Allina Health deal shifting 2,000 workers to Optum

Allina Health is hiring Optum to provide IT and bill-collection services in a deal that includes shifting about 2,000 jobs from one company to the other.

Minneapolis-based Allina announced the 10-year contract Thursday. Financial terms were not disclosed.

Optum, which is based in Eden Prairie, will handle what’s called “revenue cycle management,” the process whereby Allina confirms coverage for health services and then collects payments from health insurers and patients.

The deal should help Allina better utilize new technology, such as artificial intelligence and automation, for back-office work, said Dr. David Ingham, the health system’s vice president and chief information officer.

The agreement also is expected to trim expenses at a health system that in July announced about 350 job cuts amid high labor costs and delayed patient discharges.

“It’s not the sole reason — it’s not the rationale behind this change — but [savings] is a part that will help us as we work to overcome pretty serious financial challenges facing us this year,” Ingham said in an interview.

“We don’t have the size and scale of an Optum to deliver on some of these really emerging spaces,” he added.

Optum is the health services division of Minnetonka-based UnitedHealth Group, which also operates the giant health insurer UnitedHealthcare.

Allina is a nonprofit health system with 10 hospitals, including Abbott Northwestern in Minneapolis and United Hospital in St. Paul. It employs about 28,500 full- and part-time workers.

Roughly 2,000 employees will transition employment from Allina to Optum effective May 5. There will be no layoffs, Ingham said.

Workers will have retention guarantees — industry parlance for a promise of employment — for an unspecified duration. The location where they work will not change.

“If they’re working remotely, they’ll continue working remotely,” Ingham said. “If they’re on-site at one of our hospitals, one our clinics or at our headquarters, they’ll continue working there.”

The agreement is similar in scope to contracts Optum has reached with some other health systems across the country, although Ingham said Allina is the largest hospital and clinic operator to reach one of these long-term deals.

More than a decade ago, Minneapolis-based Fairview Health Services, another nonprofit health system, found itself mired in controversy after hiring a for-profit company for help with bill collection. The state attorney general exposed aggressive collection techniques by the firm — Accretive Health — and ultimately banned the company from doing business in Minnesota.

Ingham said Allina won’t make those same mistakes.

“While we’re partnering with Optum, and yes they’re for-profit, they’re still serving our mission – our not-for-profit mission – as a community asset,” he said. “This is really around the efficiencies gained, and not around more aggressive bill collections or something to that effect.”

Knowing the out-of-pocket cost for health care services is much more complicated, Ingham said, than knowing the price of socks at a retailer. One goal with the Optum agreement, he said, is to eliminate surprise medical bills and improve accuracy in the system.

“Those are tough problems – nobody’s really cracked those nuts,” Ingham said. “We think that with Optum’s help, we’re going to be better positioned to solve those problems and really stand out in the health care community.”

The deal on IT and bill collection is the second major partnership in recent years between Allina and Optum. In January 2020, they announced plans to jointly develop a number of ambulatory surgery centers across the Twin Cities.