Planned Minnesota health system merger meets resistance

The University of Minnesota and Essentia Health say they are looking to create an “all-Minnesota” healthcare system, and they’re hoping Fairview Health Services will be a part of it.

The University of Minnesota and Essentia Health are proposing a merger involving Fairview Health Services. Rebecca Cunningham, president of the university, and Essentia CEO Dr. David Herman say it would be best for Minnesota, but Fairview isn't interested.

But Fairview says it’s not interested in a merger with Essentia and the university. Fairview says it doesn’t want to combine with the other two institutions, MPR News and the Pioneer Press reported.

Fairview has a healthcare partnership with the University of Minnesota, but that is slated to expire at the end of 2026.

Fairview CEO James Hereford and John Heinmiller, chair of Fairview’s board, sent a letter saying that it supports the university partnering with Essentia. But Fairview doesn’t want to merge with the other two organizations.

“We have stated this clearly to the University: while we are open to a partnership, when it comes to a proposed merger between Fairview, the University, and Essentia — our answer is no,” the letter said.

In response, the University of Minnesota and Essentia say they remain committed to their vision of a merger of all three organizations. They said their idea of a merged Minnesota health system would be better for the state and its residents. Essentia and the university pledged to invest $1 billion over five years to make the new system a reality.

Rebecca Cunningham, president of the University of Minnesota, said the school and Essentia are seeking “transformational change.” Cunningham also hopes to resolve Fairview’s concerns.

“We believe there is a significant opportunity to build on the strengths of our existing partnerships across our organizations and the high-quality care to which our physicians, health providers and staff have collectively committed themselves. We remain committed and are open to addressing any and all issues with Fairview,” Cunningham said in a statement Thursday.

Dr. David Herman, CEO of Essentia Health, said the partnership would help improve health care in the state, including in rural areas.

“By building on the long, committed partnership we already enjoy with the University of Minnesota, we can help ensure the long-term success of the University and its ability to train the caregivers we depend on in communities across our state,” Herman said in a statement.

In a proposal sent to Fairview, Essentia and the university said they are looking to form a new, singular non-profit system, instead of an alliance of separate facilities. The university and Essentia hope to close on a transaction by the end of 2025.

“We want a respectful, collegial transaction process that always keeps patients and the public interest in our focus,” the Feb. 10 proposal states. “We welcome the Fairview leadership team’s input and help in crafting solutions. We should all work so that Fairview, Essentia, and UM all are seen publicly as having done the right thing, and as having contributed to advancing health in Minnesota.”

The university and Essentia say they are looking to reduce the cost of care for patients while investing in new facilities. They said the plans involve replacing some University Minnesota Medical Center facilities in Minneapolis, possibly building smaller facilities since patients could access care sites across the new merged entity.

Fairview’s leaders said in the letter that they think it’s important to retain their independence, the Pioneer Press reported.

Fairview owns the academic facilities that make up the University of Minnesota Medical Center. In February 2024, the university signed a letter of intent to take full ownership of the facilities from Fairview by the end of 2027.

Essentia operates 14 hospitals and 78 clinics serving Minnesota, North Dakota, and Wisconsin.