A mega-merger of healthcare organizations in Minnesota resulted from marketplace trends and not recent landmark state reforms, those involved in the venture said.
The $2 billion merger of Medica and HealthSpan Health Systems Corp. to become Allina Health System was completed last month. Executives said their effort isn't likely to be duplicated elsewhere in the country, but purchasers of healthcare will want the same result: one-stop shopping.
"This is very much a reaction to the marketplace," said Gordon Sprenger, former chief executive officer of HealthSpan, who will hold the same position at Allina. "This is pushing toward a single source of accountability and not a fragmented system. Giving some dollars to a third party is not the ultimate system."
The first announcement of the Medica-HealthSpan deal last December was viewed by some analysts as a response to the state's MinnesotaCare healthcare reform plan, which mandates that providers join one of a few integrated service networks, also known as "super-HMOs." The ISNs were scheduled to begin last month, but state officials sought a three-year delay to iron out questions about funding and administrative rules.
However, MinnesotaCare does ease some antitrust scrutiny that helps in network development.
"You only get to pull this type of thing off where you have progressive legislation for covering the uninsured," said James Ehlen, M.D., former president of Medica and now president of Allina. "The pace of change for healthcare reform here in Minnesota is different than other states, so I'm cautioning people."
Mr. Sprenger and Dr. Ehlen will share an executive office and answer to a 24-member board, 50% of which is composed of physicians.
Less than a year ago, Medica and HealthSpan were considered adversaries. Analysts said the merger will tell a great deal about how healthcare can be delivered in managed-care-intensive Minnesota.
"They are trying to put providers and payers together so they understand what the other does," said Tom Teigen, spokesman for the Minnesota Hospital Association. "Allina is seen as a future integrated service network."
ISNs won't be able to offer new insurance products through MinnesotaCare until Jan. 1, 1996, Mr. Teigen said.
More than 750,000 consumers could be drawn into the plan from Minnesota and parts of North Dakota, South Dakota and Wisconsin. Those areas account for more than 550,000 enrollees from Medica's managed-care organization and more than 200,000 PPO enrollees from not-for-profit HealthSpan, which operates or manages 17 hospitals in Minnesota and Wisconsin.
The merger gives Allina 26% of the Minneapolis market share and 20% of the state's market, executives said.
Like Allina, healthcare systems thinking about similar ventures don't have to wait for healthcare reform.
"Is the Minnesota model going to work in Arkansas and Idaho?" Mr. Sprenger said. "It's not, but the requirements of the purchasers of healthcare aren't going to be different."
Healthcare providers should listen to their purchasers of healthcare.
"They (purchasers) don't want their needs to be fragmented," Mr. Sprenger said. "Before our merger they had nobody to hold their finger to and be accountable."