Fairview Health Services have reached a 10-year partnership with University of Minnesota Physicians to fund the state’s medical school. State Attorney General Keith Ellison praised the deal — announced Wednesday — as a “strong step forward.”
The agreement appears to have frozen out university administration.
In a letter to Ellison’s office earlier this week, U administrators opposed the partnership, saying “The Minnesota Attorney General, Fairview and (University of Minnesota Physicians) have announced a proposed deal that would have a profoundly negative impact on the University of Minnesota Medical School and Minnesota.” They say the arrangement came without input from U administration or the Board of Regents.
“The University rejects this proposed agreement in its current form,” the letter reads.
In a statement Wednesday, university officials said the agreement “represents a hostile takeover of the University of Minnesota Medical School. It puts the interests of a single regional provider and a physician group above Minnesotans, and handcuffs the University’s ability to provide medical education and conduct life-saving research.”
According to Fairview’s announcement they and U Physicians “have executed a binding agreement which includes a detailed term sheet and expect to complete a definitive agreement by the end of 2025.”
U Physicians is a group practice for the faculty of the U’s medical school, including more than 1,200 doctors.
“This is about doing what’s right for our patients and for Minnesotans,” said James Hereford, president and CEO of Fairview Health Services, in a statement. “Our shared success depends on putting patients first, supporting physicians and advanced practice providers, and ensuring that Minnesota’s academic health system remains strong and sustainable. We’re grateful to M Physicians for their partnership and to our teams who — together — have proven the power of this collaboration for nearly three decades.”
Current agreement set to expire
The move comes as an agreement between the U and Fairview is set to expire in 2026. Fairview owns health care facilities on the university’s metropolitan campus, including the teaching hospital for the medical school.
Ellison, who has pushed the U and Fairview to reach an agreement, said in a statement Wednesday the new partnership will “ensure continuity of care and academic partnership” at the U’s medical center.
“I welcome the stability agreement framework that Fairview Health Services and University of Minnesota Physicians have announced today as a strong step forward in the process of securing the future of health care across Minnesota with the University of Minnesota,” Ellison said.
He added that Fairview and the U must still deal with issues dealing with provisions for graduate medical education and joint branding.
“They have important work to accomplish for the entire state of Minnesota, and I look forward to supporting this process,” Ellison said.
The new partnership
Dr. Greg Beilman, interim chief executive officer of M Physicians, said the agreement allows his group to focus on patients, education and health care while retaining Fairview as a partner.
“M Physicians is the preeminent faculty practice for the academic physicians at the University of Minnesota Medical School, and Fairview remains an essential partner in our statewide mission,” Beilman said in a statement. “Together, we opened one of the nation’s first COVID hospitals and we continue to advance our region’s complex primary and specialty care. This next chapter builds on that shared history and affirms what’s possible when we focus on what truly matters: patients, learners, and the future of health care.”
The partnership framework includes a $1 billion commitment from Fairview to continue investment in the medical center as well as the Masonic Children’s Hospital and other academic sites, according to the announcement.
It also will “support faculty physicians, researchers, and trainees through commitments to academic funding and opportunities to increase investment through shared goals for growth and efficiency.” And, it includes efforts to deal with rural health care challenges.
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Previous efforts at extending existing partnership
A deal to extend the partnership between the university and Fairview has proven elusive.
Since February 2024, the university and Fairview have been in conversations about a new model of care agreement. The U medical center, which educates some 70% of the doctors and nurses in Minnesota, was originally sold to Fairview in 1997.
In September, Duluth-based Essentia Health exited talks with the U and Fairview to form a nonprofit “All-Minnesota Health Systems Solution” alliance. The proposal for a new health entity, was made by the university and Essentia in January with the goal of aligning resources across the systems for education, training and delivery of clinical care. It was hailed at the time as “a new path forward” by U President Rebecca Cunningham.
Prior to that, Fairview failed to persuade U officials to back a proposed merger with Sanford Health, based out of state in Sioux Falls, S.D., and the largest rural health care system in the country.
Sanford had proposed combining their 58 hospitals, but announced in July 2023 that the deal withered under pushback from key stakeholders and regulators, including the state Attorney General’s Office.
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