How will a new Minnesota law affect mergers between large health care companies?
James Hereford, Fairview Health Services, President and CEO (R) and Bill Gassen, Sanford Health, President and CEO (L) testify during a hearing regarding the proposed merger between Sanford Health Fairview Health Services at Minnesota Senate Building in St. Paul.
Stephen Maturen for MPR News
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It’s been under public scrutiny and discussion for months, and under wraps for far longer: the proposed merger between Sanford Health and Fairview into one mega-hospital system — impacting thousands of patients, health care workers and taxpayers across Minnesota.
On Wednesday, another major merger was announced. This one joins St. Luke’s and Aspirus Health, affecting 19 hospitals and 14,000 workers across Minnesota and Wisconsin.
A law recently signed by Gov. Tim Walz outlines new ways for Minnesota’s attorney general to oversee hospital deals, but how that will work remains to be seen.
Bill author and DFL Representative Robert Bierman joined MPR News Host Cathy Wurzer to talk about that regulation and the evolving future of health care in Minnesota.
Use the audio player above to listen to the full conversation.
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Audio transcript
[THEME MUSIC] CATHY WURZER: There's another potential health care merger brewing in the state. Yesterday, Duluth's St. Luke's and Wisconsin-based Aspirus Health announced plans to merge. If successful, the combined entity would include 19 hospitals, 130 outpatient facilities, and some 14,000 workers in Minnesota and Wisconsin.
This is on top of two other large mergers, Duluth's Essentia Health and Wisconsin's Marshfield Clinic Health System, and the proposed combination of Fairview Health Services and South Dakota-based Sanford Health. A new Minnesota law bans anti-competitive health care mergers. But how this will work remains to be seen. Joining us right now to talk about this new law is the bill's author and DFL Representative Robert Bierman of Apple Valley. Welcome to the program.
ROBERT BIERMAN: Thank you, Cathy.
CATHY WURZER: Say, tell us, what was the thinking behind the need for this bill?
ROBERT BIERMAN: Well, we're seeing across the country medical mergers and acquisitions that are accelerating, and it's a rampant consolidation. And Minnesota is no different. We're seeing the mergers, as you just mentioned, the three that are pending. And so the thought was, we need as a state to make sure that mergers and their effects can be mitigated on the health care impacts to Minnesotans.
CATHY WURZER: The legislation prohibits health care transactions that substantially lessen competition or tend to create a monopoly. How will those be measured?
ROBERT BIERMAN: So there are a number of different parts to the bill that look at a particular merger and measure things like access, affordability, and quality of care, and the range of services that are historically provided. So there's a lot of metrics in it. But the fundamental is, will it reduce health care to people in Minnesota? And we have certain areas where mergers and acquisitions have caused some clinics to close and people having to drive farther to get to their health appointments, both in rural and in urban areas.
And so the other part of this is, it's really all about measuring and looking at access, quality of care, making sure that that doesn't drop. And of course, the unsustainable rates of health care costs that we're seeing, mergers have an impact on that as well. So the high cost of health care are many. And consolidation and mergers are just one of the many things we have to look at to try to control that unsustainable growth of health care costs.
CATHY WURZER: Businesses tend to want to move on and get these deals done. I'm wondering about the timelines. Who determines whether a deal is in the public interest, if it harms public health or has a negative impact on the health care market? That would seem to take some time to parse that out.
ROBERT BIERMAN: Correct. I mean, previously, what we were seeing was that health care mergers, they just happened. It was a business entity, a business decision. And looking at this, we are at an intersection where corporate health services, which underpin our delivery model, meet public health requirements. And so we in the legislature believe that health care should be a public interest. And so we put this into statute, that it is new in statute, and it is very significant.
And so this will be guided by a notice review and approval process around the Minnesota Department of Health. They would be notified-- and then the attorney general would also be able to review these mergers when they reach a certain level-- and then look at those aspects in the bill. There's about 10 or 12 of them that would really be impactful and would be the things that they would look at to determine the impacts on public health and medical access for Minnesotans going forward.
The bill is about mergers, but it also is about public interest. There's an HMO conversion part of this bill. There's the University of Minnesota, of course. So we're looking at all of these things. But public interest is central and a focal point of the bill.
CATHY WURZER: Sanford and Fairview, which that deal was really the spark for a lot of what you're talking about here, Sanford and Fairview says the law won't stop their merger. They're going to comply with the new requirements. So this law, do you think that this law could doom that deal and the other two deals we were talking about?
ROBERT BIERMAN: Well, Sanford-Fairview, certainly this bill relates to that merger. But it's a bigger scope than just that deal. And I really can't comment on what will transpire with that or prognosticate of what will become of it. And I think that our concern comes from the fact that mergers of this size, if you look at them across the country, they do have this impact on, first and foremost, price for consumers. Raising prices with medical mergers is commonplace. You can see increases across the country with medical mergers anywhere from 17% to 45%.
And I think we have a good arrangement with the Minnesota Department of Health to gather the data that they need to make some of these decisions with the attorney general. But we also gather this data for legislators to understand the health care market. The landscape is very important. And we need to make sure that we are building an infrastructure in health care that will lead to the care that Minnesotans need, border to border.
CATHY WURZER: It sounds as though this law could pump the brakes on mergers, not necessarily stop them per se. Will the bill allow the attorney general's office to take a merger to court to stop it?
ROBERT BIERMAN: It will. If the attorney general feels that it is not in the public interest, he would make that argument. And he would have to take it to court in order to stop a merger of this sort. So it would be up to the court to decide.
