Health system merger means savings, strong credit ratings

HealthPartners and Park Nicollet have agreed to affiliate in a deal expected to cut costs for the two major Minneapolis-area providers, reported Minnesota Public Radio.

The combined entity will have five hospitals, including two in Wisconsin, and annual revenues of about $5 billion.

"The two organizations are very focused on great care, great experiences and affordable cost. And this will give us more capability for that," Park Nicollet CEO David Abelson, M.D., told Minnesota Public Radio.

Health system officials did not give specific costs savings once the two entities join forces on Jan. 1, 2013, but noted there would be no layoffs among the combined workforce of 20,000, according to the article.

Both entities have fairly strong debt ratings, and a Standard & Poor's report said this would not change.

"We believe that combining the two entities augments each entity's business position because both entities operate in complementary markets," S&P said. "We also believe that the increased scale of the combined entity should provide opportunities for realizing cost efficiencies and implementing strategies that better position the organization for healthcare reform."

The rating service did note concern about how the medical groups of each entity would be merged, but said HealthPartners' debt could be raised a notch if it continued its current patient levels and had at least a 3 percent return on revenue.

For more:
- here's the Minnesota Public Radio article
- check out the Standard & Poor's statement

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