Opinion editor's note: Editorials represent the opinions of the Star Tribune Editorial Board, which operates independently from the newsroom.
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Some statements can be technically correct but still leave a mistaken impression because of key context unspoken. An example came up in a recent legislative hearing on the proposed merger of Minnesota's Fairview health system and South Dakota-based Sanford Health.
During that forum, a lawmaker noted that nonprofits like Fairview don't have investors or shareholders. While correct in a narrow sense, there's a broader backdrop. Because Fairview is a nonprofit, it's more accurate to say that all Minnesotans are "investors" in it and "shareholders" in its future.
For decades, Minnesotans have nurtured this health care system via donations and, in particular, through ongoing public contributions in the form of property tax exemptions and other preferential tax treatment that nonprofits enjoy across the nation. A 2015 report pegged the value of the foregone taxes nationally at $24.6 billion annually, a sum that's likely increased.
This reality should shape the Legislature's response to the proposed merger and how the public views the transaction. This is not simply another business deal. It requires careful consideration to ensure that Minnesotans' best interests are served. Elected officials engaged in this are not meddling but fulfilling responsibilities. There's still a lot of work to do, with several issues potentially necessitating legislative action. They include:
- Giving the University of Minnesota time to weigh new options for its hospitals. The U wants to reacquire its flagship medical center, which has been run by Fairview since a controversial 1997 agreement. Sanford and Fairview are working with a self-imposed March 31 deadline to complete the deal, but the U wants more time. When pressed by legislators last week, Sanford CEO Bill Gassen regrettably did not publicly commit to extending that deadline for the U, a misstep that underscores concerns about an out-of-state entity running university hospitals. The U needs to say specifically how long it needs, but legislators need to ensure it has a reasonable amount of time.
- Establishing a public-interest review process for health care mergers. This will not be the last merger proposed in Minnesota. The state needs to have a thorough and transparent review assessing any provider consolidation's impact on care, access and costs — one that would go beyond the state attorney general's current review of whether the merger would violate antitrust or charities laws. A 2021 analysis by the respected Milbank Memorial Fund concluded that Minnesota has limited merger review statutes compared to other states. Lawmakers missed an opportunity to put a more robust one in place after Sanford's failed merger with Fairview in 2013. It's time to fix that error.
DFL legislators have commendably introduced a bill outlining a review process for mergers. If enacted, the commissioner of the state Health Department could approve or reject a deal, with appeals handled through the court system.
The bill is a responsible course of action and a solid start on how this process would work. The Star Tribune Editorial Board would urge narrower limits on what triggers this review — such as deals above a certain amount, for example. Another question: Should the health commissioner approve deals, or should this official make a recommendation to legislators, with whom final authority lies?
DFL legislators have also proposed requiring a health care system return to the general fund any charitable assets received from the state if is merging with a for-profit or out-of-state entity. Fairview held $5.485 billion in charitable assets at the end of 2021, according to the most recent statement filed with the attorney general's office.
This would be a complex undertaking. But if Minnesota has given up revenue to benefit an organization, it's reasonable to consider whether an out-of-state entity simply gets to reap those rewards.
Some critics contend that the assets return and public interest review are political payback for Gassen's inflexibility on a deadline. In reality, lawmakers are appropriately wielding their authority and working to fill oversight gaps. They need to keep at it on behalf of public "investors."
