Two of the Twin Cities' best-known advocates for the disability community plan to merge, a move aimed at pooling their respective strengths and streamlining operations.

Courage Center and Allina Health's Sister Kenny Rehabilitation Institute said Friday that coming together will blend the medical expertise of Sister Kenny with the community programs and outreach of Courage Center.

Joining forces has been discussed in the past, said Courage Center CEO Jan Malcolm, and has long been "conceptually a good idea." But the changing health care landscape makes the time right to move now.

"The environment, frankly, is demanding that organizations start to work differently and look at doing things in a new way -- to make better use of resources, produce better outcomes for less total cost and all the other things we talk about in health care reform."

The merger is expected to become final in the spring. Terms of the deal were not disclosed.

It is the latest in a string of partnerships being forged around Minnesota as health care organizations seek strength and stability as federal reform and changing technology force fundamental changes in health care.

Park Nicollet and HealthPartners expect to merge operations by Jan. 1, a deal that aligns a health insurance plan with hospitals and clinics. The Mayo Clinic purchased a clinic in Red Wing from Fairview Health Services earlier this year, and has been building a network of affiliations with more than a dozen health systems around the country.

As the state's largest providers of care for the disabled, Sister Kenny and Courage Center often care for the same people -- with Allina and Sister Kenny providing medical care and therapy at the early stage of a serious injury or disease, such as stroke, and Courage Center providing continuing rehabilitation and training to help people get back to school or work, or to participate in sports and outdoor activities.

The organizations also have jointly operated a managed care company for about 15 years, Malcolm said.

The merger creates a new entity under the Allina Health banner, and Courage Center's clinical programs will combine with Sister Kenny's. The organizations will work jointly on clinical care, community-based services, research, innovation, public policy and advocacy. The respective foundations will be rolled into the combined unit.

Other details, such as preserving their respective names and "who will sit in what chair" still must be worked out, Malcolm said.

Courage Center, based in Golden Valley, was founded in 1928 as an advocacy group for what then was known as the Society for Crippled Children. In the decades that followed, it began providing services and programs to help people become independent. Sister Kenny opened in December 1942 and became known for pioneering treatments for polio.

Today, the Minneapolis-based Sister Kenny specializes in treating people with spinal cord injury, brain injury, stroke, cancer, sports-related injuries and neurological or muscular disorders. It serves more than 60,000 people each year through nine Allina Health hospitals and 20 outpatient therapy locations.

Courage Center now works with about 12,000 adults and children each year.

But like other charities, Courage Center has seen donations drop and endowments and investments sink during the economic downturn. Meanwhile, Minnesota, along with other cash-crunched states, has cut reimbursement rates to providers for care they give to low-income patients, a trend that has affected both organizations.

Courage Center had revenue of about $43.5 million in 2010, the most recent public filings, but posted an operating deficit of about $3.2 million. That narrowed a $3.8 million gap from the previous year, but reflected similar financial trends since the start of the recession.

The financial tightrope left no room to invest in an expensive but increasingly essential system of computerized patient records, Malcolm said.

"We're choosing to be very realistic and very proactive about how to best conserve that financial strength going forward," she said.

Streamlining the operations with Sister Kenny, an $80 million enterprise, creates an opportunity "to fund innovation to try new things and make sure those services are available to the whole community," Malcolm added.

Those with serious disabilities typically can have eight health care conditions and work with 10 to 30 physicians and other health care providers, said Dr. Penny Wheeler, Allina Health's chief clinical officer.

The merger "allows us to really tie things together," Wheeler said, from providing serious medical care to connecting families with community services to linking people under a single electronic medical record.

"We think this will serve as a national model for what we can do collectively," she added. "This is part of an evolving story."

Jackie Crosby • 612-673-7335