BCBS Minnesota Buys Minority Stake in North Memorial Health Clinics

The ownership structure aims to lower care costs by up to 20% over five years, by focusing on value-based care.

Blue Cross Blue Shield of Minnesota has bought a minority stake in 20 primary and specialty clinics owned by Minneapolis-based North Memorial Health.

Under the deal, announced this week, North Memorial Health will maintain a 51% ownership of the joint venture, and Blue Cross is purchasing a 49% stake in the clinics, the companies said in a joint media release. 

Financial details were not disclosed for the deal, which launches in January 2020.

The ownership structure aims to lower care costs by up to 20% over five years, by focusing on value-based care principles such as wellness, prevention and health outcomes, rather than fee-for-service models, the two companies said. 

"Healthcare costs too much, and it is too often difficult for people to understand and navigate. With this joint venture, we’re removing confusion from the equation," says Craig Samitt, MD, CEO of BCBS Minnesota. "Blue Cross and North Memorial Health have come together to transform healthcare in Minnesota in a way that no others have, and the winner will be the consumer."

Under the joint venture, the clinics will be separate from both parent companies and managed by a newly created CEO and board of directors.

Jennifer Close, now serving as president and chief ambulatory officer at North Memorial Health, has been named CEO of the joint venture. 

North Memorial CEO J. Kevin Croston, MD, says bold steps are needed to addressing skyrocketing care costs and access issues in the healthcare sector.

"Incremental change has been holding the healthcare industry back for too long," he says. "The industry is moving too slow, so we are taking bold action to create a transformative solution that is consumer friendly, improves the quality of care and delivers outcomes that are measurably better than others."

Acknowledging that other mergers and consolidations in both the payer and provider spaces have not resulted in lower costs for consumers, Croston and Samitt say their joint venture creates an integrated business model that taps into the strengths of both partners.

"We will transform service and take consumers out of the middle of interactions with their doctor and insurer," the two physicians say. "We'll take care of the hassle, so consumers can focus on their health."