University of Minnesota, Fairview delay deadline on pact for hospital sale

The University of Minnesota and Fairview Health Services said Friday they won’t meet a Sept. 30 deadline for reaching a definitive agreement on the U reacquiring its teaching hospital in Minneapolis.

University and health system officials say they’re still working to finalize a deal proposed in February for selling University of Minnesota Medical Center, which is one of the state’s largest hospitals and a critical venue for training Minnesota’s physician workforce.

Fairview acquired the medical center in 1997 in a financial bail out.

“We hope within a month to wrap up the current stage of discussions,” they said in a statement.

University of Minnesota Medical Center (UMMC) is the primary teaching site for the state’s largest and only public medical school. About 70% of Minnesota’s physicians trained at the U as medical students or as part of their graduate medical education studies.

Earlier this month, U of M president Rebecca Cunningham told the Star Tribune that university officials were still discovering and analyzing data to inform a decision on whether to move forward with the purchase. She described it as “a big, complex decision with many moving parts.”

Among other things, it’s still not clear what the sale price might be.

While some academic medical centers like the University of Michigan say they’ve seen significant benefits from owning their teaching hospitals, a top official from Michigan — where Cunningham previously worked — told a U of M audience this month that ownership is not essential since there are many models that can work.

In their joint statement Friday, the U and Fairview said a lot has been accomplished since the deal was first announced in February, including work with consultants for outside analysis of current and future operations at UMMC.

“We have worked toward the original Sept. 30 deadline outlined in our letter of intent, a deadline our organizations set for ourselves,” the U and Fairview said in the statement. “While significant work has been done over the past eight months, we both agree additional time is needed. As we have made clear from the outset, getting these agreements right is our top priority.”

Beyond the Sept. 30 deadline, the letter specified a majority stake in UMMC would transfer to the U by the end of this year, with the university paying Fairview 51% of the negotiated price at that time. Funds for the health system’s remaining stake would be placed in escrow.

The deal would close by the end of 2027.

While negotiating terms of an acquisition this year, Fairview and the U will also have been talking about a revamp of their existing affiliation agreement. This deal creates a joint clinical enterprise called M Health Fairview, which the university and health system jointly operate.

Fairview also makes annual payments to support the U’s academic health mission, but the health system argues that current payment levels are too high.