The University of Minnesota, Fairview Health Services and M Physicians — the U of M medical school faculty organization — have reached a three-way, 10-year mediated agreement that keeps alive the recently-endangered M Health Fairview partnership and a decades-long collaboration over research and patient care.
The agreement, which contains key changes from a prior arrangement hashed out last November between Fairview and M Physicians alone, is expected to be finalized by a vote of the U’s Board of Regents on Friday.
Notably, the new agreement includes a commitment from Fairview to put $1 billion in the next 10 years into its medical facilities on the U of M campus, including the U’s Medical Center on the East Bank campus in Minneapolis.
The M Health Fairview brand, which was set to expire at the end of this year, was officially launched at the beginning of 2019, though the complex partnership between Fairview and the U of M dates back to 1997.
U-Fairview agreement was coming to an end
The prospect of ending what had been a 30-year partnership between the U of M, its medical faculty and Fairview had alarmed university officials, who saw themselves shut out of negotiations last year between Fairview and M Physicians as the 2019 agreement barreled toward its scheduled close.
The M Health Fairview brand provides medical services for 1.2 million people annually and trains 70% of Minnesota doctors, while serving as a “hub of scientific innovation and economic growth for Minnesota,” reads a joint statement issued Monday by the three institutions.
The previous impasse drew the attention of the state Attorney General’s Office, which is the primary regulator of Minnesota charities and healthcare transactions.
Attorney General Keith Ellison’s office was intimately involved in helping broker peace between the organizations and convened a strategic facilitation process last March and April, naming Lois Quam as chief facilitator until a mutually-agreed upon mediation team could be put in place.
The team, which met from Dec. 5 until Jan. 26, included Quam, retired judge Thomas Fraser and Dr. William McGuire as co-consultants.
With this year’s deadline looming, the new three-way arrangement was reached after seven weeks of “intensive mediation,” according to the joint statement.
“I know all Minnesotans join me in thanking everyone that contributed to getting us to this point,” said Ellison, quoted in the joint statement. “It is a significant and positive development for all of us and the state we love.”
Key elements of agreement
Among the mediated changes in the latest agreement:
• Payments made by Fairview to the university will now flow directly to the university’s medical school. In the preliminary agreement between Fairview and M Physicians, those payments would have gone instead to the physicians organization.
• The agreement ensures that the university and medical school continue to be in charge of managing medical education and research, while Fairview will continue to operate the University of Minnesota Medical Center and its other hospitals.
• Medical school leadership will continue to hold seats on the M Physicians board.
• A new leadership council will be set up with the goal of improving improving collaboration between the university, Fairview and M Physicians.
• The agreement also includes a commitment to launch a new program designed to help residents of Greater Minnesota access specialized care, backed by an initial commitment of $10 million from Fairview.
Expansion to be considered
As part of Fairview’s investment into its U of M-based facilities, the U and Fairview will “explore expansion of physical capacity at the academic medical centers and other approaches to enhance care through state-of-the-art facilities.”
Fairview also will assume operations for the Clinics and Surgery Center, based on Fulton Street on the East Bank campus in Minneapolis, after negotiating a new lease with the university “to foster integration, delivery and management of services for patients, physicians, associated care providers, and related staff.”
With the goal of preserving patient care, Fairview will forgive the operating debt the Clinics and Surgery Center owes to Fairview and assume all annual operating losses. That debt had been held by the M Physicians group.
Fairview will provide $50 million in annual funding for the medical school, with the “potential for additional funding based on system performance,” reads the joint announcement.
Fairview also assumes additional financial responsibility for clinic services, bringing its 10-year commitment to the medical school to approximately $600 million before additional performance-based funding.
The new leadership council will consist of two members each from university leadership and the Fairview board of directors to “discuss strategic matters and mutual needs and ensure an effective collaboration,” reads the joint statement.
Complex negotiations
Negotiations intended to keep alive the M Health Fairview partnership were complex, according to those involved, in part because of the breadth of the three institutions. The Fairview system spans 1,500 physicians and 500 advanced practice providers affiliated with M Physicians, along with 1,100 physicians and 400 advanced practice providers affiliated with Fairview and other providers operating in Fairview clinics.
The three-way agreement has already been signed by U of M President Rebecca Cunningham, Fairview President and Chief Executive Officer James Hereford, and M Physicians interim CEO Greg Beilman.
The University of Minnesota Board of Regents, the M Physicians Board, and the Fairview Board of Directors are expected to vote on the binding agreement by Feb. 1. The agreement would then take effect on Jan. 1, 2027, with some features implemented this year.
There’s still more negotiations head. The latest agreement provides a framework for three distinct arrangements, including an academic affiliation agreement between the U of M and Fairview, a master agreement between M Physicians and the U of M, and an amendment to the Fairview/M Physicians “stability agreement” that was agreed upon last November.
The parties have agreed to continue working with the existing mediation team on the three “definitive agreements.”
U president, Fairview CEO respond
Cunningham, the U of M president, was quoted in the joint statement saying the new agreement “is an important milestone that brings clarity to the relationship between the University, M Physicians, and Fairview Health Services for the next 10 years. We are pleased to be able to continue this long-term partnership, which has played a vital role in caring for Minnesotans, training much of the state’s healthcare workforce and advancing lifesaving medical research.”
James Hereford, president and CEO of Fairview Health Services, said that healthcare delivery in Minnesota and across the country “is in crisis, and meeting the needs of patients in this environment requires constant innovation, improvement and a willingness to change how we provide care-
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delivery services to meet the needs of our patients.”
“This mediation process,” Hereford continued, “created the space for all parties to focus on what matters most: continuity of care, a strong academic partnership, and a sustainable future for healthcare in our state.”
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