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Minnesota Health Systems Try Partnering, Not Competition, To Boost Their Bottom Lines

Oct 31, 2011

This story is part of a reporting partnership that includes Minnesota Public RadioNPR and Kaiser Health News.

A partnership between two rival health systems in the Minneapolis area is offering a glimpse of the future, at least as envisioned in the federal health law.

HealthPartners and Allina Hospitals and Clinics together tested strategies to improve care and reduce health costs for 27,000 patients

The systems say they’re already proving that an accountable care organization can lower costs while improving quality. The health law encourages the development of these ACOs.

They claim the collaboration saved about $6 million, which was enough to bring the growth rate of health care costs down from 8 percent to just 3 percent. Patient satisfaction scores improved as well.

HealthPartners and Allina each own numerous clinics and at least one hospital in the Twin Cities area.

The partnership started about three years ago, when executives at HealthPartners and Allina met to discuss what they could do as a team that they could not do alone.

"We are not-for-profits," HealthPartners’ Brian Rank said. "To a certain extent we're competitors, but health care today eats up too much of the gross domestic product and we all believe we could do better together."

Rank said he and Allina's Penny Wheeler thought an accountable care organization (ACO) could be the next step.

The ACO idea became part of the federal health care law to provide an incentive for doctors to keep people healthy, rather than the current system of paying for every procedure and patient visit. The ACO would provide doctors financial incentives to keep patients healthier, preventing some hospital stays and duplicate tests.

HealthPartners and Allina worked on a number of projects under the collaboration they call a "learning laboratory" for an ACO, including:

-- They shared data with doctors about the doctors’ patterns of prescribing name brand versus generic drugs. The prescription rates for generic drugs rose and cut total medical costs by about $1 million.

-- They made lower-cost options to the emergency department available by expanding urgent care clinics.

-- To prevent hospital admissions, high-risk patients with chronic problems were sent to primary care clinics to be closely followed.  

Allina obstetrician Penny Wheeler said they also cut the rate of induced labor before 39 weeks of gestation from 8 percent to zero, likely keeping newborns from a stay in the neonatal intensive care units.

"Inducing somebody's elective labor before 39 weeks is very black and white. There's no reason to induce people before--in fact by doing so you're increasing their length of labor, their chance of having a cesarean section, and their chance of their baby being admitted” to the neonatal intensive care unit, Wheeler said.

"If they can keep this up, it's very significant," said Paul Ginsberg, a health care economist and head of the Center for Studying Health System Change, a non-partisan health policy research. He points out that nationally, health care spending has been growing at 2 percent faster than the gross domestic product.

"If we could get [health care inflation] down to just the growth of gross domestic product, that would be enormous," Ginsberg said.  

Whether the savings are sustainable is just one of several questions that remain to be answered. There's also the question of upfront costs. HealthPartners and Allina aren't saying how much they had to invest in new systems to reduce health costs by $6 million.  

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