Fairview lost $41 million in its latest quarter — an improvement over last year

Fairview Health Services saw its operating loss narrow in the second quarter as the health system saw stronger revenue growth and spent less on highly paid "traveling" nurses to fill staffing gaps.

Between March and June, Minneapolis-based Fairview posted an operating loss of about $41 million on $1.84 billion in revenue, better than the $95.2 million loss during the same period a year ago.

Fairview's finances have been publicly scrutinized recently as part of ongoing talks with the University of Minnesota about their long-term affiliation agreement.

The future of this partnership was an important question as Fairview worked on its proposed merger with South Dakota-based Sanford Health — a deal the health systems called off last month.

"Traveling nurse expense is definitely down year-over-year," Joe Gaylord, the Fairview chief financial officer, said in an interview.

"We're running our operating rooms more efficiently," he added. "We're anticipating demand further in advance and making sure that all the pieces are in place to meet that demand. ... Part of that is staffing — we've been able to hire more people."

This spring, Fairview said there were signs of improvement in its first quarter numbers.

Even so, the health system remains on track to lose about $150 million on health care operations this year, Gaylord said. That would bring the health system's collective operating loss over a five-year period to about $900 million.

During the second quarter, Fairview benefited from an improving stock market.

Total revenues — a measure that includes investment income — exceeded expenses by about $3.7 million. That's a significant improvement over a loss of $166.5 million during last year's second quarter.

Fairview owns University of Minnesota Medical Center in Minneapolis as well as a broader network of hospitals and clinics. Fairview and the U jointly market health care services under the M Health Fairview brand.

Fairview provides annual financial support for academic medicine at the university through an agreement that dates back to 1997, when the health system acquired the U's teaching hospital.

On Thursday, Gov. Tim Walz created a task force to study the future of the U's health care system and its health science training programs. Recommendations are due by mid-January, just after the Dec. 31 deadline for the U and Fairview to signal if they want to continue their current affiliation beyond 2026.