Fairview Health Services has announced a significant investment of $1 billion to enhance its medical facilities in collaboration with the University of Minnesota (U of M) and M Physicians. This decision comes as part of a new 10-year operating agreement, which the University of Minnesota Board of Regents is set to vote on Friday. The agreement marks a notable shift from previous tensions between the three parties, particularly highlighted during discussions last November.
The mediation process, led by retired Hennepin County District Court judge Thomas Fraser, played a crucial role in facilitating the agreement. Minnesota Attorney General Keith Ellison emphasized the shared goal of the involved parties: to strengthen healthcare delivery and support the University of Minnesota Medical School. “Despite differences they had, they shared the overriding goal of strengthening the health and prosperity of our entire state and its flagship university,” Ellison stated in a news release on Monday.
Under the terms of the new agreement, Fairview will continue its ownership of the University of Minnesota Medical Center, a position it has held since 1997. The investment of $1 billion includes an annual financial support commitment of $50 million for the U of M Medical School, a reduction from the previous $100 million annual support, which Fairview deemed unsustainable. However, the new agreement allows for additional funding based on the health system’s performance, potentially increasing Fairview’s total financial commitment to approximately $600 million over the decade.
Strengthening Healthcare Access Across Minnesota
The agreement also reaffirmed the U of M’s designation of M Physicians as the sole faculty practice group representing Medical School faculty and affiliated doctors. This designation allows M Physicians to continue their academic work while providing care within Fairview facilities, thereby enhancing the University’s commitments to medical education and research.
In a bid to address healthcare accessibility, the deal includes initiatives aimed at improving timely diagnosis and treatment for patients in Greater Minnesota, regardless of their geographical location. Fairview has allocated an initial $10 million towards this innovative program, which aims to support local physicians in delivering necessary care for complex medical conditions.
The negotiations have been lengthy, with Ellison stepping in to facilitate discussions in early 2025 as the existing operating agreement was set to expire at the end of 2026. Initially, Lois Quam, a former executive at UnitedHealth Group, was appointed as a strategic facilitator. However, as complications arose, Fraser was brought in to mediate, alongside co-equal consultants Quam and Dr. Bill McGuire, former CEO of UnitedHealth Group.
In a testament to the intensive negotiation efforts, Ellison noted that an agreement was reached after seven weeks of daily meetings, excluding December 25.
Future Outlook for Healthcare in Minnesota
University of Minnesota President Rebecca Cunningham characterized the agreement as a “milestone” that clarifies the relationship among the involved parties. “We are pleased to be able to continue this long-term partnership, which has played a vital role in caring for Minnesotans, training much of the state’s healthcare workforce, and advancing lifesaving medical research,” Cunningham remarked.
The ongoing healthcare crisis in Minnesota and nationwide has prompted industry leaders to seek innovative solutions. James Hereford, President and CEO of Fairview Health Services, emphasized the importance of adapting to meet patient needs. “This mediation process created the space for all parties to focus on what matters most: continuity of care, a strong academic partnership, and a sustainable future for healthcare in our state,” Hereford stated.
Dr. Greg Beilman, interim CEO of M Physicians, expressed pride in reaffirming their status as the University’s premier physician practice. “This agreement establishes a clear and durable foundation for M Physicians and all parties to deliver world-class care and education for our patients, learners, and community,” Beilman added.
The announcement of this new deal follows closely behind the departure of Dr. Jakub Tolar, the Medical School dean since 2017, who has accepted a position as president and CEO of the Baylor College of Medicine in Houston, Texas. This transition underscores the evolving landscape of healthcare leadership and priorities within Minnesota’s medical community.
