House Democrats want state authority over health care consolidation in Minnesota

Minnesota House Democrats warned Monday that a merger between Fairview Health Services and Sanford Health could increase healthcare costs or cause hospitals and clinics to close.

In November, Fairview and Sanford announced their intention to merge into a healthcare system led by Sanford’s current CEO, Bill Gassen. The target date for completing the deal is March 31, which DFL lawmakers and healthcare advocates have repeatedly called too early.

Rep. Robert Bierman, DFL-Apple Valley, proposed legislation Monday to the joint House Commerce and Health Finance and Policy committees that would require healthcare providers to notify the Minnesota Department of Health Commissioner and obtain approval if they choose to another healthcare facility opting for a merger.

“Due to the rush to close the deal, this issue is of paramount importance now,” Bierman said. “This is not just a case where the speed of reaching an agreement will improve public health policies. Our central focus … should be improving the delivery of quality health care to Minnesotans statewide while improving access and affordability.”

Sioux Falls-based Sanford and Minneapolis-based Fairview said they will each remain nonprofit and retain their own leadership and regional boards. Attorney General Keith Ellison is investigating the merger and has held public hearings on whether Minnesota residents believe the merger would be beneficial. Ellison asked healthcare providers earlier this month to push back the March 31 target deadline.

One of lawmakers’ biggest concerns concerns the University of Minnesota Medical School, which is owned by Fairview. The school is the primary teaching hospital of the university.

The Dean of the US School of Medicine, Dr. Jakub Tolar, told the committee on Monday that the merger was carried out without considering the potential impact on the university by healthcare providers.

Myron Frans, the university’s senior vice president of finance and operations, urged lawmakers to delay the merger and that a final agreement between Sanford and Fairview include the university’s involvement.

Gassen, CEO of Sanford, and James Hereford, CEO of Fairview, told members of the House that “at this point in time” they would not be able to move the date of completion of the merger

However, Gassen said they may postpone the merger based on feedback they receive from stakeholders and the attorney general’s office.

Rep. Zack Stephenson, DFL-Coon Rapids, told Gassen his response was “disappointing”.

“All stakeholders … seem to be fairly united in asking you to allocate more time for this,” said Stephenson, chair of the House Commerce Finance and Policy Committee.

DFL-Rochester MP Tina Liebling asked CEOs: “What’s the rush?”

Fairview CEO Hereford said it was in the public interest to complete the merger quickly.

“Healthcare has fundamentally changed, and it is imperative for us in our role to serve Minnesotans to ensure we adapt, innovate and continue to advance,” Hereford said.

Members of the Republican House of Representatives were friendlier to the merger, emphasizing that Sanford has many clinics in rural Minnesota and a merger could strengthen those facilities.

Rep. Tim O’Driscoll, R-Sartell, said there could be more health care options on the network for Minnesotans if the two merge and create health insurance.

In 2013, Sanford and Fairview announced a similar deal, but state lawmakers and then-Attorney General Lori Swanson crushed it. Swanson said her main concern at the time was that Sanford, an out-of-state organization, could operate Fairview-owned University of Minnesota’s hospital and use Minnesota taxpayer money to expand into other states.

Fairview has more than 31,000 employees at 11 hospitals, and Sanford has 47 medical centers with 2,800 physicians and providers throughout the Dakotas and greater Minnesota.

The House of Representatives committees will consider the bill again on Wednesday.


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