BLUE CROSS AND BLUE SHIELD OF MINNESOTA AND ALLINA HEALTH SYSTEM SETTLE HOSPITAL CONTRACT DISPUTE.

ST. PAUL, Minn.--(BUSINESS WIRE)--Jan. 13, 1997--Allina Health System (Allina) and Blue Cross and Blue Shield of Minnesota (BCBSM) announced today that the two organizations have successfully concluded their mediated negotiations on a two-year hospital agreement.

"We're pleased that we have made substantial progress toward achieving competitive pricing with Allina," said Dr. Mark Banks, BCBSM group vice president and a member of the negotiating team. "The agreement preserves choice for our 1.6 million members by keeping Allina in our statewide hospital network at equitable reimbursement rates for Allina hospital services."

"We are pleased to have reached an agreement that will allow Blue Cross members to have continued access to Allina hospitals and fairly compensates the Allina hospitals," said John Grotting, Allina's system vice president for care delivery operations and a member of the Allina negotiating team.

While the specific terms of the agreement are confidential, both Banks and Grotting emphasize that the new agreement creates positive incentives to improve quality and to use resources more efficiently.

Sheryl Ramstad Hvass, an attorney with the Minneapolis law firm Rider Bennett Egan and Arundel, mediated the sessions which began December 26. Hvass, a former Hennepin County District Court judge, has mediated over 450 disputes.

Minneapolis-based Allina Health System is an integrated health care system comprised of doctors, hospitals, and health plans serving communities throughout Minnesota, western Wisconsin and eastern North and South Dakota. Allina's vision is to be the recognized leader in community health improvement. Allina is a not-for-profit health care system formed in July 1994 by the merger of HealthSpan, a health care delivery system and Medica, a health plan organization.

BCBSM, based in Eagan, a suburb of St. Paul, Minn., covers 1.6 million people through its own health plans or plans that it administers. BCBSM, a leader in developing innovative relationships with hospitals and physicians, is Minnesota's oldest and largest health plan. The company began operations in 1933. BCBSM is an independent licensee of the Blue Cross and Blue Shield Association, headquartered in Chicago.

CONTACT: Blue Cross and Blue Shield of Minnesota

Karl Oestreich [phone]

or

Allina Health System

Sarah Stoesz [phone]