Partnership Yields Minnesota's Largest ACO, New Employer Health Plan

Health systems, Guidehouse focus on clinical integration to guide PreferredHealth formation


As pressure from the government, private payers, and consumers to deliver better value increases, progressive health systems are contemplating how to facilitate an enterprise-wide transformation across the continuum of care. For some, this entails a merger and acquisition approach, but for others operating in a fiercely competitive market, a more creative solution is required.

Recognized as a leader in healthcare, Minnesota consistently ranks among the best-performing states in coverage, access to high-quality care, overall health, and the total cost of care, particularly in Medicare populations. Nevertheless, employers and consumers in the Twin Cities market of Minneapolis and St. Paul voiced the need for a better healthcare option. Three independent health systems – Fairview Health Services, HealthEast, and North Memorial Hospital – were each on individual paths to respond to this charge. Although all three organizations demonstrated success in shared savings contracts with private health plans, the leaders of the respective systems recognized a common set of challenges:

  • Insufficient geographic coverage across the Twin Cities market to meet consumer needs regarding access
  • Escalating investments costs required to build a population health infrastructure
  • A need to create differentiation in a market with a strong prevalence of integrated delivery networks

With a merger not desired or feasible due to multiple constraints, the health systems sought an alternative option to address these three barriers.


In 2013, Fairview, HealthEast, and North Memorial partnered with Guidehouse to design a coordinated and comprehensive blueprint to enable effective population health management and position all three organizations for sustainable growth.

The parties identified their solution to be a partnership using clinical integration as its foundation. Clinical integration – a collaborative effort to actively develop a shared clinical program with initiatives to improve the quality and control the costs of healthcare – is an increasingly popular imperative for providers in their journey to value. It offers the opportunity to improve care under a contracting model that harvests and monetizes the value of such improvements. Importantly for the three organizations, it provides an alternative for securing the benefits of collaboration without the ownership change required under a merger or acquisition.

The transition to a clinical integration model is not easy, even for systems with a long history of innovation. Guidehouse guided the three health systems through a process to reach the goals of each organization with these key activities:

  • External assessment of market dynamics
  • Organizational readiness evaluation
  • Legal structure and operating model design
  • Implementation plan development
  • Go-to-market action steps formation

Upon its formation, the partnership began to create a shared clinical integration program to underpin its efforts. Clinicians from each respective network, inclusive of independent and employed physicians, collaborated around three focus areas: readmissions, emergency department utilization, and women's health.

The heart of clinical integration is care coordination. By working together as payer and providers, we can effectively identify and proactively reach out to patients who need care. Guidehouse's approach to uniting culture and strategy will sustain our organization well into the future.

Aaron Bloomquist
Chief Financial Officer
North Memorial Healthcare


The pursuit of clinical integration provided the vehicle for Fairview Health, HealthEast, and North Memorial to offer the state’s largest accountable care organization (ACO) to payers. The parties collaborated with PreferredOne, a local health plan, to offer a new group employer health plan called PreferredHealth. The network provides access to more than 5,000 providers, 625 primary and specialty clinics, and 13 hospitals, in addition to a value-based insurance benefit design featuring a concierge line, full on boarding, and travel coverage.

Since its launch in 2013, PreferredHealth has demonstrated tangible success, as defined by the following indicators:

The partnership continues to develop innovative models for delivering high-value care to the community using the chassis of clinical integration.

About the Experts

Back to top