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University of Minnesota intends to buy teaching hospital from Fairview

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The University of Minnesota is taking a major step toward buying back its teaching hospital in Minneapolis from Fairview Health Services.

Regents at the U are expected Friday to approve a letter of intent for a deal that would close by the end of 2027, roughly 31 years after Fairview purchased the U hospital in a financial bail out.

Boards at Fairview and University of Minnesota Physicians already have agreed to the letter, but key elements of the proposed transaction — including a purchase price — aren’t yet clear.

The move comes about 15 months after Fairview proposed an ill-fated merger with South Dakota-based Sanford Health. U officials opposed the move as it would have transferred control of University of Minnesota Medical Center to an out-of-state entity.

University of Minnesota Medical Center is the primary teaching venue for the state’s largest and only public medical school. About 70% of physicians practicing in Minnesota trained at the U.

The letter of intent specifies a first closing date by the end of this year, at which point the U would pay Fairview 51% of the negotiated purchase price. Funds for the health system’s remaining stake would be placed in escrow.

While negotiating the acquisition in the coming months, Fairview and the U will also continue talks on revamping their affiliation agreement for the large M Health Fairview network of hospitals and clinics.

For now, nothing changes with patient care and day-to-day operations. In a joint statement, the U and Fairview said no layoffs are expected and staff transitions are being planned to minimize disruptions.

“We are grateful for the collaboration and shared successes we have experienced with Fairview Health Services over the years — M Health Fairview patients and all Minnesotans are better off because of the work of our talented teams,” U interim president Jeffrey Ettinger said in a statement. “We also agree we will need to step up in new and different ways for the future health of our state.”

The U’s plan to regain ownership of the hospital is bound to be scrutinized, considering the potential expense and the university’s difficulty operating it in the 1990s.

Last summer, Janie Mayeron, chair of the Board of Regents, acknowledged this history, saying she understood one reason the U stopped running the medical center was “we weren’t doing it very well and we thought there were others who had better expertise.” The comment came during a board retreat when Mayeron asked Cliff Stromberg, a long-time consultant to the U, if other universities had taken back their teaching hospitals — an idea that she described as potentially “dicey.”

Stromberg replied that some universities had done so, but he also advised: “Your cautionary observations are exactly right.”

University of Minnesota Medical Center had more than 750 beds staffed for patients during 2022, making it the state’s second largest inpatient facility behind Mayo Clinic Hospital in Rochester.

The facility consists of four large and distinct operations including, on the U’s East Bank campus, an inpatient hospital for adult patients as well as a clinic and outpatient surgery center. Across the Mississippi River and adjacent to the U’s West Bank campus, the complex includes Masonic Children’s Hospital and an inpatient facility that’s one of the state’s largest sources of inpatient mental health care.

Fairview, which is based in Minneapolis and ranks as Minnesota’s fourth largest nonprofit group, owns all three hospital facilities and has a financial interest in the clinic and outpatient surgery center. The deal would provide the U with ownership of all four facilities.

“This is a critical first step towards a new and reimagined relationship that will better meet the current and future needs of our patients and our community…,” said James Hereford, the Fairview chief executive officer, in a statement. “Today’s announcement is designed to provide clarity on our collaborative path forward.”

After the first closing, a new board, with membership split between Fairview and the university, would then run the hospital during a two-year transition period. This would lead to a second closing date by the end of 2027, when the remaining funds would transfer and the U would take full control.

The deal must be approved by regulators, a process that could stretch into 2025.

Meanwhile, the U, Fairview and University of Minnesota Physicians will keep negotiating a new definitive affiliation agreement for running M Health Fairview. These negotiations are crucial because large teaching hospitals typically rely on a network of affiliated hospitals and clinics to refer enough patients for advanced specialty services like those offered at University of Minnesota Medical Center.

The letter of intent sets Sept. 30 as the deadline for this new affilation deal, although there is an option for an extension.

“While this [letter of intent] is a critical first step, there still remain important conversations around the long-term alignment between our organizations…,” Fairview and the U said in a letter distributed Friday to employees. “We will continue to operate as M Health Fairview for the foreseeable future.”

Toward the end of last year, Fairview provided notice that it didn’t want to renew its current agreement with the U, which is set to expire on Dec. 31, 2026. It specifies Fairview’s ongoing financial support for academic health programs at the U, a sum that reached about $100 million last year. The health system says it can no longer afford payments at that level and the university also provided notice that it wanted to negotiate a new deal, as well.

The university floated in January 2023 the idea of building a state-of-the-art replacement hospital on the East Bank campus as part of a five-point plan for its academic health care programs. The letter of intent says the U will pursue analysis, planning and obtaining funding for this new hospital, which officials have said could cost between $1 billion and $2 billion.

The U’s medical school has seen improvements in its national rankings and university officials say the don’t want to jeopardize the reputation with outdated facilities.

In recent weeks, the U sought support for its hospital ambitions and five-point plan from a state task force convened by Gov. Tim Walz. In a final report this week, the group provided qualified support, although members said there was a need for more financial details as well as transparency and accountability measures.

“We know this [letter of intent] leaves many questions unanswered…,” Fairview and the U said in the letter to employees. “We are committed to working collaboratively with our teams and sharing information as we work to build our new and exciting future.”

Reporter Jeremy Olson contributed to this report.



