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Continued: Health merger motivations remain strong despite Sanford-Fairview failure

That was part of the allure of a deal between Fairview with Sanford Health, the nation’s largest nonprofit rural health provider, according to executives on both sides.

University medical ­students and residents would gain more-varied training opportunities at Sanford’s hospitals and clinics, and patients with more complex illnesses could get directed to the University of Minnesota facilities for care.

This need for a strong “hub-and-spoke model” won’t go away as Fairview and the university move forward.

“With HealthPartners and Park Nicollet being a single entity, they now are breathing down Fairview’s neck in terms of market share,” said health care market analyst Allan Baumgarten. “At least in the Twin Cities, scale and size definitely matters.”

University President Eric Kaler continues to push for more integration, even though a proposal he made to block a Sanford Health deal and have the U take over Fairview is no longer under consideration.

Quest for efficiencies

The next challenge comes as Fairview and the university physicians try to work out the revenue-sharing kinks in their joint effort to build a $182 million outpatient medical center on campus.

These discussions will play out with a long-simmering sense among some doctors and administrators that promised synergies with Fairview still haven’t come to pass decades later.

It’s not an unusual complaint, and it remains unclear whether consolidation will ultimately be able to deliver better quality at a lower cost.

“When you integrate two systems, it can be challenging,” said Chris Hoffman, senior director in charge of marketing at TripleTree, a health care investment firm and consultancy. “It takes time, it takes investment. There’s a lot of complexity in the health care IT component in the hospital systems. Hospitals may not see all those great benefits — having more resources to do more for the populations they serve — right away, given the integration challenges.”

And then there’s the promise of lowering costs.

“Here’s the $64,000 question,” said Alwyn Cassil of the Center for Studying Health System Change. “If hospitals and health care providers are able to improve integration, there’s little doubt that’ll be better from a quality standpoint. The question is, will those efficiencies and savings get passed on to you and me, or will they keep it?” • 612-673-7335 • 612-673-7744

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