Fairview Commits $1 Billion to U of M Medical Facilities in New Agreement

The University of Minnesota Board of Regents is expected to approve a significant operating agreement with Fairview Health Services and M Physicians, committing $1 billion to enhance medical facilities over the next decade. This agreement marks a pivotal moment in the relationship between the three entities, which had faced strained interactions as recently as November 2023.

The new collaboration follows a mediation process led by Thomas Fraser, a retired judge, who facilitated discussions that have led to what Minnesota Attorney General Keith Ellison describes as a partnership focused on “strengthening the health and prosperity of our entire state.” The agreement is seen as a resolution to previous conflicts and aims to provide stability for health care consumers and providers alike.

Under the terms of this agreement, Fairview will continue its ownership of the University of Minnesota Medical Center, a status it has held since 1997. The deal stipulates that Fairview will reduce its annual operational support from $100 million to $50 million, effective from January 1, 2024. Despite the reduction, there is an opportunity for increased funding tied to the health system’s performance, potentially bringing Fairview’s total commitment to the Medical School to approximately $600 million over the next ten years.

Innovative Programs and Statewide Impact

The agreement also reaffirms the role of M Physicians, which represents faculty and affiliated doctors at the Medical School. This designation allows M Physicians to continue their academic work while providing essential care in Fairview facilities, contributing to medical education and research.

A notable component of the deal is the exploration of a new initiative aimed at supporting local physicians in Greater Minnesota. This program seeks to ensure that patients, regardless of geographical barriers, receive timely diagnoses and appropriate treatments for complex medical conditions. Fairview has already allocated $10 million to kickstart this initiative.

Negotiations surrounding this agreement have been challenging, with Attorney General Ellison stepping in to mediate discussions in early 2025. Following a breakdown in talks, Ellison appointed Lois Quam, a former UnitedHealth Group executive, as a strategic facilitator and later brought in Fraser to guide the mediation process, supported by Dr. Bill McGuire, former CEO of UnitedHealth Group.

Ellison’s release noted that the parties reached an agreement after seven weeks of intensive mediation, meeting daily except for December 25. In a statement, Rebecca Cunningham, President of the University of Minnesota, referred to the deal as “an important milestone” that clarifies the relationship among the three parties.

Future of Healthcare in Minnesota

Health care leaders have emphasized the necessity for innovation in the face of ongoing challenges within the healthcare system. James Hereford, President and CEO of Fairview Health Services, stated, “Health care delivery in Minnesota and across the country is in crisis,” underscoring the urgent need for improvements in care delivery services.

This agreement is designed to establish a robust foundation for M Physicians and all parties involved, promoting world-class care and education for patients and learners alike. Dr. Greg Beilman, interim CEO of M Physicians, expressed pride in reaffirming their status as the University’s premier physician practice, enhancing their clinical and academic missions.

The announcement of this agreement comes shortly after the departure of Dr. Jakub Tolar, the Medical School dean since 2017, who has been appointed president and CEO of Baylor College of Medicine in Houston, Texas.

The collaborative effort between Fairview, M Physicians, and the University of Minnesota represents a significant investment in the future of healthcare in the state, aiming to provide better services and outcomes for all Minnesotans.