Managed Care in the Twin Cities: What Can We Learn?

Abstract

Prologue:Minnesota's Twin Cities, Minneapolis and St. Paul, have long been viewed as a testing ground for how managed care can take hold in a community. Some of the nation s first health maintenance organizations (HMOs), which many view as the basic building block for a managed competition-based health care system, flourished in the Twin Cities area during the 1970s. The long history and relatively broad acceptance of HMOs, coupled with an employer community that is active in health care purchasing for its workers, make the area ripe for comparison and study. In this paper Jon Christianson and his colleagues trace the evolution of managed care in the Twin Cities from the 1970s through more recent times. They draw on a rich literature examining the managed care market there and focus on recent developments involving mergers among some of the area's managed care plans and hospitals. In an era when integrated health systems are growing in prevalence, these developments are of interest in communities throughout the United States. Christianson, a health economist, received his doctorate from the University of Wisconsin-Madison. He is a professor at the Institute for Health Services Research at the University of Minnesota. Bryan Dowd is a professor at the institute who has been studying the Twin Cities health care market for fifteen years. John Kralewski is the William Wallace Professor of Health Services Research and Administration at the University of Minnesota and directs the institute; he holds a doctorate in health services administration from the University of Minnesota. Susan Hayes is coordinator of external programs at the institute. Catherine Wisner, who received a doctorate in health services research and policy from the University of Minnesota, is a health services research investigator at Group Health Foundation in Minneapolis. Minneapolis/St. Paul, because of its history of health maintenance organization development and active employer participation in the health care arena, is often cited as a community in which managed competition has been tested to some degree. This paper reviews the historical development of the Twin Cities health care market and summarizes findings from past studies of this market. It also describes the recent consolidation of providers in the Twin Cities, as well as the activities of large purchasing coalitions. Finally, it assesses the elements of the Twin Cities experience that seem most relevant to managed competition-based health care reform proposals.