Feb. 13, 2023
Sanford Health will be the primary beneficiary of Denny Sanford’s estate, and the system will invest $500 million in Minnesota health care facilities following a proposed merger with Fairview Health Services.
Those were among the details shared with Minnesota legislators in a letter sent today from Sanford CEO Bill Gassen and Fairview Health Services CEO James Hereford.
The cover letter was sent along with the systems’ letter of intent to merge, which was signed last September.
It includes information about a “strategic capital investment” of $500 million from the combined system into hospitals and facilities in Minnesota communities currently served by Fairview.
“This investment reflects our foundational commitment to ensuring increased access to health care for Minnesotans for generations to come,” the letter said.
Additionally, the letter references “Cornerstone Commitments” between Sanford Health and Denny Sanford, who has donated nearly $1.5 billion to the health system since 2004.
“In addition to this unprecedented financial support during his lifetime, Mr. Sanford has also declared his legacy giving intentions that Sanford Health will be the primary beneficiary of his estate,” the letter said.
The Cornerstone Commitments function as a promise to Denny Sanford that reflect the intention of his support, the systems said.
“Post-close, the benefit of Mr. Sanford’s generosity will extend to more Minnesota communities and patients, including those in legacy Fairview’s service area,” they said. “As such, the parties have agreed to terms of the proposed merger that are aligned with these commitments.”
Specifically, the combined Sanford-Fairview system will:
- Remain a not-for-profit entity domiciled in North Dakota or South Dakota, which will serve as a parent entity with Fairview Health Services continuing as a not-for-profit entity operating in Minnesota.
- Maintain corporate headquarters in Sioux Falls, where its chief executive officer and a majority of its entity-level administrative staff shall be located. The combined system also will have a material corporate presence in the Twin Cities.
- Incorporate “Sanford” as the singular primary name and brand of the health system, while allowing business lines, divisions or regions — including the legacy Fairview region — to utilize joint or distinct naming conventions consistent with the best interest of the organization’s business objectives.
- Remain independent and retain governance oversight in any merger reorganization or similar transaction.
- Maintain a material portion of Sanford Health’s current clinical and medical research at its Sioux Falls research location.
- Sustain historic levels of involvement and support with local community activities and programs to promote the public health and welfare within its service areas.
The two systems also said they will provide a copy of amended and restated bylaws for Fairview, which “reflect what we stated in committee – that clinical care decisions and policies will continue to be made by and originate from medical staff committees at the local level,” the CEOs said.
“We know that community hospitals are made strong by local leadership and governance. In a combined Fairview/Sanford system, there will be regional governance, and each unique region will continue to have regional hospital medical staff structures, led by local leaders and overseen by a regional board of trusted community leaders.”
The letter also addressed several questions that came up during a series of public hearings held by Minnesota’s attorney general and in a legislative committee. Among them, the systems reiterated:
- The continued ability of the University of Minnesota to carry out its mission and reaffirming that the combined system will honor the current affiliation agreement through its expiration in 2026.
- The proposed combination will not result in fewer options for gender-affirming care and comprehensive women’s health care, including abortion.
- This merger would not result in layoffs for nonexecutive employees or the closure or sale of facilities.
- The combined system will continue to honor its existing collective bargaining agreements.
- The merger will not result in diversion from the state of any assets donated in Minnesota.
- Both systems will continue to operate in a transparent way to answer the questions of relevant stakeholders.
To view the full letter of intent, click here.
In the letter, Sanford and Fairview also confirmed that they have delayed a planned closure of the merger for two months, now targeting May 31 as the date to finalize it. Actual closing could be later depending on regulatory approvals.
Today, the two CEOs also announced the leadership team that would be put in place post-merger. Click below for that story.
Sanford announces post-merger leadership team