attorney general's oversight of mergers, consolidations and transactions involving health systems. Sanford and Fairview already have pushed their closing date back twice as state and health system leaders work toward an agreement. 

The state Senate passed the bill May 21. If Mr. Walz signs it — and he is expected to, a spokesperson for his office told the Minnesota Reformer — new measures would become law including increased requirements for timely notifications of transactions and prohibition of transactions that would substantially lower competition. 

Notably, the bill would prohibit the Minneapolis-based University of Minnesota's healthcare facilities from being owned or operated by an out-of-state entity unless the attorney general decides it is in the public interest. Fairview currently owns and operates the University of Minnesota Medical Center — along with M Health Fairview Masonic Children's Hospital and West Bank Medical Center, which the University has never owned and previously agreed to sell the flagship hospital back to the university. That "vision" is not set in stone, and may require further refinement into the summer, Mr. Walz said at a May 22 news conference. 

Sanford and Fairview believe an ongoing partnership with the University of Minnesota is in the public interest, but the university must "decide its own future," a spokesperson for Fairview told Becker's. The health systems hope to resolve these discussions in "short order." 

The university previously pushed back against a sale, believing the public institution's hospital should be transferred back to the state as a charitable asset. 

"It centers on public value rather than a commercial question of fair market value," university leaders said in March.

Despite the additional hurdles the bill might impose, the legislation is unlikely to halt the merger. The bill zeroes in on transactions that create a monopoly or substantially lessen competition; the FTC determined the merger was neither, allowing its review period to expire Feb. 13 without further information requests. 

"This new law does not change our desire to combine with Sanford Health, and while it creates new regulatory processes, we strongly believe that the merger is in the public interest and that we can comply with the new requirements," the Fairview spokesperson told Becker's.

"As we move forward, we will continue to work closely with the attorney general's office on their review and continue to abide by the commitment to provide 90 days' notice prior to any closing date."

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