The Fairview/U of M-Sanford merger: 3 good and bad questions to pose

sanfordhealth.org
Sanford USD Medical Center in Sioux Falls

Minnesota Attorney General Lori Swanson is right to scrutinize the proposed merger of Fairview Health System and Sanford Health System.  It could have a big impact on Minnesota taxpayers, and it shouldn’t only be discussed by Sanford and Fairview C-suiters.  The discussion should be out in the open.

So now that Attorney General Swanson has moved the Fairview-Sanford merger issue into the sunshine, what questions should Minnesotans be asking about it? So far, some of the questions have been excellent, and some have been silly.

Bad questions

Minne-xenophobia.  “Should we allow marauding invaders from the west to rape and pillage our Minnesota health care motherland?”

  • Okay, so those aren’t the precise words that have been used, but there has been some of that tone coming from Minnesota elected officials looking to score political points.  There are plenty of relevant questions that Minnesotans should be posing about this merger, but this one is grounded more in delusional Minnesota Exceptionalism than good public policy.  There may be reasons why this dance partner turns out to be wrong for Minnesota patients and taxpayers, but state of origin is not one of them, at least not as a stand alone issue.  So Minnesota, let’s leave the xenophobia and ego trips out of this.

Loan Sharkism.  “Should we allow someone who made billions loan-sharking vulnerable consumers with 36% interest rate credit cards to control our medical bills?”

  • It’s true that South Dakota’s lack of usury laws did allow Sanford Health’s dominant benefactor T. Denny Sanford to make billions charging breathtakingly high interest rates and fees to the  nation’s most vulnerable consumers.  It’s true that South Dakota lawmakers should be ashamed about the damage they have allowed bankers to do to consumers.  Moreover, it appears Mr.  Sanford may be much more involved in Sanford Health’s strategic decision-making than Sanford Health has admitted.    But until someone can show that there is a tangible connection between Sanford’s loan-sharking and Sandford Health’s patient care, these two regulatory issues need to be considered separately.  The usury discussion isn’t relevant to the merger discussion.

Quid Pro Quo.  “Is the University secretly planning to trade away a $1.2 billion hospital and clinic system so that it can receive a few million dollars in donations for  Sanford-financed athletic practice facilities?”

  • If Mr. Sanford gave the University a few million for new basketball and football facilities right now, that would be an extremely destructive PR move.   Merger advocates understand this.  It would look very much like billionaire bribery, which is why the University was more than willing yesterday to pledge that no such donations would be accepted during the merger discussions.  That promise makes this a non-issue.

Good questions

Taxpayer Stewardship.  “Should health company executives who are not directly accountable to Minnesota taxpayers be given day-to-day control over a world class medical gem – the University of Minnesota Medical Center and related health sciences assets at the University – that was financed by Minnesota taxpayers?”

  • This is a very important question.  Much has been written about Mr. Sanford’s admirable $600 million in gifts to Sanford Health.  But Minnesota taxpayers have given even larger gifts to the University of Minnesota over many decades.  Given that, Minnesota taxpayers deserve to have ironclad guarantees that their interests – not Fairview’s or Sanford Health’s interests – will drive University-related decision making into the future.

Equal Regulatory Playing Field.  “Is Sanford as lean, transparent and efficient as the Minnesota Attorney General’s office has demanded other Minnesota health care non-profits to be?”

  • Former Attorney General Mike Hatch, with current Attorney General Lori Swanson heavily involved, famously audited Minnesota’s major health care companies – Allina, Fairview and HealthPartners.  Swanson and Hatch demanded, in a very public way, that these Minnesota-based non-profits be more lean and transparent.   Is Sanford Health going to be held to the same regulatory scrutiny and standards as Allina, HeathPartners and Fairview were?   I can promise you, Sanford was not subject to a Hatch-esque level of regulatory oversight in the conservative laissez-faire Dakotas. Therefore, will Attorney General Swanson audit Sanford Health’s salaries, perks and overhead, which would level the playing field between Sanford Health and its already audited and reformed Minnesota competitors?

Upside.  “What are the specific financial, research and patient care benefits associated with the Fairview-Sanford merger, as compared with the status quo or the University taking over Fairview?”

  • All mergers have both costs and benefits.  Minnesotans need to be sure they have a clear picture of what benefits Sanford Health would bring to the University.  So far, most of what we hear from Sanford Health CEO is that it is Sanford Health’s manifest destiny to be large and go east, young man.  For Minnesota taxpayers who have  invested heavily in the University of Minnesota over many decades, bigness for bigness’s sake is just not a good enough reason to merge.  Minnesota taxpayers need guarantees of specific benefits, or we shouldn’t risk a change.

It’s critically important for Minnesotans to debate the proposed Fairview-Sanford merger.  But it needs to be the right kind of debate.

Note:  An earlier version of this post listed the cost of new basketball and football practice facilities at $25 million.  That was an error.  To the best of my knowledge, the cost of those potential new facilities is not yet known.

Disclosure:  In the past, I have worked for Allina and HealthPartners, but have not done so in many years.  I currently do work for the University of Minnesota, but on transportation-related issues, not health care issues.  I also have worked for the Minnesota Attorney General’s Office, but not during the Hatch- and Swanson-eras.

This post was written by Joe Loveland and originally published on Wry Wing Politics.

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Comments (8)

  1. Submitted by Bill Gleason on 04/09/2013 - 11:00 am.

    One Good Question About the Sanford/U-Fairview Merger

    Why did the original sale of the U to Fairview not work out?

