New Fairview deal provides at least $600M for U of Minnesota health programs

The University of Minnesota has struck a deal with its doctors and Fairview Health Services, one of the state’s largest operators of hospitals and clinics, to fund the U’s medical school and related health care and research programs over the next decade.

The funding agreement, which was not immediately released, creates a framework for three distinct contracts that are not yet finished, according to an announcement Jan. 26 by Minnesota Attorney General Keith Ellison.

The lack of detail leaves questions unanswered about how the parties are resolving years of acrimony over power and money at the state’s largest training program for physicians. And the parties aren’t releasing a related deal announced in November by Minneapolis-based Fairview and the doctors group, known as University of Minnesota Physicians (UMP).

Fairview and the U are business partners that operate the M Health Fairview brand, which has clinics and hospitals staffed with employees of the U and Fairview. The $100 million in annual funding it generates for medical education at the U has been put in jeopardy by the lack of a deal to replace their existing agreement.

The U’s academic health programs are a critical resource for providing Minnesotans access to cutting-edge care, training the state’s next generation of physicians and promoting innovation that can bolster the regional economy. The current 30-year affiliation expires at year’s end, and the lack of a deal along with growing friction among the parties raised worry that key physician scientists would leave the university and relocate to other states.

“Minnesota will remain a place where world-class physicians, specialists and researchers seek to treat patients and build successful careers,” Ellison said in a statement about the new agreement.

Ellison’s office has been part of negotiations between the U, Fairview and university physicians since spring 2025.

Like the earlier deal, the final agreement provides at least $50 million per year over 10 years in support to fund the U’s academic health program, with the possibility of more funding based on performance. Fairview will invest $1 billion in medical facilities on the U’s campus, which also was part of the earlier deal.

Monday’s agreement is different, however, in specifying that Fairview will take more financial responsibility for certain clinic services, bringing the minimum financial commitment to $600 million over a decade — the comparable figure announced in November was $500 million.

The agreement announced Monday also calls on Fairview to forgive “significant debt” owed for their joint operations of a large clinic and surgery center in Minneapolis. The parties, however, didn’t disclose a dollar value.

The Minnesota Star Tribune reported in March that a joint-venture including UMP owed Fairview more than $100 million for supplies and services at the clinic and surgery center, which is located on Fulton Street in Minneapolis.

The U will retain ownership of this large outpatient medical center, but Fairview will assume all operations in the building. The U and the health system will negotiate a new lease agreement, as well.

In a statement, Dr. Rebecca Cunningham, president of the university, called the deal “an important milestone.” James Hereford, the Fairview CEO, said it was a “durable path forward.”

The agreement reaffirms that UMP will remain the official doctors organization for the clinical faculty at the U of M Medical School. The Board of Regents in November threatened to revoke this status as part of its opposition to the Fairview-UMP agreement.

Fairview’s financial support remains “the largest investment in the University of Minnesota Medical School from an outside resource,” Dr. Greg Beilman, interim chief executive at UMP, said in Ellison’s news release.

The U’s Board of Regents is scheduled to vote on the new deal at a meeting Friday.

Under their current affiliation agreement, Fairview is providing the U about $100 million per year in funding, but the health system has called this amount too high. Medical school leaders have said planning is underway for how the training program will live within a smaller budget.

After the Essentia proposal fell apart, the attorney general backed the Fairview-UMP deal announced in November for long-term funding of the U’s programs. University officials at the time, however, blasted the agreement as a “hostile takeover” crafted without their input.

Ellison then summoned the parties to mediation, resulting in the agreement announced Monday.

Ellison’s news release did not address whether Fairview and the U will maintain the M Health Fairview brand they’ve shared since 2019 to market their jointly operated hospitals and clinics. Apparently, however, it will be downsized or eliminated after 2026.

Fairview says it’s developing its own brand for the health system’s community hospitals and clinics. Fairview and the U separately will negotiate future use of the U of M brand at academic medical facilities such as University of Minnesota Medical Center in Minneapolis and the clinic and surgery center on Fulton Street.

Fairview acquired the University of Minnesota Medical Center in a 1997 deal that some have described as a financial bailout.