Minnesota House passes bill that could doom Sanford-Fairview merger

The Minnesota House on Monday passed a bill that bans anti-competitive health care mergers, which could kill the proposed marriage of Minneapolis-based Fairview Health Services and Sioux Falls-based Sanford Health.

The proposed merger has received criticism from legislative Democrats, who say that it would create a health care monopoly in greater Minnesota and likely lead to clinic closures and higher costs for patients.

The legislation, which passed the House by a 70-61 vote, prohibits health care transactions that “substantially lessen competition or tend to create a monopoly.” Attorney General Keith Ellison is already investigating the proposed Fairview-Sanford merger for potentially running afoul of antitrust and charity laws, but this bill gives the attorney general’s office greater latitude in bringing a case to state court to ask a judge to prohibit the merger.

“We can create a better health care infrastructure based on the public interest and deliver better health outcomes no matter where you reside in the state,” said Rep. Robert Bierman, DFL-Apple Valley, the bill’s chief author.

The bill’s language was also included in the major health budget bill that already passed the Senate and House. The bill passed Monday was a standalone measure to give it an even better chance to become law.

The legislation seems tailored to the Fairview-Sanford merger, but it would apply to all mergers and acquisitions of health care organizations that have an annual average revenue of at least $40 million.

In addition, the bill prohibits University of Minnesota health care facilities from being owned in whole or in part by an out-of-state entity, unless the attorney general deems it in the public’s interest. That’s also aimed squarely at Sanford-Fairview, given that Fairview owns the University of Minnesota teaching hospital.

The prospect of a South Dakota-based company owning the university’s main teaching hospital has outraged politicians and health care advocates. Earlier this session, former Minnesota Govs. Tim Pawlenty, the last Republican elected to statewide office, and Mark Dayton told lawmakers the university’s Medical Center shouldn’t be controlled by a South Dakota company.

That was also one of the reasons then-Attorney General Lori Swanson was critical of the merger back in 2013. Sanford pulled out of the deal shortly after Swanson held a public hearing during which she grilled company executives.

On Monday, House Republicans didn’t propose any amendments to the bill, but said it would hurt Minnesota health care and expressed concern about giving the attorney general additional power.

“We are literally playing a mean game of chicken with people and their health care in the state of Minnesota,” said Rep. Tim O’Driscoll, R-Sartell.

O’Driscoll said Fairview patients would struggle with access to health care under the bill, as Fairview Health Services has reported massive losses in recent years and could close its clinics if it doesn’t merge with Sanford.