In another example of a health insurer moving into the primary-care provider space, Blue Cross and Blue Shield of Minnesota and Minneapolis-based health system North Memorial Health will jointly own 20 outpatient clinics throughout the Twin Cities.
The value of the deal has not been disclosed. Under the joint venture that kicks off in January, North Memorial Health will own a 51% stake in its existing clinics that will operate under the health system's brand. The Blues will own a 49% stake.
The clinics will become a separate business entity from both parent organizations and managed through new leadership and a new board of directors. North Memorial Health President and Chief Ambulatory Officer Jennifer Close will become CEO of the joint venture.
North Memorial CEO Dr. Kevin Croston said the new venture will focus on cost reduction by eliminating much of the administrative burden that has defined the relationship between payers and providers. The goal is to lower overall cost of care by 20% over the next five years.
"There's a lot of waste and redundancy to healthcare that can be reduced by the right kind of partnership," Croston said. "I see this as a good starting target, but this is just the beginning."
Minnesota Blues CEO Dr. Craig Samitt said his company had been looking for years to align with a provider to address both increasing financial pressures as well as demands for more coordinated and patient-centric care.
"The future of healthcare is going to be about convergence and alignment of the industry incumbents," Samitt said. "If those that know healthcare well and are closest to patients don't reinvent care from the inside out, someone will change us from the outside in."
The move is part of a wave of insurers seeking more direct relationships with members by merging with or acquiring physician groups and clinics. In April, Blue Cross and Blue Shield of Texas announced plans to partner with Colombia-based, multinational primary-care provider Sanitas to open 10 "advanced primary-care medical centers" throughout Dallas and Houston.
UnitedHealth's Optum, Humana and Centene Corp. have all have made similar moves, while CVS Health completed its acquisition of Aetna last November.
"These types of aligning discussions are long overdue," Samitt said. "We needed to find a coalition of the willing, and that coalition is growing."
Both Samitt and Croston said their venture kicks off a relationship that could get closer in the future. Samitt mentioned North Memorial emergency management services and the Blues' mobile care delivery services as an opportunity for collaboration, but neither plans to acquire the other.
"We're not getting into the hospital business through this partner and North Memorial is not getting into the insurance business," Samitt said. "We're essentially co-creating what we believe the future of healthcare delivery will look like."