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Exclusive: Sanford, Fairview CEOs respond to merger concerns, UMN plans & attorney general pushback

Sanford CEO Bill Gassen and Fairview CEO James Hereford spoke to KARE 11 reporter Kent Erdahl to discuss merger plans and address some big questions.

MINNEAPOLIS — Any proposed merger between two large healthcare providers will draw public scrutiny and concern, but when Sanford Health and Fairview Health Services announced plans to combine forces late last year, it drew even more attention.

Now, two months before the deal was projected to close, Attorney General Keith Ellison says he needs more time to investigate the potential impact on patients, competition and even taxpayers. The added state interest comes because Fairview operates the state's largest academic training hospitals and has an ongoing relationship with the University of Minnesota.

In the meantime, the University has announced its own hope to chart its own path, and separate itself from Fairview, while physicians and medical students have become some of the most vocal critics of Sanford's interests as an out-of-state organization based in the Dakotas. 

With all of that in mind, KARE 11 reporter Kent Erdahl sat down with the leaders of Sanford and Fairview to address those concerns.

Kent Erdahl: "Let's just talk a little bit about culture and politics. These are two nonprofits from two different states that have ideological differences right now, and that has been politicized through gender-affirming care and abortion care/reproductive care. There have been a lot of questions raised about what happens to that kind of care if this merger goes through. What do you want to say about that?"

Bill Gassen: "The gender-affirming care, the abortion care and abortion services that are provided, today, in the state of Minnesota, those are going to continue. They will remain unchanged as a result of this merger. Don't take my word for it, but what we've committed is the by-laws for the new organization will expressly state that as well so that nobody can be concerned that there ends up being some kind of a corporate policy where you have people in a corporate headquarters deciding what type of care is provided."

Sanford CEO Bill Gassen and Fairview CEO James Hereford say they understand the concerns that patients and employees have voiced since announcing their plans to merge. The two have spent weeks visiting hospitals and clinics across Minnesota to address fears about everything from care to union contracts.

Gassen: "Sanford Health has long had unionized workforces in Minnesota and we will continue to honor and respect those collective bargaining agreements post-merger."

On Tuesday, in Grand Rapids, the CEOs made their final public plea for combining Sanford - the nation's largest rural health care provider - with Fairview, which operates 11 hospitals, primarily in the Twin Cities area.

The leaders argue that the merger is an ideal fit because the two nonprofits do not overlap geographically, meaning they won't be looking to close clinics or hospitals. Instead, they say that they will be able to leverage Sanford's recent $350 million investment in virtual care to spread out costs at a critical time for providers.

Hereford: "Over half the care delivery systems in this country lost money in this last year, including ours. There is no returning to a status quo. Together we can improve the experience and support for our patients and providers and employees in a way that neither Fairview nor Sanford can do alone." 

Kent: "I wanted to ask you about that because the two bottom lines of these two organizations are very different right now. How sustainable is the future for Fairview without a merger?"

Hereford: "Well, it's sustainable, but I think in a different way. My team and I have been working very hard. We've got great progress over the last quarter. We would be able to exist, but not to thrive in the way that Minnesotans deserve."

Erdahl: "Let me ask you about better care. There's a lot of literature out there that has looked into mergers, saying costs tend to go up and care stays the same, or declines. Why would this be any different than that?"

Hereford: "No one should argue that a merger by itself is going to yield anything. Higher costs, lower costs, higher quality, etc. Because it also takes a dedication to actually achieve those things. An intent. That's part of why, I think, this combination makes so much sense to me. If you look at what drives Fairview and what drives Sanford in terms of improving quality, improving safety, driving down cost structures, creating a better patient experience — that intent is there."

Erdahl: "How should Minnesotans feel confident in a merger going forward when the status of one of those potential partners - The University of Minnesota - seems to appear that they want out?"

Gassen: "The conversation around the university and its future that it has charted has absolutely nothing to do with the merger with Sanford Health and Fairview Health Services. What kind of gets lost in the public conversation, and some of the political theater that ensues, is the reality that there is a contract that is in place between Fairview and the university. That agreement runs until 2026."

Hereford: "We're open to any and all possibilities. We just feel it would be a shame if we can't work out some relationship because every academic in the country needs to be associated with a care delivery system. Either of its own creation or some other relationship, because you can't be the ivory tower on the hill."

Gassen: "But the university's indecision about what it wants to do and how it wants to proceed, should in no way, shape or form, hold back the independent nature of Fairview and Sanford from going forward and charting our course." 

Erdahl: "What is your response to the attorney general saying this needs more time?" 

Gassen: "With all due respect, I know it seems like there's a lot of time for other people as it relates to bringing the two organizations together, but what we do every single day is life and death, and our ability to be able to continue to do that and to do that in a sustainable way into the future is critical. So every day that we delay bringing the organizations together is another day for missed opportunity.

We are not the final say on that date. We need to work with federal and our state regulators to make sure that we satisfy their questions, and we intend to do that. We're working every single day to answer those questions, but with two months to go, I'm not ready to sort of call it quits and say, well there's just not enough time left."

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