HealthPartners-Park Nicollet merger was years in the making

  • Article by: JACKIE CROSBY , Star Tribune
  • Updated: August 31, 2012 - 11:15 PM

HealthPartners and Park Nicollet CEOs point to a relationship that dates back to the early 1990s.

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Mary Brainerd, CEO of HealthPartners, center

Photo: Sara Glassman, Star Tribune

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How does it come about that two major health care companies decide to merge? Is there a casual mention between two leaders over a social-hour cocktail? A clandestine meeting with teams of lawyers?

The leaders of HealthPartners and Park Nicollet offered few details about their courtship on Friday as they made the media rounds to talk about the biggest merger to hit the Twin Cities health care market in decades.

Park Nicollet CEO David Abelson said the deal unfolded naturally. "It was actually some very early conversations between the two of us about 'what if, someday?'" he said. "It emerged."

HealthPartners CEO Mary Brainerd noted the past ties between the two organizations. The two nonprofits, along with the Mayo Clinic, formed a think tank in 1993, the Institute for Clinical Systems Improvement (ICSI). And HealthPartners got its start in 1992 in a merger involving a HMO run by Park Nicollet.

"[The agreement] has roots that go back 20 years," Brainerd said. "For many months, we've been talking more directly about what the next phase in our organizations' relationship might look like."

HealthPartners and Park Nicollet announced late Thursday that they had agreed to join operations, a move that, if approved, would create the state's second-largest hospital system by revenue.

The deal offered the best long-term solution to create a stronger regional player, the CEOs said. Park Nicollet's Methodist Hospital and the bulk of its clinics are on the west side of the metro, while HealthPartners' Regions Hospital gives it a strong draw to the east. There isn't much overlap, analysts said, which will be the focus of federal and state regulators, who must approve of the merger.

The process is expected to be completed by early 2013. It leaves the Park Nicollet name intact on hospitals and clinics, but puts the HealthPartners name atop the corporate entity. No layoffs are expected, according to the companies.

Skeptics worry that costs will go up even more if hospitals, doctors and other providers continue to get folded into giant health conglomerates. But Abelson and Brainerd insist that the marriage of their institutions will help them move more quickly toward the federal health law's focus to forming "accountable care organizations," where providers and insurers will share data on proven and effective treatments to reduce costs.

"This was not about bigger is better," Abelson said. "We're coming together because we have a commitment to using quality to make care more affordable ... and we can do that more effectively together."

Nurses union has concerns

The Minnesota Nurses Association, which represents Methodist workers, said Friday that it looks forward to expanding its presence in the east side of the Twin Cities metro area, but "raised a voice of concern" over the "corporatization of health care."

"As traditionally bottom-line-obsessed corporations grow, so too must our voice continue to grow to ensure patients are always placed above profits," said Walter Frederickson, the union's executive director.

It's unclear what impact there will be as a health insurance company, which is HealthPartners' main business, drives the show, said Allan Baumgarten, an independent Twin Cities health care analyst. When Allina was formed in a merger between a hospital system and the insurer Medica, many questioned whether more Medica enrollees would be steered to Allina hospitals.

"For the most part, it didn't happen," Baumgarten said. "Just because you've now combined Methodist and Regions and HealthPartners clinics under the power of the HealthPartners insurance plan doesn't mean patterns of admission of referral will change.

"But it's something everyone will be looking at."

Jackie Crosby • 612-673-7335

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