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University of Minn. offers to take over Fairview Health, possibly pre-empting Sanford merger

FARGO - The University of Minnesota has proposed that it take over Fairview Health Services, the system that operates the university's teaching hospital, in a move that could pre-empt a merger between Fairview and Sanford Health.

FARGO - The University of Minnesota has proposed that it take over Fairview Health Services, the system that operates the university's teaching hospital, in a move that could pre-empt a merger between Fairview and Sanford Health.

The school released a letter written by University President Eric Kaler on Thursday addressed to Charles Mooty, Fairview's interim chief executive officer. The Jan. 28 letter outlines the potential for a new partnership between the two organizations.

"I think it's time we seriously evaluate a more ambitious combination of our organizations," Kaler wrote.

Fairview has run the university's medical program, which includes flagship hospitals, since 1997.

The letter's disclosure comes just days before Fairview and Sanford Health are scheduled for a hearing at the Capitol. Minnesota Attorney General Lori Swanson said she is concerned about an out-of-state organization "taking over" the Twin Cities' second-largest hospital and clinic chain.

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Both Fairview and Sanford Health officials have said their talks are only in the early stages.

Fargo- and Sioux Falls, S.D.-based Sanford Health is chartered in North Dakota, has more than

$1 billion in revenues in South Dakota and more than 6,000 employees in Minnesota.

In Mooty's letter, he repeatedly mentions that a merger between the school and Fairview would be a benefit to the state.

"... Chartered in the state constitution, the University of Minnesota has been here for 150 years, and will be here for 150 more. The best interests of Minnesota and our communities will always be core to our mission and our operations will never leave the state," Kaler wrote.

In the letter, quick action is offered. Kaler offered to "promptly appoint a core transaction team and retain, as necessary, professional legal and financial advisors to complete preliminary due diligence and business planning in the next 90 days with the goal of executing a letter of intent that addresses our new relationship."

Kaler said he'll meet with Fairview executives next week.

A spokesman for Sanford Health said the health system did not have an immediate statement regarding the university's proposal.

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Sanford Health, the largest health care provider in North Dakota, has 35 hospitals, 140 clinic locations and more than 26,000 employees. Fairview Health, one of Minnesota's largest health systems, opened its first hospital in 1916 and now operates nine medical centers and employs 22,000.

The Associated Press contributed to this report.

Readers can reach Forum reporter Wendy Reuer at (701) 241-5530

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