Medica to acquire Mayo Clinic’s MMSI

Aug. 17--A Minnesota insurance giant announced this morning it is buying Mayo Clinic's health benefits division called MMSI.

Minneapolis-based Medica is buying MMSI from Mayo Clinic with the deal expected to close by at least the end of the year. The announcement did not include how much Medica is paying Mayo Clinic.

MMSI, which is based in Rochester, is described as "a health benefits management company and licensed third-party administrator that provides plan administration services and health care products to 260,000 members through 28 customers."

One of those customers is Mayo Clinic. MMSI administers the health plans that cover Mayo Clinic employees.

MMSI has about 200 employees working in Rochester. The division is based in the Mayo Support Center North at 4001 41st St. NW.

It is unclear what this change could mean for MMSI customers, such as Mayo Clinic, and what will happen to the MMSI employees in Rochester.

"I don't think any moves are going to happen in the short term. In short term, it will be business as usual," said Medica's Larry Bussey. "Our intention is to grow the business."

Karl Oestreich, of Mayo Clinic, said the full transition of the MMSI operation to Medica is expected to take place during a period of 18 to 24 months.

Bussey said negotiations for the deal took place during the last six months or so.

MMSI is listed on Mayo Clinic's organization chart as a "Taxable, For Profit" entity. MMSI is under the umbrella of the Mayo Holding Co., a taxable, nonprofit entity. Medica is a nonprofit, though some of its divisions are taxable. Bussey said it still is being worked out what MMSI's tax status will be under Medica.

Medica provides health care coverage in the employer, individual, Medicaid and Medicare markets in Minnesota, Iowa, Kansas, Nebraska, North Dakota, South Dakota and Wisconsin.

"Complementing each organizations' strengths is important in this decision," stated Mayo Clinic Chief Financial Officer Kedrick Adkins in today's announcement. "This new arrangement offers technologies and opportunities to explore that can benefit patients and clients."

Bussey said while the insurance industry has been undergoing a lot of turmoil in recent years, that did not drive the decision to acquire MMSI.

"Mayo Clinic has decided to transition to this new arrangement in response to changing external market forces that make it necessary to ensure patients with serious and complex medical conditions have access to Mayo Clinic. It has nothing to do with the quality of work MMSI staff provide," stated Mayo's Oestreich via email after the announcement.

MMSI has morphed many times during its 31 years within Mayo Clinic. Originally called Mayo Management Services Inc. when it was founded in 1986, MMSI now operates under the name of Mayo Clinic Health Solutions.

In 2006, Mayo Clinic merged MMSI with Mayo Medical Ventures to form the for-profit division of Mayo Health Co. That move was done "to create some more synergy and more efficiencies," according to Mayo Clinic. MMSI had 31 clients at that time.

Mayo Health Co. no longer is part of the Mayo Clinic organizational chart.

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