Sanford Health withdraws from Fairview merger - KMSP-TV

Sanford Health withdraws from Fairview merger

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  • Hospital merger met with resistance at St. Paul hearing

    Hospital merger met with resistance at St. Paul hearing

    Sunday, April 7 2013 7:47 PM EDT2013-04-07 23:47:52 GMT
    Sanford Health, based out of South Dakota, wants to assume control of Fairview Health Services and the University of Minnesota hospital in the metro, but the merger was met with resistance on Sunday.
    Sanford Health, based out of South Dakota, wants to assume control of Fairview Health Services and the University of Minnesota hospital in the metro, but the merger was met with resistance on Sunday.

Just days after a heated hearing on a potential merger between South Dakota-based Sanford Health and Fairview Hospitals was held, CEO Kelby Krabbenhoft announced they are abandoning what appears to be an "unwelcome" plan.

In a release to the media and to Minnesota Attorney General Lori Swanson, Krabbenhoft said misperceptions of acquisition and control undermined a merger offer made in good faith.

"It was never suggested that either party was 'acquiring or controlling' the other," Krabbenhoft wrote. "Those terms were never contemplated because they would be rejected on their face as unacceptable to each of these historic, charitable and successful organizations."

Krabbenhoft went on to say that Sanford Health has a philosophical policy of "only going where we are invited," and that interested partners and key stakeholders have since made it apparent that such a merger is unwelcome in Minnesota.

"It is inconceivable and unacceptable to me that we would ever propose a merger without the affirmation of these parties," Krabbenhoft said. "I am now concerned that the good reputation of Sanford may be injured by a process that only intended the highest of ideals and integrity for what we believed to be a compelling solution to the challenges facing health care deliver today and in the future."

Given that assessment, Krabbenhoft said it is time for Sanford Health to withdraw from the process, adding that they will only re-engage if Fairview hospitals and the University of Minnesota "have sufficiently resolved issues within their relationship and secured a positive understanding by Attorney General Swanson of their intentions and plans."

The decision to disengage from the merger effort is effective immediately, and the interim CEO of Fairview described the news as "a disappointment."

"We understand why they would choose to step back at this time," Chuck Mooty said in a statement. "Clearly, we need to ensure strategic alignment between us before we can advance new ideas for the future."

Mooty had previously warned that the merger would not take place if the University of Minnesota Medical Center opposed it.

Over the weekend, the first hearing about the merger took place at the Capitol -- but much of it was spent by Swanson, who grilled representatives from Sanford Health over not being as transparent as she would have liked. Many who attended the hearing voiced opposition to the merger.

Fairview Health Services is a private, non-profit corporation that operates nine hospitals employing 22,000. Sanford Health is also considered a non-profit, but it also has several for-profit branches. That's where many of the concerns about the merger arose -- especially since Fairview is so largely supported by Minnesotans through tax breaks, donations and state aid.

Now that a merger is off the table, Mooty says Fairview will work with the University of Minnesota to collaborate and strengthen their existing partnership, but will not consider any proposal that involves the university acquiring Fairview. The hospital network now plans to seek out a new CEO.

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