Medica buying Mayo Clinic’s health benefits division

Minnetonka, Minnesota-based Medica has reached a deal with Mayo Clinic to acquire its Mayo Clinic Health Solutions division, also known as MMSI, for an undisclosed sum.

MMSI acts as a third-party administrator for 28 self-insuring companies, including the Mayo Clinic’s own employee health plan, which cover about 260,000 people. A press release said the move “represents a new business arrangement” with opportunities to improve access for complex patients.

“For many years, Mayo Clinic and Medica have each worked to advance health care, improve the consumer experience and drive innovation in health care delivery, technologies and tools,” Medica President and CEO John Naylor said in a statement. “Today, with Medica’s acquisition of MMSI, we can bring greater capabilities and flexibility through new technologies for customers.”

Medica and Mayo Clinic hope to begin the change by the end of 2017, with MMSI’s services transferring to Medica over a two-year period. Some decisions will have to made about the division’s tax status, as Medica is a nonprofit while MMSI is not.

First established in 1986 as Mayo Management Services, MMSI customers and employees shouldn’t notice any change in the immediate future, Medica said. Mayo’s decision to sell the division was motivated by the increasing prevalence of narrow network insurance plans.

"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," Mayo Clinic spokesman Karl Oestreich said to the Rochester Post-Bulletin.