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Former Medtronic consultant gets 18 months federal prison for insider trading

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A former Medtronic consultant received an 18-month prison sentence this week for his role in a scheme linked to the $1.6 billion acquisition of an Israeli medical device company in 2018.

A federal jury in February convicted Doron “Ron” Tavlin, 69, of Minneapolis, of one count of conspiracy to engage in insider trading and 10 additional counts related to securities fraud. That same jury found David Jay Gantman, 58, of Mendota Heights, not guilty of all charges against him. A third defendant — Afshin “Alex” Farahan, 57, of Los Angeles — pleaded guilty in 2022 and has yet to be sentenced.

“His crime was cynical and brazen. It was also reckless,” Assistant U.S. Attorney Matthew Ebert wrote in a memo calling for a 3-year prison term. “Tavlin’s conduct had the potential to blow up a deal that a team of executives and financial advisers had been diligently negotiating for months.”

Tavlin is now scheduled to self-surrender Jan. 5 to begin his prison term, which will be followed by 320 hours of community service.

According to the evidence presented at trial, Tavlin learned about a secret, pending acquisition by Medtronic of Mazor Robotics, where he worked as vice president of business development, in 2018. Tavlin also previously worked as a consultant to the Ireland-based Medtronic, which also has a headquarters in Fridley.

Tavlin illegally tipped off Farahan, his friend, about news of the imminent acquisition and told him to keep the news secret. Farahan knew the deal would likely result in a boost to Mazor’s stock price and quickly bought more than $1 million of the company’s stock throughout August and September 2018. Medtronic announced plans to acquire Mazor, which specialized in robotics for spinal procedures, in September 2018 and the deal closed three months later.

Prosecutors said Farahan netted more than $245,000, and Gantman made $255,000 in profit by selling the securities quickly after the deal was publicized. Farahan paid Tavlin for the secret information about the pending deal — including a $25,000 kickback about a year later —according to prosecutors.

U.S. District Judge Donovan Frank, who sentenced Tavlin Monday, also ordered Tavlin to pay a special assessment fee of $1,100 – or $100 per each count. Frank did not impose a fine.



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Charges detail assault in Minneapolis that led to shooting rampage, killing one in Kandiyohi County

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Another friend of the ex-girlfriend arrived to help. He pulled up in a car as the group exited the apartment and Matariyeh immediately pointed a gun at him before pounding on the windshield with the gun. Everyone fled as Matariyeh ran back inside the apartment.

The two men met in a parking lot before attempting to return to the apartment. That’s when they looked up and saw Matariyeh on the balcony. Matariyeh immediately began firing multiple shots at them as they took cover behind parked cars.

It was around this time that Minneapolis police officers arrived and made contact with Matariyeh’s ex-girlfriend. She believed he was still inside the apartment, but officers later learned that he had fled. They reached him on the phone. He told officers he was going to kill innocent people if he couldn’t speak with his ex-girlfriend or see his daughter, who was at daycare at the time. He later told police negotiators that “he wanted to go out by ‘suicide by cop.’”

All the while, Matariyeh was speeding westbound.

Police officers pursued him near Cosmos in Meeker County after being alerted that Matariyeh might have stolen another vehicle at gunpoint in Carver County.

Around 2 p.m. he pulled into the rural driveway of Peter Mayerchak in Lake Lillian. Mayerchak, who was in his yard placing hay over his septic mound, went and greeted Matariyeh, who shot him in the chest.



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DFL’s last-minute push to keep their trifecta

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Mixing progressive dreams with dire warnings, a group of DFL leaders riled up a group of volunteers in St. Paul on Thursday morning, urging them to push on through the day’s freezing rain and fatigue in the remaining days before the election.

Several elected officials including Lt. Gov. Peggy Flanagan and U.S. Sen. Amy Klobuchar told the group of about 150 campaign staffers, volunteers and union members about how meaningful their work is to keeping DFL control of the Legislature, as the electeds start a statewide bus tour to turn out votes.

“We are here to keep our trifecta here in Minnesota,” U.S. Rep. Ilhan Omar told volunteers on Thursday. “We’ve got five days, people!”

On the Republican side, House Minority Leader Lisa Demuth, R-Cold Spring, said earlier this month that the House Republican Campaign Committee had raised a record $2.7 million ahead of the election and she said Republicans have also set records in volunteering and door-knocking as they work to break DFL control.

Minnesota Democrats hold a rally before starting a bus tour around the state to get voters excited, including Rep Ilhan Omar, Sen Amy Klobuchar, Lt. Gov. Peggy Flanagan, House Speaker Melissa Hortman, Senate Majority Leader Erin Murphy, Rep Betty McCollum and Sen Tina Smith on Thursday. (Glen Stubbe/The Minnesota Star Tribune)

“Republicans have the momentum and resources heading into the final stretch to win the majority and restore balance to Minnesota,” Demuth said in a statement. “Minnesotans are ready to move on from the expensive two years of Democrat one-party rule.”

House Speaker Melissa Hortman, DFL-Brooklyn Park, said she thought voters preferred action to the gridlock of divided government. “They’re looking for people who can get things done,” she said.

These last-minute get-out-the-vote efforts come as Democrats around the country push to keep control of state legislative chambers and try to flip a few statehouses that Republicans hold by just a few seats.

The Democratic Legislative Campaign Committee, the arm of the national Democratic party that works on statehouse races across the country, has spent $500,000 on Minnesota races this year, including House races and the state Senate contest.



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