The University of Minnesota Medical School, in the face of serious financial problems twenty years ago, sold its hospital and clinics to a community health system, Fairview Health Services. In a number of ways, the relationship has not been a happy one in the sense that goals of a community hospital often do not always align with those of an academic teaching and research institution. A recent attempt has been made to negotiate a "merger" of Fairview with the U of M Medical School, creating a single management layer. But this effort has now collapsed with the Medical School casting about for a new hospital and clinic partner (see: Collapse of Fairview merger leaves U casting about for a partner). Below is an excerpt from the article:
On paper at least, Fairview was the most logical partner to extend the U's clinical reach beyond campus. The two have worked together for 20 years, ever since the U sold its hospital and clinics to Fairview. Now, ironically, that sale could hamper the U's efforts to find a new partner. While the U can offer suitors the clinical expertise of its 750 physicians, it can't bring to the table the facilities where they work."The university lost control of their university hospital, which is their primary teaching and research site," ...[said a faculty member]. "It is kind of like you sell your factory but you still make your parts there."The U sold the hospital to stem financial losses that were cutting its ability to fund research and education....Recognizing that the sale resulted in a partial alliance that was falling short of expectations, leaders began negotiations toward a complete merger of Fairview with the University's physician group. The Fairview name would have been replaced by University of Minnesota Health, or "M Health" for short. All seven hospitals and 42 clinics in the Fairview system would be rebranded. With top academic physicians on board, the system would offer patients the type of cutting-edge care they couldn't get elsewhere, at the same time generating money that could be invested in new research and education opportunities for the medical school. But when merger discussions dragged on beyond the self-imposed deadline of March 31, 2016], university officials eventually presented Fairview with a set of merger agreements that it had written itself....After studying the U's final offer, Fairview's interim chief executive knew that it would not get approval from the Fairview board.....In the meantime, both Fairview and the university say they will continue working together under several affiliation agreements. As the U considers other merger possibilities, leaders say new partnerships might focus more on outpatient care, which is replacing extended hospital stays for many procedures.
For me and more than anything, this is a cautionary tale that instructs us about the wide gap between the academic, medical/teaching culture and the community hospital culture. On paper and initially, the purchase by Fairview of the UM hospital and clinics seemed logical and integrative. The strength of the University of Minnesota was its prestigious brand, its large physician group, and its history of quality research. The strength of Fairview was its large footprint in the community, its real estate, and its solid financial status. In the final analysis, the executives and board of Fairview could not stomach having its facilities branded as "M Health" and the proposed combined management structure. I am not sure which of these factors was more important.
I certainly wish both organizations well in the future. There is potential greatness in the alliance if they could have come up with a reasonable way forward. Despite the fact that the major direction of hospital care is largely toward outpatient delivery, this will not be be an adequate total strategy for the University of Minnesota. Any academic medical center obviously needs inpatient beds for training purposes and for clinical research. The two sides have worked closely for years while they retained separate leadership. The merger would have cemented the relationship under a combined management but the sides apparently haven't come to terms on governance and executive decisions (see: Merger of Fairview, U of M physicians group stalls).