    Perhaps an autopsy on this case would reveal the cause of death and help us to prevent a similar one in the future?

    I note, without further comment now, that the same justifications that were used by the U to justify selling – and that word may not be accurate – its hospital to Fairview are now being used to justify the U engulfing the Fairview system.

    Curious, that.

    Bill Gleason, U of M faculty and alum

    • Submitted by Robert Gauthier on 04/09/2013 - 05:36 pm.

      Those who fail to observe history are doomed….

      Bill:
      One of he reasons I have been so active on this issue is that this IS history repeating itself. I was there, I saw it and it was a mistake. The Medical School suffered for it. If you look at specialty programs like transplant, cardiac surgery and bone marrow transplant, many of the leaders in he community AND Mayo are former U faculty. Cannot have a quality hospital without resources. And doctors have other venues to go to. And once he U is destroyed, then where will we get the next generation? Even Mayo needs the U to poach talent from.

      • Submitted by Bill Gleason on 04/09/2013 - 11:29 pm.

        The plural of anecdote is not data…

        Thank you Dr. Gauthier.

        I have followed your comments here and elsewhere with great interest.

        I suspect that your impressions are probably correct in this matter.

        Nonetheless, it is critical to have the cold hard numbers available about the finances, both when the U sold its hospital to Fairview and now, when it would like to take it over again.

        Those of us in the medical school were told that we had no choice in the matter when the original sale took place, but no numbers or justification was ever actually given.

        I am not a clinician but have heard a continual stream of complaints about Fairview from my colleagues ever since the takeover. This does not augur well for our future, in the hands of either Fairview or Sanford.

        With my thanks for your efforts in trying to shed light on this complex situation.

        Bill Gleason
        Associate Professor
        University of Minnesota
        Dept. of Laboratory Medicine and Pathology
        Medical School

        U of M Alum, PhD Chemistry, 1973

  2. Submitted by Robert Gauthier on 04/09/2013 - 11:21 am.

    The real questions to ask

    1. How will facility charges and service charges rendered be handled, will Sanford share generated revenue with UMP and the Medical School?
    2. How will Sanford agree to not interfere in physician practice at the medical school.
    3. How will Sanford handle facility access to University and community doctors?
    4. What will be the facility management structure? Will it have significant input for Medical School needs or will it be ignored as it was by Fairview?
    5. Will Sanford halt the interference in use of resident labor and allow a typical academic structure that is conducive to teaching or will it interfere as did Fairview?
    6. Do they see an option to harness the unique talents and resources of the entire system to improve care in the Midwest?

    These are the real issues. Denny Sanford is a University alum, as is Krabbenoff. They are loyal alums, capitalize on that and stop these stupid personality slanders. This can work, Fairview has not worked-Kaler’s letter referenced this. It is well known at the U, Fairview did not and does not know what they have or how to utilize it. Their management was indifferent and dismissive of the U from the start.

    Don’t repeat the same mistakes. To allow the past mistakes to be perpetuated.
    .

  3. Submitted by Pat Berg on 04/09/2013 - 02:22 pm.

    The abortion connection

    The reason I’m concerned about a Dakotas-based company getting their claws into the Fairview health system stems from all the recent anti-abortion activity in North Dakota. I’m not sure what the mechanism would be (and perhaps other commenters will have some ideas on this), but if Sanford’s administrative base is also in North Dakota, I find myself concerned about some of that over-the-top anti-abortion policy finding its way into what Fairview (including the hospital at the U) will be permitted to do.

    Thoughts?

  4. Submitted by Jackson Cage on 04/09/2013 - 02:44 pm.

    Seriously???

    Well, at least 1 of the 3 “bad” questions was actually bad.

    So someone who made millions in loan-sharking is suddenly going to become a model citizen when they shift their interests into healthcare? wow, talk about naive!

    And the U promising not to accept donations until the end of merger talks solves that problem? Look up the definition of collusion, then get back to me.

  5. Submitted by Bill Davnie on 04/09/2013 - 03:05 pm.

    Sports connection

    I’m not sure the third ‘bad’ question is irrelevant. While a gift now would be out of the question, anticipation of large gifts down the road could also influence decision-makers, conceivably. Having a major donor also have business connections (of any sort) with the U makes for potential conflicts of interest, perhaps especially when it’s not really Sanford’s business interests here but his ego and desire for influence — makes conflict of interest look less obvious, when it may be just as real.

  6. Submitted by Joe Loveland on 04/09/2013 - 03:37 pm.

    Elaboration

    Thanks for the thoughtful discussion all. Some elaboration of my viewpoint:

    1) Loan Shark-ism. If Sanford Health or a vendor is charging exhorbitant interest rates on overdue medical bills, that would be very relevant to the health merger discussion. But I haven’t heard that’s happening, have you? Until I do, I think the credit card issue shouldn’t be conflated with the medical merger issue. That’s not to say the credit card issue isn’t important for policymakers to address. I’m just arguing that it is a separate issue that should be considered separately.

    2) Quid Pro Quo. My point is, the media and regulatory spot lights are blaring on the U leaders and Mr. Sanford, and that high profile publicity makes shenanigans very unlikely. And if a gift is now made during the merger discussions, the resulting bad PR would hurt the merger effort, not help it. That’s why this issue isn’t as big of a concern as others. Conflicts-of-interest are dangerous when they happen secretly in the shadows, that the spotlights are now on.

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