Mediated 10-year deal keeps University of Minnesota faculty practice intact; Fairview pledges $1 billion in capital and $50 million a year to the medical school

MINNEAPOLIS — Leaders of the University of Minnesota, Fairview Health Services and the University of Minnesota Physicians told the state Higher Education Committee on Jan. 26 that a mediated, 10-year agreement signed Jan. 23 is intended to stabilize the medical school, preserve clinical training statewide and sustain patient access.

Lois Quam, the strategic facilitator appointed by the Attorney General's office, told the committee the mediation team signed a 10-year agreement on Jan. 23 and that the deal will be the basis for definitive contracts the parties expect to complete by March 31 or a later mutually agreed date. "As the Attorney General said when the mediation agreement was announced, ‘will ensure that 1,200,000 Minnesotans a year will continue to receive world class patient care in our state,'" Quam said.

Why it matters: The deal aims to protect the University of Minnesota Medical School’s education, research and clinical missions, which university officials say help train roughly 70 percent of Minnesota’s doctors. University leaders and UMP officials warned that without a mediated settlement customers, faculty jobs and clinical services were at risk.

Key terms and commitments

- Capital and academic support: Fairview pledged $1,000,000,000 in capital improvements to University Medical Center and related facilities over 10 years and committed $50,000,000 a year in guaranteed academic support to the medical school. Quam summarized the parties’ estimates that Fairview’s fixed and performance-based funding brings the 10-year support to about $600,000,000 before additional performance-based amounts.

- Clinic and Surgery Center operations: Under the mediated framework, Fairview will assume operations of the Clinic and Surgery Center (CSC), negotiate a new lease with the university (which owns the building), forgive operating debt the CSC owes to Fairview and assume annual operating losses to preserve patient care at the facility.

- Faculty practice plan and governance: The agreement reaffirms the University of Minnesota Physicians as the university’s sole faculty practice plan, a structure parties said preserves faculty research, teaching and clinical practice. The institutions will form collaborative bodies, including a leadership council with representatives from both the university and Fairview, to coordinate strategic priorities.

- Greater Minnesota and rural support: The parties committed an initial $10,000,000 to programs intended to improve specialty access and diagnosis for patients in Greater Minnesota, and Fairview speakers emphasized plans to work with rural communities rather than dictate solutions.

What witnesses said

University President Rebecca Cunningham called the agreement "a win" for patients, students, faculty and Minnesota. "This agreement brings clarity and stability to the university's relationship with our physician group and with Fairview for the next 10 years," Cunningham said, and she thanked the Attorney General's office and the mediation team.

James Hereford, Fairview’s president and CEO, described Fairview as an "anchor institution" for Minnesota and said the commitments aim to sustain clinical capacity and innovation. "Fairview will remain the largest private source of outside investment into the University of Minnesota Medical School," Hereford said, and he outlined investments in buildings, equipment, technology and surgical capacity.

Greg Bealman, CEO of University of Minnesota Physicians and a long-serving faculty surgeon, told the committee the mediated deal averted large financial losses. "Without this new agreement ... about a $400,000,000 reduction in revenue," Bealman said, adding that such a loss could have resulted in a 30–50 percent loss of faculty.

Unresolved details and next steps

Committee members asked about the agreement’s ‘variable’ payment component. Cunningham said the support consists of a fixed component (about $50,000,000 a year) and a variable component tied to Fairview’s operating performance; the detailed formula is specified in the agreement and was not recited at the hearing.

Members also asked how the university would have input on Fairview’s capital spending. Quam and Cunningham said Fairview ultimately controls spending on its buildings but that committees and the new collaborative structures will provide communication channels and opportunities for university and UMP input on priorities.

The mediated agreement in principle was approved by the University of Minnesota Board of Regents on Jan. 30, 2026, and university and practice-plan teams are drafting definitive contracts that parties say they expect to finish by March 31 or a later date if mutually agreed.

The committee adjourned after the testimony and set unrelated items for a future meeting.