Sanford-Fairview merger: Minnesotans question control

Published: Feb. 23, 2023 at 6:35 PM CST
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SIOUX FALLS, S.D. (Dakota News Now) - Ten years ago, a merger attempt between Sanford and Fairview Health Systems was unsuccessful. The two groups are working toward the goal again.

The $14 billion merger affecting nearly 60 hospitals is under the scrutiny of the Minnesota Attorney General and their state legislature. These entities could hold the keys to whether plans can move forward.

The joining of the healthcare systems could bring stability for both. Non-profit consultant Michael Wyland has analyzed the financial status of both Sanford and Fairview.

“Neither system is particularly financially robust right now,” explained Wyland. “You know, Stanford’s doing okay but not great. Fairview is in trouble.”

In 2021 when Denny Sanford gifted $300 million, and then another $350 million in 2022, there was cause for celebration.

But Wyland says Sanford’s filings last year show $330 million in investment loses.

“People go crazy when they hear about a gift in that range,” said Wyland. “You know, but we’re not nearly paying as much attention to Sanford lost that much money.”

In January, Moody’s Investors Service downgraded the revenue bond ratings of Minneapolis-based Fairview Health.

“Just below investment grade. In other words, they’re saying it’s a speculative investment with a significant risk of loss,” explained Wyland.

Sanford CEP Bill Gassen says the two healthcare groups coming together will bring significant benefits.

“To drive better coordination of care between the Dakotas, western Minnesota, and the Twin Cities is going to allow us a much better job of caring for all of the communities together,” said Gassen.

Others are asking questions.

“Opposition from the University of Minnesota Medical School, and the physicians and professors who are employed by that medical school, opposition from the Attorney General, opposition from the legislature,” said Wyland.

As the two entities work on becoming one, Minnesota state representative Robert Bierman submitted a bill to give legislators a say in such unions.

“Minnesota just needs something in place to look at mergers, ascertain if they really are beneficial to the public health to the public interest, and to taxpayers,” said Bierman.

He’s concerned about Minnesotan-created healthcare leaving the state.

“The University of Minnesota and the charitable assets that are involved between the State of Minnesota, the university, and the taxpayers of Minnesota have supported a lot of that,” explained Bierman.

Both CEO’s of Sanford and Fairview have addressed Minnesota legislators.

“Testimony in support of the merger, We’re going to continue to do that, to make ourselves available, to be able to share with Minnesota legislators the virtues all around this opportunity,” said Gassen.

The Minnesota Hospital Association appears to be accepting of the merger out of concern should Fairview have to continue alone. Saying: “Denying a healthcare entity transaction could result in essential healthcare services being totally eliminated in a community in our state.”

The merger itself is just the first of several hurdles.

“In the Sanford/Fairview merger environment, they’re going to need an infusion of cash right away,” said Wyland.

Many are asking how the proposed merger could affect employees and patient care. We spoke with Gassen about those concerns. His response and other insight will come in part two on Friday night at 6:00 p.m. on Dakota News Now.