No easy answer on whether University of Minnesota should own its teaching hospital

The University of Michigan credits ownership of its teaching hospital with promoting collaboration among researchers while rallying the school around the cause of improving health care quality.

For these and other reasons, Mary Sue Coleman, a past university president at Michigan, told an audience Wednesday at the University of Minnesota that hospital ownership “has been enormously effective.”

But Coleman stopped short of a blanket endorsement of the ownership model, which U officials currently are contemplating as they negotiate a possible deal to reacquire University of Minnesota Medical Center in Minneapolis.

“It’s not essential for academic medical centers to own their hospitals,” Coleman said. “It depends on culture, geography, environment — there are so many issues. ... It’s worked for us; it may not work for everybody.”

Coleman was part of a health care panel Wednesday convened for the inauguration of new U President Rebecca Cunningham, who previously served at Michigan as an emergency physician, researcher and top administrator. Cunningham moderated the panel and asked her former boss if there are any advantages for universities to own their teaching hospitals.

Minneapolis-based Fairview Health Services has owned University of Minnesota Medical Center since acquiring the hospital in a financial bailout in 1997. In February, Fairview and the U announced a nonbinding letter of intent for the university to purchase the hospital facility.

They are supposed to reach a definitive agreement by Sept. 30. Last week, Cunningham told the Star Tribune that a final decision depends on complicated details that still are being analyzed. At this point, the purchase price is unclear.

“We have aspired to the deadlines outlined in the [letter of intent], but the most important thing is that we get these agreements right,” Fairview and the U said Wednesday in a joint statement. “Our work continues.”

Coleman served as Michigan’s president from 2002 to 2014, and as interim president in 2022.

The University of Michigan owns teaching hospitals in Ann Arbor for adults and children, Coleman said, and is building a new inpatient facility that will feature private rooms for patients.

To compete with other health systems, the University of Michigan has been acquiring hospitals across the state and placing them in separate nonprofits. This protects the university’s bond rating, Coleman said, “in case we were to reach a stretch where there were catastrophic reimbursement rates or something that would really cause a big financial strain on the university.”

The University of Michigan is located in a small town, Coleman said, adding that this geography “is very amenable to our owning our own teaching hospital.” Hospital ownership has promoted a strong medical research program at Michigan, she said, because the university and hospital “have the same systems.”

“But I will say: Harvard doesn’t own its own hospitals and they do perfectly well in the research arena,” she said. “So, culture and geography matter. ... The structure is well suited for our hospital ownership and expansion, but I want to be very clear here — I’m not promoting this for everybody.”

Over the past year, a task force appointed by Gov. Tim Walz studied the future of academic health at the U and considered the merits of various ownership structures. These can range from university-owned systems like Michigan to those like the U of M, where independent groups run affiliated hospitals and clinics while providing funds to the university for health professions training.

The University of Minnesota and Fairview jointly manage their clinical enterprise under the brand M Health Fairview.

In the end, the task force concluded “there is no one best model,” said former Health Commissioner Jan Malcolm, who participated in Wednesday’s panel discussion.

“There are very successful models where the university owns its health care delivery practice, and successful models where the university does not own the clinical practice,” Malcolm said. “However, in both cases, strong partnerships are needed with the broader health care ecosystem.”