The University of Minnesota and Duluth-based Essentia Health announced a partnership Friday to develop a new nonprofit health care organization to include a $1 billion investment in the next five years, as the university’s future with Fairview Health Services remains uncertain.
The partnership would “re-invest in University of Minnesota on- and near-campus medical facilities, as well as in rural healthcare and increased access to elevated levels of specialized care,” according to a U statement.
Described as an “all-Minnesota” solution, the new organization would educate future health professionals, address urgent health care needs and assure “the future of academic medicine in Minnesota and essential financial support to the University of Minnesota Medical School,” according to the U.
Essentia operates 14 hospitals and 80 clinics in Minnesota, including St. Mary’s Medical Center in Duluth, as well as in North Dakota and Wisconsin.
“Our state’s healthcare providers and leaders, as well as everyday Minnesotans, have said loud and clear that we need a healthcare transformation in Minnesota to increase access to care and keep patients close to home with high quality care,” said U President Rebecca Cunningham in the statement. “We agree, it is time to forge a new path forward and deliver a solution for all Minnesotans.”
$1 billion investment
The $1 billion investment will be possible by “leveraging the assets” of the partnership and inspiring “philanthropic support,” according to U officials.
No additional taxpayer dollars or a state legislative budget request is needed for the initial launch of the partnership, according to university spokesperson Jake Ricker.
“Though we are not asking for funding in the 2025 session, or to launch this proposed new solution, future support from the State of Minnesota will be essential as we look to build new facilities down the road or bring innovation to advance care and health across the state that the University, Essentia and other partners can uniquely provide,” Ricker wrote in an email.
Fairview Health Services partnership
The university’s current partnership with Fairview Health Services is set to expire in 2026. Fairview provided notice of termination of its affiliation with the U in November 2023.
Fairview previously failed to persuade U officials to back a proposed merger with Sanford Health, based out of state in Sioux Falls, S.D., and the largest rural health care system in the nation. Sanford had proposed combining their 58 hospitals, but announced in July 2023 that the deal had withered under pushback from key stakeholders and regulators, including the Minnesota Attorney General’s Office.
Since February 2024, the university and Fairview have been in conversations about a new model of care agreement, and the two signed a letter of intent at that time with plans for the university to purchase the four academic health facilities that make up the M Health Fairview University of Minnesota Medical Center, with the U assuming full ownership of the facilities by Dec. 31, 2027. The U medical center, which educates some 70% of the doctors and nurses in Minnesota, was originally sold to Fairview in 1997.
However, discussions with the Minneapolis-based Fairview about the model of care agreement have so far not been successful, according to Ricker.
“What we know with certainty today is that our existing agreements with Fairview continue M Health Fairview through 2026. What our relationship looks like past 2026 is a matter of ongoing conversation,” Ricker wrote.
According to a Friday statement, Fairview Health Services became aware of the University’s discussions with Essentia within the last 24 hours and that in the last year, Fairview has “worked in good faith towards the University’s desire to purchase the academic assets. Today’s announcement by the University reflects a sudden change in their stated desire. As we look ahead to determine next steps, our unwavering focus remains on delivering exceptional care and ensuring the health and well-being of Minnesotans.”
‘Inflection point’
The partnership with Essentia builds on the work at M Health Fairview, according to Cunningham.
“We are at an inflection point in our relationship with Fairview Health Services that requires an urgent and innovative solution,” Cunningham said in the statement on the partnership with Essentia. “We envision this model as a new path forward in our relationship, one that builds on the momentum all those at M Health Fairview have built and that continues to put patients first, consistent with our organizations’ shared priorities. We have begun conversations and invite further discussion with Fairview to bring this concept to life for Minnesota.”
The partnership’s proposed model will help Minnesotans access more comprehensive care closer to home, especially in rural and tribal communities, and provide benefits such as decreased clinical costs, while maintaining existing doctor-patient relationships, according to U and Essentia officials.
“This is the beginning of an exciting, ambitious — and critically needed — conversation about the future of care in our state,” said Essentia Health CEO Dr. David Herman in a statement.