The Alliance for Nonprofit Healthcare grew out of an informal group of nonprofit Blue Cross and Blue Shield plans (“The Blue Caucus”) which in the late 1990's were concerned about the conversion of nonprofit Blue Plans to for-profit insurers and the negative impact that these conversions were having and would continue to have on the nation's health care system. These plans joined together to place ads in key healthcare journals to inform policy makers and the public of the value and performance of the nonprofit health care sector --and the costs to the community if these nonprofit plans were lost. The results were dramatic, largely stemming the tide of such Blue plan conversions. However, the effort created a "family feud" in terms of relationships between the nonprofit and for-profit Blue plans, and it was felt that the initiative had to be either discontinued or reshaped to with a broader membership base.

Following a series of meetings of nonprofit healthcare leaders the decision was made to create an organization of both nonprofit health insurers and providers and insures. The result was the Alliance (formally incorporated as a 501-c(4) corporation in mid-2003), which both added to and absorbed the Blue Caucus plans, becoming the only national group in the nation with payer and provider organizations (acute care, sub-acute care, and long-term care and primary care). They regularly sat at the same table and discussed how they as nonprofits could improve the nation's health care system and people’s health status.

Over time the Alliance also continued to evolve. Under the leadership of Robert Sigmond, with financial support from both himself and about a half-dozen large nonprofit Blue plans, a research and education foundation, entitled the Walter J. McNerney Forum, was created as a sister 501.c.3 corporation of the Alliance: The Institute for Advancing Nonprofit Health Care.

Howard J. Berman, the President and CEO of Lifetime Healthcare, Inc. based in Rochester, NY, served as Chair of not only the original informal group but also the incorporated Alliance and Institute until their operations were discontinued in late 2015. Bruce McPherson, based in Washington, DC, served as President and CEO of the incorporated Alliance and Institute until their operations were discontinued. Through most of this period, Jim Smith, Partner in the American Continental Group consulting firm based in Washington, DC, served as a federal relations consultant to the Alliance. In addition, Lisa Moore and Dave Montgomery, both employees of Lifetime Healthcare, Inc., provided important administrative support to the Alliance and the Institute on a part-time basis.