"The nonprofit status of both Sanford and Fairview also raises questions about what a potential merger deal would look like. Would money be exchanged? If so, who is the beneficiary? Complex questions about the ownership of nonprofits, and the value embedded in them, arise when they change hands."

Is Sanford deal in Minnesota's best interests? 

From the Star-Tribune:

South Dakota provider would control U’s teaching hospital.

The University of Minnesota Medical Center, Fairview, is not about to be renamed the University of Minnesota Medical Center, Sanford, any time soon.

But if a merger between South Dakota-based Sanford Health and Twin Cities-based Fairview Health Services, which owns and operates the U’s teaching hospital as well as other major metro hospitals, is a serious possibility, Minnesotans deserve to be informed and to weigh in.

While mergers are increasingly common in health care, this isn’t just another business transaction because of the public-policy questions it raises. Of particular concern: It could give control of the world-class university teaching hospital, which helps fund the medical school and provides a critical training ground for state doctors, to an out-of-state organization with no history of deep cooperation with a major academic health center.

Minnesota Attorney General Lori Swanson was on target this week when she called public hearings to air details and hear concerns about deepening merger talks between Sanford and Fairview. Gov. Mark Dayton’s longtime support for the U’s medical school and the priority he’s put on strengthening it also lend urgency to spotlighting the deal.

From its humble origins as a hospital for Norwegian immigrants, public support through philanthropy, volunteer time and the substantial tax breaks that nonprofits enjoy has helped Fairview become a leading medical institution in Minnesota, with a net worth of $1.2 billion.

Fairview’s hospitals and clinics are where generations of Minnesotans have sought care for their families, and also where about 22,000 people work. For decades, Minnesotans have made substantial investments in Fairview. They have a substantial stake in its future success, which is why assurance is needed that the potential deal is in the best interests of the state.

In an interview with an editorial writer on Friday, Fairview’s interim CEO, Charles Mooty, repeatedly emphasized the exploratory nature of the merger talks. But the hiring of an investment bank to evaluate a potential deal suggests that this is an appropriate time for Fairview officials to start making their case to Minnesotans.

We’d especially like to know more about why Sanford, which has little experience operating in a highly competitive metro area, is the best partner for Fairview.

It’s easy to see what Sanford would get from a merger. The South Dakota-based system — named for a key philanthropist — has long sought to enter the Twin Cities. Adding Fairview facilities to its lineup would establish Sanford as a major health care player. Sanford Health Plan also sells health insurance. Having Fairview hospitals and clinics within the corporate fold could enhance its plans’ attractiveness.

But much more detail is needed on how Minnesota might benefit. Swanson has raised good questions about whether Sanford would leverage Fairview assets built through years of public support to enhance care here. Or, would those assets help fuel Sanford’s growth?

The nonprofit status of both Sanford and Fairview also raises questions about what a potential merger deal would look like. Would money be exchanged? If so, who is the beneficiary? Complex questions about the ownership of nonprofits, and the value embedded in them, arise when they change hands.

The most pressing questions, however, concern the future of the University of Minnesota’s academic health center. Nationally, top academic medical centers that sold their hospitals in the 1990s, as the U did, are moving to reacquire or take more control over them. A Fairview-Sanford merger would have the U moving in the opposite direction. Sanford’s commitment to providing financial and training support for an academic health center the size of the U’s is also unclear.

To his credit, Mooty acknowledged these concerns on Friday and said, “This endeavor with Sanford is not going anywhere if the university doesn’t believe it’s a positive.’’ That’s reassuring. The U should not be a junior partner in these merger talks.

There are numerous questions about the proposed deal. What’s not at issue is the need to safeguard priceless state assets — a world-class academic health center and its teaching hospital.

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