The merger wave in health care continues its surge across Minnesota.
Fairview Health Services and the insurer UCare announced Tuesday they will merge operations, boosting Fairview's insurance arm and moving it closer to a fully integrated organization in an era of rising health care costs.
Consumers likely won't notice a difference right away, but in due time might see a reduction in duplicate billing statements. In the longer term, Fairview hopes that having doctors, insurers and improved patient-tracking data under one roof will enhance patient care and lower costs.
"Hospitals are trying to do more care coordinating, more discharge planning, more patient follow-up," said health care analyst Allan Baumgarten. "The benefits of being a partner or owner of a health plan is that they've already got most of the infrastructure in place and have mastered the flow of data."
UCare is the fourth-largest health plan in Minnesota with about 150,000 enrollees. But it has struggled mightily since losing a bid last year for a valuable state contract to cover people enrolled in government health plans. The insurer lost about 350,000 enrollees across the state, which accounted for about half of its $3 billion revenue in 2014.
Fairview Health Services, the state's fifth-largest nonprofit, is undergoing a swirl of change under interim CEO David Murphy. In addition to the deal with UCare, Fairview also is in the midst of merger talks with the University of Minnesota Physicians, and in July will change its name to M Health.
With $3.4 billion in revenue in 2014, Fairview has an increasingly diversified portfolio.
It operates six hospitals, nearly 100 primary care and specialty clinics and also operates more than 50 senior housing locations and pharmacies.