Former UnitedHealth CEO McGuire to join health care talks between Fairview, U of M

Dr. William McGuire, the visionary former CEO at UnitedHealth Group who stepped down amid financial scandal nearly 20 years ago, has been called on to help broker a deal in the public feud between Fairview Health Services and the University of Minnesota.

The parties, along with doctors at the U, will be working to create a new agreement to preserve Fairview’s substantial funding of the U’s Medical School. The clock is ticking on their current deal, which expires next year and allows them to jointly market hospital and clinic services with the M Health Fairview brand.

On Friday, Minnesota Attorney General Keith Ellison announced McGuire would join Lois Quam, another former executive at Eden Prairie-based UnitedHealth, as consultants in the new mediation process.

The three-person team will be led by Thomas Fraser, a retired Hennepin County District Court judge.

Fairview, which is one of the state’s largest operators of hospitals and clinics, provides $100 million a year in financial support for teaching, research and patient care at the U. But their agreement expires at the end of next year, and a new deal has proven elusive, in part because of disagreements over the level of funding.

Fairview struck a contract directly with U’s physician organization that would guarantee just $50 million a year. That agreement, opposed by the U administration, includes incentive pay that could bring the total to $100 million a year or slightly more, depending on overall financial performance.

Quam had been serving since the spring as Ellison’s strategic facilitator in the negotiations. Her work led to the new agreement announced last month by Fairview and the U’s doctors.

The new mediation team “was selected by agreement between the University of Minnesota, Fairview and M Physicians based on recommendations from the parties,” the attorney general’s office said in a statement.

McGuire is the Texas-born physician who transformed a struggling Minnesota HMO into what’s now the nation’s largest health care company. He left UnitedHealth in 2006 in the wake of a scandal over the timing of stock option awards that prompted him to surrender more than $600 million in options and other benefits while also paying a $7 million fine with the U.S. Securities and Exchange Commission.

The executive, who did not admit or deny wrongdoing under the SEC settlement agreement, remained in the Twin Cities as a prominent philanthropist. An owner of the Minnesota United FC soccer team, McGuire has been involved with redevelopment efforts near the team’s stadium in the Midway neighborhood of St. Paul.

Fraser was a shareholder at the law firm Fredrikson and Byron, where he specialized in arbitration and mediation, before serving seven years as a judge in Hennepin County.

Quam worked at UnitedHealth Group from 1989 through 2007 and was credited with leading the company’s ascendance as the largest private health insurer for Medicare beneficiaries. Ellison called on her to negotiate an agreement after the U and Fairview disagreed over a proposal for Fairview to merge with Duluth-based Essentia Health in order to better support academic health programs at the university.

At a University Senate meeting last week, Dr. Rebecca Cunningham, the U president, suggested funding from health care providers at peer academic health centers nationally is about $200 million per year.