M Health Fairview-Sanford merger: Experts weigh in

The proposed merger of Sanford Health and Minneapolis-based Fairview Health Services has sparked widespread reaction, including an investigation by Minnesota Attorney General Keith Ellison’s office, which regulates charities and reviews antitrust issues.

Combined, the two hospital networks will be one of the largest health systems in the nation. Sanford, based in Sioux Falls, SD, is already the nation’s largest rural health care provider, and the health care giants said joining forces could improve patient outcomes and the patient experience while providing affordable care.

Critics have filled the attorney general’s office with concern. The proposed merger has raised questions about reducing choice and competition, as well as moving Minnesota assets, including control of the state’s two teaching hospitals on the University of Minnesota campus, out of state.

Industry analysts say those fears are unfounded.

“It’s difficult for a program that didn’t have experience with a large teaching hospital on how to handle it,” said Vivian Ho, a health economist at Rice University in Texas.

“He offers completely different services,” Ho said. “He helps critically ill patients with the most complex care. A completely different level of technology and expertise. Rural hospitals are not competitive. They are often the only hospital in the market.”

Teaching hospitals, financial challenges

University of Minnesota officials issued a public statement in November noting that teaching hospitals train most of Minnesota’s doctors, and questioned whether the Fairview-Sanford merger would respect “faculty independence,” and patient care, and how it would address Fairview’s financial challenges. .

Fairview Health Services’ net operating loss last year reached $132 million, although it recently ended core services at St. Joseph’s Hospital and the former Bethesda Hospital in St.

When merger talks emerged between Sanford and Fairview in 2013, then-Gov. Mark Dayton suggested removing teaching hospitals from the discussion and bringing them back to the US.

“The university health program is probably one of the biggest attractions for Fairview to Sanford,” said Allan Baumgarten, a health care market analyst based in St. Louis. Louis Park. “Whether Fairview would be attractive to Sanford if the academic health center was separated from the deal is an open question. My mind is not there. I don’t give this (combination) better than a 50-50 chance of making it to the finals.”

And if Sanford acquired these two teaching hospitals?

“I think Sanford is attracted to the reputation of a teaching hospital,” Baumgarten said, “but I think they’re going to have a little patience with how much those costs are, and whether you should pursue getting that money elsewhere in your system, or reducing some of those important academic health center functions.”

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Different cultures, from abortion to urban care

Outside of M Health Fairview's Midway Clinic
People come out of M Health Fairview’s Midway Clinic on University Avenue in St. Paul on Nov. 15, 2022. (Ellie Roth / Pioneer Press)

Then there are questions about the differences in corporate culture and the potential impact on consumers in terms of prices and services. For example, the Fairview system, which includes 11 hospitals and more than 80 specialty care clinics, is highly integrated, while Sanford’s 47 medical centers are not.

The two health networks both offer assisted living facilities for the elderly, but their services differ in some areas. Sanford, as a matter of policy, does not provide elective abortions, which are prohibited by state law in South Dakota except in limited circumstances.

Fairview does not publicly advertise abortion services beyond “Plan B” emergency contraception, but invites patient questions about abortion, and a spokeswoman issued a written statement Thursday supporting doctor-patient autonomy and “all aspects of reproductive health care.”

“No changes are contemplated in Fairview’s policies of care — including reproductive health and sexual care — as a result of this merger,” Fairview spokeswoman Aimee Jordan said in a statement.

Abortion rights in Minnesota expanded this summer when a Ramsey County Circuit Court judge struck down a series of restrictions, such as a mandatory 24-hour waiting period and a requirement that both parents be notified before a minor can have an abortion.

Some industry analysts have already begun calling the merger a buyout, since Sanford will be the new parent company, with about 45,000 employees compared to Fairview’s 31,000, and Sanford CEO Bill Gassen will oversee the entire combined company behind one. a year of joint leadership with Fairview president and CEO James Hereford.

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