CATHY WURZER: Say, I note that tacked onto the Senate file, there's a section that specifically mentions a special session. Is it your understanding there could be a special session to address these mergers?
ROBERT BIERMAN: Certainly, I've heard that as well. The governor, I believe, even mentioned it a while back that special sessions are called when special sessions are needed. And we just have to wait and see what transpires with these mergers going forward. And if we get called in for this, we'll go and we'll deal with it.
CATHY WURZER: All right. Representative, I appreciate your time. Thank you so much.
ROBERT BIERMAN: Absolutely. Thanks for having me on. Have a good day. Bye-bye.
CATHY WURZER: You too. We've been talking to DFL State Representative Robert Bierman of Apple Valley.
This is on top of two other large mergers, Duluth's Essentia Health and Wisconsin's Marshfield Clinic Health System, and the proposed combination of Fairview Health Services and South Dakota-based Sanford Health. A new Minnesota law bans anti-competitive health care mergers. But how this will work remains to be seen. Joining us right now to talk about this new law is the bill's author and DFL Representative Robert Bierman of Apple Valley. Welcome to the program.
ROBERT BIERMAN: Thank you, Cathy.
CATHY WURZER: Say, tell us, what was the thinking behind the need for this bill?
ROBERT BIERMAN: Well, we're seeing across the country medical mergers and acquisitions that are accelerating, and it's a rampant consolidation. And Minnesota is no different. We're seeing the mergers, as you just mentioned, the three that are pending. And so the thought was, we need as a state to make sure that mergers and their effects can be mitigated on the health care impacts to Minnesotans.
CATHY WURZER: The legislation prohibits health care transactions that substantially lessen competition or tend to create a monopoly. How will those be measured?
ROBERT BIERMAN: So there are a number of different parts to the bill that look at a particular merger and measure things like access, affordability, and quality of care, and the range of services that are historically provided. So there's a lot of metrics in it. But the fundamental is, will it reduce health care to people in Minnesota? And we have certain areas where mergers and acquisitions have caused some clinics to close and people having to drive farther to get to their health appointments, both in rural and in urban areas.
And so the other part of this is, it's really all about measuring and looking at access, quality of care, making sure that that doesn't drop. And of course, the unsustainable rates of health care costs that we're seeing, mergers have an impact on that as well. So the high cost of health care are many. And consolidation and mergers are just one of the many things we have to look at to try to control that unsustainable growth of health care costs.
CATHY WURZER: Businesses tend to want to move on and get these deals done. I'm wondering about the timelines. Who determines whether a deal is in the public interest, if it harms public health or has a negative impact on the health care market? That would seem to take some time to parse that out.
ROBERT BIERMAN: Correct. I mean, previously, what we were seeing was that health care mergers, they just happened. It was a business entity, a business decision. And looking at this, we are at an intersection where corporate health services, which underpin our delivery model, meet public health requirements. And so we in the legislature believe that health care should be a public interest. And so we put this into statute, that it is new in statute, and it is very significant.
And so this will be guided by a notice review and approval process around the Minnesota Department of Health. They would be notified-- and then the attorney general would also be able to review these mergers when they reach a certain level-- and then look at those aspects in the bill. There's about 10 or 12 of them that would really be impactful and would be the things that they would look at to determine the impacts on public health and medical access for Minnesotans going forward.
The bill is about mergers, but it also is about public interest. There's an HMO conversion part of this bill. There's the University of Minnesota, of course. So we're looking at all of these things. But public interest is central and a focal point of the bill.
CATHY WURZER: Sanford and Fairview, which that deal was really the spark for a lot of what you're talking about here, Sanford and Fairview says the law won't stop their merger. They're going to comply with the new requirements. So this law, do you think that this law could doom that deal and the other two deals we were talking about?
ROBERT BIERMAN: Well, Sanford-Fairview, certainly this bill relates to that merger. But it's a bigger scope than just that deal. And I really can't comment on what will transpire with that or prognosticate of what will become of it. And I think that our concern comes from the fact that mergers of this size, if you look at them across the country, they do have this impact on, first and foremost, price for consumers. Raising prices with medical mergers is commonplace. You can see increases across the country with medical mergers anywhere from 17% to 45%.
And I think we have a good arrangement with the Minnesota Department of Health to gather the data that they need to make some of these decisions with the attorney general. But we also gather this data for legislators to understand the health care market. The landscape is very important. And we need to make sure that we are building an infrastructure in health care that will lead to the care that Minnesotans need, border to border.
CATHY WURZER: It sounds as though this law could pump the brakes on mergers, not necessarily stop them per se. Will the bill allow the attorney general's office to take a merger to court to stop it?
ROBERT BIERMAN: It will. If the attorney general feels that it is not in the public interest, he would make that argument. And he would have to take it to court in order to stop a merger of this sort. So it would be up to the court to decide.
CATHY WURZER: Say, I note that tacked onto the Senate file, there's a section that specifically mentions a special session. Is it your understanding there could be a special session to address these mergers?
ROBERT BIERMAN: Certainly, I've heard that as well. The governor, I believe, even mentioned it a while back that special sessions are called when special sessions are needed. And we just have to wait and see what transpires with these mergers going forward. And if we get called in for this, we'll go and we'll deal with it.
CATHY WURZER: All right. Representative, I appreciate your time. Thank you so much.
ROBERT BIERMAN: Absolutely. Thanks for having me on. Have a good day. Bye-bye.
CATHY WURZER: You too. We've been talking to DFL State Representative Robert Bierman of Apple Valley.
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