Fairview Health Services has announced a significant investment of $1 billion in medical facilities affiliated with the University of Minnesota (U of M). This agreement, which is set to be formalized on January 1, 2024, follows a turbulent period of negotiations that involved mediation to resolve previous disputes between the three parties: Fairview, M Physicians, and the U of M.
The University of Minnesota Board of Regents is expected to vote on the 10-year operating agreement, marking a critical step toward stabilizing relationships that had previously been strained. Minnesota Attorney General Keith Ellison, who appointed a mediation team, noted that despite their differences, the involved parties shared a common goal of enhancing the health and prosperity of the state and its flagship university.
Under the terms of the new agreement, Fairview will continue to own the University of Minnesota Medical Center, a position it has held since 1997. Fairview’s financial commitment includes an annual operational support of $50 million for the U of M Medical School, a reduction from the previous $100 million but with the potential for increased funding based on the health system’s performance.
“Fairview also assumes additional financial responsibility for clinic services, bringing its 10-year commitment to the Medical School to approximately $600 million before additional performance-based funding,” the Attorney General’s release stated.
The agreement reaffirms M Physicians as the sole faculty practice group, allowing it to maintain its academic work while operating within Fairview facilities. This arrangement supports the University’s mission to deliver care, educate future medical professionals, and conduct vital research.
In a bid to address statewide health care concerns, the deal includes initiatives aimed at supporting local physicians in Greater Minnesota. A preliminary allocation of $10 million has been set aside for programs that will ensure timely diagnosis and treatment for complex medical conditions, regardless of a patient’s location.
The mediation process, initiated in early 2025, became necessary when negotiations stalled, prompting Ellison to appoint Lois Quam, a former executive at UnitedHealth Group, as a strategic facilitator. In December, Ellison further enhanced the mediation team by bringing in retired judge Thomas Fraser as the lead mediator and appointing Quam along with Dr. Bill McGuire, former CEO of UnitedHealth Group, as consultants to assist in reaching an agreement.
The negotiations were intensive, with the mediation team meeting daily for seven weeks, working to establish a sustainable path forward for all parties involved.
Rebecca Cunningham, president of the University of Minnesota, described the agreement as “an important milestone” that clarifies the relationship among the three parties. She emphasized the long-standing partnership’s role in delivering health care and advancing medical research throughout Minnesota.
James Hereford, president and CEO of Fairview Health Services, acknowledged the challenges facing health care delivery both in Minnesota and nationally. He stated that the mediation process allowed all parties to prioritize continuity of care and a robust academic partnership.
Dr. Greg Beilman, interim CEO of M Physicians, echoed this sentiment, asserting that the agreement lays a solid foundation for delivering high-quality care and education.
The announcement comes shortly after Dr. Jakub Tolar, dean of the U of M Medical School since 2017, announced his departure to assume the role of president and CEO at the Baylor College of Medicine in Houston, Texas.
This new partnership aims to enhance the educational and health care landscape in Minnesota, ensuring that the state’s residents receive the necessary care and support in an evolving health environment.
