Hennepin County Medical Center and its doctors' group have agreed to merge operations in the center's latest effort to streamline costs and prepare for coming health care reforms.

The deal at the state's largest public hospital system is subject to approval by the Hennepin County Board, but it's expected to pass at its Nov. 29 meeting.

Under the agreement, Hennepin Faculty Associates, the 28-year-old independent physicians' group, will be absorbed into Hennepin Healthcare System Inc., the name of the public subsidiary that operates Hennepin County Medical Center's trauma center and academic center in downtown Minneapolis as well as private clinics around the Twin Cities.

Dr. Don Jacobs, CEO of Hennepin Faculty Associates, said the alignment brings "a safety net of financial resources required to deliver health care in the complex and unsettled environment" because of the economy and health reform efforts.

The decision to integrate the two operations wraps up an 18-month process that included visits to the Mayo Clinic, Park Nicollet, Denver Health and Virginia Commonwealth University Medical Center in Richmond -- all health systems where doctors are on the hospital payroll.

Hennepin Faculty Associates, or HFA, has about 1,000 employees, including 320 physicians and dentists. About 30 positions are being eliminated because of overlap in administrative positions such as billing, collections and human resources.

Other than receiving a single bill, patients won't notice the change.

HCMC has an annual budget of $600 million; HFA an annual budget of $150 million. The merger is projected to save $9 million a year for each of the first two years, not counting one-time expenses of about $5 million to be shared between the two organizations, according to the county.

"Rather than having two organizations doing their best -- sometimes resulting in inadvertent competition, inadvertent difference of priorities and some duplication -- we can create alignment around strategy, resources, operations and the care we plan to deliver," said Art Gonzalez, who will remain as CEO of the merged Hennepin Healthcare System.

"This is really two strong organizations that hopefully are going to be stronger as a result."

Jackie Crosby • 612-673-7335