Attorney General Will Probe Fairview Acquisition

Updated: 03/26/2013 5:00 PM By: Scott Theisen

Attorney General Lori Swanson is examining a potential acquisition of Fairview Health Services by a South Dakota-based company, citing her concern that putting one of the state's largest hospital systems in the hands of an outsider is not in the best interests of Minnesotans.
Swanson announced Tuesday that she will hold public hearings at the state Capitol starting April 7. She said she expects Fairview and Sanford Health to explain the motives behind a deal and how it may affect Minnesotans' health and the state's economy.
"The notion that an out-of-state organization potentially could be looking at taking over ... is concerning," Swanson said. "Where does the money go? What happens to the institution we know as Fairview?"
She said her office started to get calls in the last year that Fairview and Sanford officials were talking about an acquisition, which she characterized as "fairly advanced at the executive level."
In separate statements, both Fairview and Sanford disputed that. Fairview's statement said talks are in early stages, "which is why there has not been broad public discussion."
"The leadership transition at Fairview is seen as a reasonable opportunity for combined management discussions without a leader having to be displaced," Sanford President and Chief Executive Kelby Krabbenhoft wrote.
Sanford Health, based in Sioux Falls, S.D., runs 35 hospitals and more than 140 clinics in eight states.
Swanson noted that Fairview has been without a full-time CEO since Mark Eustis left the company last year.
Fairview's roots in Minnesota go back more than 100 years. Since then, the company has flourished into a network of hospitals and clinics spread throughout the state. It controls about 20 percent of the state's health care market and has a net worth of roughly $1.2 billion, Swanson said.
She said the company owes much of that success to Minnesota. Its state status as a charitable trust - exempting the organization from income, sales and property taxes - gives Fairview an obligation to serve the state and its people, Swanson said.
"Who's making decisions for the benefit of Minnesotans? Are they Minnesotans, or are they South Dakotans?" she asked.
Swanson also cited Fairview's close ties with the University of Minnesota. Fairview has run the school's clinics and hospitals since 1997. Swanson said she wants to ensure a change in ownership wouldn't hamper university research or training of young physicians.
"Nothing will move forward unless we and our partners at the University of Minnesota believe there is merit to a merger," Fairview said in its statement.

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