Duluth, Minn.-based Essentia Health has exited merger discussions with Minneapolis-based Fairview Health Services and the University of Minnesota to form a $1 billion health system. The development narrows the path forward for the university as it works to secure the future of its medical school and clinical care network.
A spokesperson for Essentia confirmed the change in direction to Becker’s, stating the health system is “no longer part of the strategic facilitation process” involving Fairview and the university. That process, led by a facilitator appointed by the Minnesota Attorney General’s Office, continues directly between Fairview and the university.
“The strategic facilitator determined Essentia no longer had a role in that process, [which] is distinct from the broader conversations happening between the University and Essentia to support the University’s Medical School — a critical resource for all Minnesotans — in preparing the current and future healthcare workforce,” Essentia said in a statement.
The university echoed that sentiment, emphasizing its ongoing efforts to find long-term solutions for sustaining medical education, research and care delivery across the state.
“Despite our good faith efforts, thus far we have not reached an agreement with Fairview that secures the long-term future of the medical school — one of the state’s most vital and essential assets,” the university said in a statement shared with Becker’s. “We believe there is room for continued conversation with Essentia Health, and we invite other providers to help us build solutions to meet the urgent healthcare challenges facing the state today and in the future.”
The university added that any solution must ensure the “short- and long-term sustainability of the University of Minnesota Medical School,” which has three campuses serving diverse populations across rural and urban areas of the state.
Essentia’s withdrawal shifts attention to whether the university and Fairview can reach a new agreement before existing academic and clinical affiliation agreements expire at the end of 2026, according to The Minnesota Star Tribune. Under those agreements, Fairview paid $103 million last year in academic support to the university and its physician group. The two organizations jointly operate hospitals and clinics under the M Health Fairview brand.
The talks are part of a broader effort by the university to gain greater autonomy over its clinical enterprise and ensure the sustainability of the medical school, a key pipeline for training physicians in Minnesota.
Negotiations are still underway, according to Lois Quam, the strategic facilitator overseeing the process.
“Negotiations to conclude a new agreement between the parties are ongoing, including today,” Ms. Quam said in a Sept. 25 statement provided to Becker’s. “It’s normal and to be expected that in working to reach an agreement on an issue as complex as this one, negotiations would take some time.”
She added that all parties “understand the importance to the people of Minnesota of stability and continuity in patient care, research and training Minnesota’s future doctors. We are making meaningful progress and I expect we will reach a fruitful agreement.”
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