Schafer: Health merger is not just geography

Understanding why Park Nicollet Health Services is merging with HealthPartners starts with overlaying maps of their clinic locations.

It is remarkable how well the two networks fit with each other, with very little overlap.

The merger was announced last week, and when it closes in January HealthPartners will have a network of clinics and other facilities that extends from Park Nicollet's bastion in the western suburbs of Minneapolis east into primary HealthPartners territory and across the St. Croix River into western Wisconsin.

But if HealthPartners just had clinics and a big hospital that happened to complement the network of clinics and a big hospital owned by St. Louis Park-based Park Nicollet, this deal almost certainly would not be happening. Not now anyway.

The striking difference between the two organizations is that HealthPartners is both a provider of health care services, much like Park Nicollet, and also has a large health plan side that has more than 1.4 million medical and dental plan members.

As Park Nicollet President and CEO David Abelson tells the story, the appeal was the opportunity to be part of an integrated model that includes the health financing and risk-management functions of HealthPartners' insurance side.

And it's not just how HealthPartners happens to be organized, but also its leadership's focus on using its integrated organization to simultaneously improve health care quality and hold down costs.

In an interview with HealthPartners CEO Mary Brainerd in HealthPartners' offices, Abelson described the first step when he scheduled lunch with her at McCoy's Public House near his St. Louis Park office. It was just after he had assumed the CEO's role.

While he had met Brainerd years before, he said, "I certainly realized then that we shared a common vision, particularly around affordability. To me that was an important meeting."

No merger discussion took place for more than a year as Abelson looked for the trends around payments and incentives to become clearer. The ground was just beginning to shift, as the old fee-for-service model that rewarded providers for just seeing patients or performing a procedure was on its way out in favor of paying doctors and hospitals for value.

With this change in payment incentives, the line gets blurred between what a health plan or health insurer does -- enroll members in a health insurance plan and cover the financing side of health care -- and what the clinic or hospital does in treating patients.

Put it this way: Before a health care provider like Park Nicollet would agree to take financial responsibility for the health of a whole group of patients, it had better be pretty sure that it knows what diseases that group had, what new conditions could be expected, and everything else it can to estimate what it would take to keep that population healthy.

And with a strategy that meant accepting more and more of that risk, the appeal of a partnership with HealthPartners became clear.

Negotiations with HealthPartners began in the summer of 2011, and initially it was just a team of five executives working with Abelson at Park Nicollet. As he put it in an interview Tuesday, "our leaders understood with their heads right away. It took a while with their hearts to realize that this was absolutely the right thing."

This conversation with Abelson included Brainerd and took place in a conference room at HealthPartners. While they have had plenty of practice telling their story to employees and others since the merger was announced, the rapport between them was obvious.

The combined organization will be called HealthPartners and be based in Bloomington, with Brainerd as CEO. The merger will create a 1,500-physician group practice and integrate it with the health plan operations of HealthPartners. The combined organization will have more than 20,000 employees, and Brainerd said "we are going to need all the people we've got."

Abelson will be leading the provider group, to be named the Park Nicollet HealthPartners Care Group.

And for both of them the remaining challenge is integrating two cultures that, while committed to common goals, assumed their approach was better.

"You have to show both proud cultures a higher purpose," Abelson said. "We really are involved in a higher purpose. Our enemy is not our competitors. Our enemy ... is a lack of health, and a lack of affordability."