But questions linger about how consumers will benefit.
For all the complaints about a "government takeover of health care," the 2010 Affordable Care Act left intact a system not only firmly based on private-sector providers and insurers, but highly dependent on innovation by both to bring about the change needed to deliver affordable, high-quality health care.
The recent marriage announcement by Park Nicollet and HealthPartners is a promising example of how regional health institutions have the freedom to attack the problem of delivering better care at better prices and find pioneering ways to forge ahead in a rapidly changing health care landscape.
The merger, announced about a week ago, creates by revenue the second-largest hospital system in Minnesota and formidable new health care competitor in the metro area, which is why federal officials will weigh antitrust concerns before they sign off on it. While there's a wave of provider consolidations happening across the nation, the Minnesota merger stands out.
This new organization will combine the strengths of a hospital/clinic system (Park Nicollet) with an organization that employs physicians but is also a large insurance provider (HealthPartners). Previous consolidations have usually undermined the notion that bigger is better in health care, but those often have involved providers only. They didn't bring the buyer and seller of health care together in a way that this deal does.
In general, the Park Nicollet-HealthPartners combination is the type of health care system that experts agree can achieve better outcomes at better prices as health reform continues to unfold. "The good news here is that the payer and provider are no longer in an adversarial place. They are teamed toward accomplishing shared objectives,'' said Robert Laszewski, a Washington, D.C.-based health care consultant.
The potential benefits to the merged organization are clear. Having an insurer's risk management expertise in-house with a big provider network gives the new organization an edge in a post-health-reform world with its emphasis on accountable care organizations and other payment models that give providers a global budget (and some financial risk) for caring for a group of people instead of paying them per procedure. That should reward providers that keep people healthier instead of rewarding them for putting patients into the hospital.
The standardization and economies of scale to be found in large operations could also help wring duplication and other inefficiencies out of the system without compromising quality. While this typically hasn't happened in other supersized systems in Minnesota and elsewhere, the strong and consistent leadership at Park Nicollet and HealthPartners, along with their previous work on improving care while reducing costs, bodes well for achieving conscientious cost control.
"If anybody can pull something like this off, it may be these two organizations,'' said Lawton R. Burns, a health care management professor with the University of Pennsylvania's Wharton School.
What's less clear, however, is the pocketbook benefit to consumers over the long term, according to Burns and other experts. Will the organization's potential new efficiencies translate to lower medical insurance premiums, for example? And could the newly merged organization, or other consolidated systems to come, become so dominant in the Twin Cities market that they can eventually raise prices at will? How will regulators monitor the market and protect consumers?
"It raises a whole bunch of question marks,'' said Carnegie Mellon University Prof. Martin Gaynor, a health merger skeptic.
A previous Minnesota combination of insurer and provider -- Medica and Allina -- did not deliver significant cost and quality improvements, and it was broken up by former state Attorney General Mike Hatch about a decade ago. But health care's soaring costs and the openness nationally to innovation make it worth allowing these two respected Minnesota organizations to try it again and prove it can work here.
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