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GROUP HEALTH, MEDCENTERS HEALTH PLAN SIGN LETTERS OF INTENT TO FORM NEW AFFILIATION

 GROUP HEALTH, MEDCENTERS HEALTH PLAN SIGN LETTERS
 OF INTENT TO FORM NEW AFFILIATION
 MINNEAPOLIS, April 24 /PRNewswire/ -- The Boards of Directors of Group Health, Inc., and MedCenters Health Plan, have signed a letter of intent to form a nonprofit holding company organization, according to William F. Schoenwetter, M.D., and Russell D. Tall, chairs of the MedCenters and Group Health Board of Directors, respectively. The holding company, governed by a new, joint board of directors, would serve as a structure to combine current operating activities of both existing organizations. Joined together, the two HMOs would have a combined total of nearly 570,000 members.
 Under the new holding company structure, both organizations would coordinate their systems of medical care delivery and quality improvement programs. The objectives are to improve the quality and efficiency of medical delivery and administrative systems by sharing expertise, and reducing duplication of services.
 An earlier announcement from the organizations described that they were discussing forming a joint venture in order to respond to requests from area business health care coalitions.
 Park Nicollet Medical Center, a 340-physician multispecialty group practice based in Minneapolis, would be a major provider to this partnership. Aetna Health Plans will continue to provide administrative services for portions of the partnership. Aetna will also provide linkages to national managed care programs for the partnership.
 "We believe in the ability of integrated health systems, such as multispecialty group practices, to provide the highest quality at a reasonable cost to patients," said James L. Reinertsen, M.D. Park Nicollet Medical Center president and chief executive officer. "Working together, we'll build on each other's strengths to provide a truly integrated system of care in many communities."
 "It's exciting to think about the potential we will have through this affiliation," said Schoenwetter. "While the details of the affiliation will be worked out over the next couple of months, we are very encouraged by what has transpired to date. Both MedCenters and Group Health are strong health care organizations in their own right and our clinic networks are very complementary in terms of broad geographic coverage."
 "We're looking forward to continuing to work with the MedCenters board as we finalize agreements during the next few months," said Tall. "We expect the net impact of working together to be both lower administrative costs and improvements in the way our organizations deliver health care services."
 "With this affiliation, we are able to provide broader access to citizens across the state of Minnesota," according to George Halvorson, Group Health, Inc. president and chief executive officer. "We will be responding to the needs of our largest purchasers of care for managed care from Duluth, Minn. to Fargo, N.D. to Rochester, Minn., as well as in the Twin Cities."
 "Increasingly, major employers are making national regional decisions about their health care purchases," said Kirby Erickson, MedCenters Health Plan executive director. "This affiliation will let us compete more effectively in that market environment."
 "I fully expect that an affiliation will have a significant impact on other health care providers in Minnesota," Halvorson said. "They will probably respond by creating more tightly managed systems of care with a greater focus on both efficiency and quality. Our affiliation should have a catalytic effect on health care that will benefit all Minnesotans. If we are successful, the potential impact could be national."
 Final decisions on whether or not to proceed with the creation of the new organization are pending based on final board approvals, and the receipt of regulatory approval. These steps are expected to be completed within the next 60 days.
 -0- 4/24/92
 /CONTACT: Sara McFee of Group Health, 612-623-8761; Jacqueline Hanson of MedCenters, 612-371-5503; or Lisa Graham-Peterson of Park Nicollet, 612-927-3610/ CO: Group Health, Inc.; MedCenters Health Plan; Park Nicollet Medical
 Center ST: Minnesota IN: MTC SU:


AL -- MN013 -- 2770 04/24/92 18:08 EDT
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Date:Apr 24, 1992
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