Blue Cross and Blue Shield of Minnesota is dropping a service that provided consumers with telephone advice about ongoing health conditions, such as diabetes or heart problems -- but only because it's getting ready to launch its own, more elaborate program next year.

The decision is a blow to Healthways, a Tennessee-based medical outsourcing company that had been providing the service under a 2001 contract. Healthways serviced the contract with 200 employees in Eagan, most of them nurses.

The partnership was heralded at the time as greatly expanding the definition of health care, said Dr. Bill Gold, Healthways' senior vice president for innovation. He said the service had helped Blue Cross save money on emergency medical claims by meeting patients' needs ahead of time.

Now, Blue Cross plans to build its own internal organization to handle the telephone "disease management" services as well as new phone services aimed at people who are medically at risk, but not yet ill.

Both programs will reach a wider range of consumers than Healthways did, according to Blue Cross.

The Blue Cross program will take advantage of computer searches of medical records, said Dr. David Plocher, senior vice president of informatics and chief medical officer. A technique called data mining will identify consumers in immediate need of attention, such as a diabetic who hadn't renewed a prescription for insulin. A nurse would then contact the patient to find out what was wrong.

"This is a gigantic project for Blue Cross," said Dave Delahanty, a Bloomington-based health care consultant with Watson Wyatt Worldwide. "But it will shrink Healthways' business, at least here in Minnesota."

The contract loss, which appears to be in the range of $18 million a year, is hardly a major blow to Healthways, which had $615.6 million in 2007 sales. But it is a major blow to the firm's Minnesota business.

Healthways not leaving state

Still, Healthways isn't giving up on Minnesota, Gold said. It will urge hundreds of self-insured corporations to keep the Healthways service rather than switching to the new Blue Cross service. Healthways also said that it will offer broader consumer services than those customers presently get.

But even if Healthways retains those self-insured Minnesota customers, it still would lose about half of the annual revenue it got from Blue Cross, which came from smaller corporations fully insured through Blue Cross, Gold said.

Steve Alexander • 612-673-4553