American Healthways and Blue Cross Blue Shield of Minnesota Announce Joint Outcomes Initiative.

Health/Medical Writers

NASHVILLE, Tenn.--(BW HealthWire)--May 22, 2002

Initiative to Focus on Improving the Fundamental Effectiveness

And Economics of Health Care

American Healthways, Inc. (NASDAQ/NM:AMHC), and Blue Cross Blue Shield of Minnesota (BCBSM) today announced another step in their joint effort to change the way health care is delivered and to improve health outcomes by initiating a project to significantly close the gaps in how care is experienced by health plan members.

The joint project will fulfill one of the major goals expressed in the 10-year outcomes-focused agreement, signed last December between the two companies. That agreement resulted in launching the first ever population-based care enhancement program for members with chronic disease and other significant conditions.

"The current health care system needs to be transformed around outcomes in order to better align the interests of patients, providers, employers, and insurers," said Mark Banks, MD, Chief Executive Officer of Blue Cross Blue Shield of Minnesota. "This outcomes-focused initiative is aimed at identifying, developing, and testing those strategies which, if proven successful, will be made available not only to our members, but also to other health plans across the country."

Initial efforts will focus on a number of areas where the gaps in the current system are the greatest. The current system is very fragmented in its approach to improving health outcomes and there continues to be wide variation in delivering evidence-based care. Closing these gaps will lead to improved infrastructure, systems, consumer and provider satisfaction, and most importantly, significantly improved health outcomes. Among the areas of initial focus are:

- Fully integrating medical management services

- Fully engaging providers in an outcomes-based approach to care

- Exploring new member benefit structures

- Developing new services to significantly change the care experience for
consumers

Blue Cross and Blue Shield of Minnesota, the leading health plan in its market, is nationally recognized for its history of applying innovative methods to health care delivery. American Healthways is the recognized market leader in providing care enhancement programs that improve the health outcomes and, thereby, reduce the costs of care for patients with chronic diseases and other high-cost conditions. Combining the expertise and experience of the two organizations provides exceptional synergies and is expected to yield substantial benefits not only for the organizations, but more importantly, for patients, physicians and other health care stakeholders.

"Long-term, industry wide innovation initiatives designed to change the face of health care are rarely, if ever, even attempted by single organizations. Our relationship with Blue Cross and Blue Shield of Minnesota, a truly innovative and forward looking health plan, will enable joint development to a degree that would otherwise not be possible" said Thomas Cigarran, Chairman and Chief Executive Officer of American Healthways. "The ground-breaking projects we will undertake in the next year will help us validate our joint beliefs of the value of shifting healthcare towards outcomes."

"Leading the project for American Healthways will be Rich Rakowski who is leaving his post as president to devote his time on the initiative," Cigarran added. "Both organizations are pleased that Rich will be providing his expertise and perspective to this important project."

"Being able to create new solutions for the problems that are plaguing our health care system is what excites me most about working in this industry," Rakowski said. "This initiative offers a unique opportunity to make further meaningful differences in the lives of millions of people and I am personally committed to its success."

For the past several years, organizations such as the National Science Foundation's Institute of Medicine, the Institute for Health Care Improvement, the National Business Coalition on Health and others in both the public and private sectors, have been calling for new approaches to improve the quality of care. "BCBSM and AMHC have been leaders in responding to that call," said David W. Plocher, MD, vice president of Cap Gemini Ernst & Young (CGE&Y), who released their own White Paper on those issues on May 21, 2002. "Through this initiative, these two industry leading organizations will significantly leverage their existing track records of significant innovation and focus those capabilities on tackling these issues head on. This is truly an exciting development for the industry and for the future of health care in America." The companies have jointly retained CGE&Y to help develop a business plan for the initiative.

Blue Cross and Blue Shield of Minnesota was chartered in 1933 as Minnesota's first health plan and continues to carry out its charter mission: to promote wider, more economical and timely availability of health services for the people of Minnesota. Under the parent organization, Aware Integrated, Inc., Blue Cross and its affiliates serve approximately 2.2 million members through a variety of health coverage plans for organizations and individuals. Blue Cross is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago.

Nashville-based American Healthways (www.americanhealthways.com) is the nation's leading provider of specialized, comprehensive care enhancement services to health plans, physicians and hospitals. The Company's programs have been recognized for innovation and excellence, most recently by the Disease Management Association of America's 2001 Comprehensive Disease Management Company Leadership Award. American Healthways has contracts to provide disease and care management programs to health plans with members in all 50 states, the District of Columbia and Puerto Rico. The Company also operates diabetes management programs in nearly 80 hospitals nationwide.