University of Minnesota, Fairview will rebrand shared hospitals, clinics in bid to elevate standing

The Fairview name will live on under a new agreement between the Twin Cities health system and the University of Minnesota that seeks to elevate the standing of both as medical and research powerhouses.

The U's Board of Regents approved an eight-year partnership Friday morning that will rebrand the shared hospitals and clinics under the name M Health Fairview.

The two parties have alternately considered splitting, merging, then splitting again, since forging a partnership two decades ago, but Fairview and university leaders said this new collaboration recognizes the important roles that each side plays for the other.

The partnership provides a "user-friendly, research-based and science-driven way of getting health care to Minnesotans," said Dr. Jakub Tolar, vice president for health sciences and dean of the U's Medical School.

Fairview clinics and hospitals will continue to serve as a referral base, sending patients to the university and its specialty care and research programs.

The health system also committed to providing $40 million or more per year in clinical revenue to support research. That was an increase from the current amount of $8.7 million annually, and the agreement calls for an additional variable amount of up to $8 million per year in research spending if Fairview generates excess clinical revenue.

The university and its faculty doctors will provide expertise, clout and an academic brand name to Fairview, which was already one of the largest providers of primary care in the Midwest before its 2017 merger with the HealthEast hospital-clinic system.

While the deal might appear to be a "dollar for brand" swap, U general counsel Doug Peterson said it is more complicated. The increased research funding is based on the assumption that Fairview and university doctors will increase patient volumes and accelerate research discoveries that will improve patient care, he said.

"The point … is to do the research that helps patients," he said.

Tolar said the research funding will be concentrated in areas where the U already has a strong reputation — neuroscience, biomedical engineering and cell therapy.

The university sold its hospitals and clinics to Fairview two decades ago to stem financial losses. The relationship between Fairview, the university, and the University of Minnesota Physicians (UMP) group has been rocky in the years that followed.

In 2013, the U considered breaking from Fairview and aligning with Sanford Health. In 2015, Fairview and UMP engaged in merger discussions that created the M Health brand and sought unsuccessfully to eliminate the Fairview name. In 2016, the sides announced that merger talks had failed and that the university would again consider other clinical partners.

While the Medical School continues to rank among the nation's best in primary care training, its reputation and funding have slipped as measured by federally supported research. U.S. News & World Report magazine recently ranked the school 46th nationally for medical research.

"To truly be a great care delivery organization, we need to have programs of distinction," said James Hereford, Fairview's chief executive. "It should be unacceptable to us that we don't have the top" programs in cardiology, oncology and other specialties.

While the partnership should elevate the university's standing, Hereford said it took "courage" because it presents financial risks and depends on revenue growth. Fairview's revenue increased last year following the HealthEast merger, but its operating income actually declined.

Tolar said the university and academic physicians will benefit from Fairview's expertise as a clinical provider and focus on patient satisfaction. Patients facing wait times of 17 weeks or more to see university physicians, for example, is unacceptable, he said.

Some doctors are operating under the "recycled knowledge that the longer your waiting time, the better doc you are," he said. "That's absolutely the opposite of how I look at it."

Tolar and Hereford said the deal should spark innovations, including wearable technologies to improve patient communication, and mobile clinics and telemedicine programs so the system can treat patients in broader corners of the state.

Jeremy Olson • 612-673-7744