Reaction was mixed Friday after the announcement that Seattle’s Group Health Cooperative may be acquired by California giant Kaiser Permanente. No changes in coverage or care are planned immediately.
Reaction was swift — and mixed — Friday after the announcement that Seattle’s homegrown medical cooperative, Group Health, may be acquired by the California behemoth Kaiser Permanente.
Callers buzzed phone lines at Group Health’s administrative offices as well as the satellite centers throughout Washington and Northern Idaho, officials said. Employees huddled with colleagues and managers. Hundreds of conversations ensued, even as officials said no change in care or coverage is immediately planned.
Most were “wonderfully positive,” said Diana Birkett Rakow, Group Health’s executive vice president of public affairs.
By the numbers
Group Health Cooperative
Areas served: Washington, North Idaho
Medical centers: 25
Annual revenue: $3.5 billion
Members: 10.3 million
Areas served: Colorado, Georgia, Hawaii, Virginia, Maryland, California, Oregon, southern Washington, Washington, D.C.
Hospitals, medical offices and outpatient centers: 657
Annual revenue: $56.4 billion
Sources: Group Health, Kaiser Permanente
“They really understand and were sharing proactively why this is the best decision not just for today, but for five years from now and 10 years from now,” she said.
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Others, however, weren’t as enthusiastic.
“No! I love my co-op,” longtime Group Health member Rebecca Lane, 60, of Seattle wrote on Facebook. “This is terrible news.”
Some members lamented what they saw as potential loss of local control, while others questioned the merger’s impact on cost and access to care.
Online, critics noted that the deal, which must be approved by voting members and regulators, was made public three days too late for most Group Health members to register to weigh in.
Officials with the two nonprofits announced early Friday they’d finalized an agreement for the Kaiser Foundation Health Plan, which serves 10.3 million people in eight states and Washington, D.C., to acquire Group Health, which serves 600,000 patients in Washington and north Idaho.
In exchange, Kaiser Permanente is contributing $1.8 billion to create the new Group Health Community Foundation, with plans to invest an additional estimated $1 billion in the next decade in new facilities, staff, technology and research in Washington state.
Group Health officials said the move positions the organization for growth in an increasingly competitive health-care market, where mergers are becoming commonplace.
“This is an opportunity to do more, better,” said Scott Armstrong, Group Health’s president and chief executive.
In an email sent Friday to members, Group Health officials said they were moving from a “position of strength” just three years after facing cuts of more than $250 million and dozens of layoffs in ensuing years.
“We can’t guarantee we’ll get such an excellent opportunity from an organization that so clearly shares our values in the future,” the letter said.
It’s not clear yet what the organization’s new name will be, but it marks a significant milestone in the nearly 70-year history of Group Health, which was formed in 1947 by doctors with the then-radical notion that prevention should be in the forefront of health care and that consumers should have a say in how integrated insurance and care is managed.
The move is part of a wave of hospital-system and health-insurance mergers nationwide, but for local residents, it’s more personal, said Aaron Katz, a health-policy expert at the University of Washington.
“For us, in the Seattle area, it’s different. Group Health is a homegrown product, it’s just an institution in our lives,” Katz said. “It has a very unique origin coming out of activism, the labor movement.”
No changes in care or coverage are expected in the near future, Group Health officials said. Katz agreed the immediate effect on consumers will be minimal.
“It’s not like one local competitor consuming another local competitor,” he said. “I can’t imagine Kaiser shipping up a bunch of doctors from California and replacing local doctors.”
Company officials said the move would increase efficiency and drive down costs. However, in most mergers, “there’s little evidence” to support such claims, Katz said.
Group Health and Kaiser Permanente Northwest, a unit of the larger company, discussed merging in the late 1990s, but the deal “unwound” after 18 months, Armstrong said. The current deal is structured differently and occurs in a vastly changed market, he added.
It could take nine months to a year to finalize the new merger. Under Group Health bylaws, it has to be approved by voting members during a special meeting scheduled for Jan. 30, with votes tallied through March 9. The results are set to be announced March 12.
Only about 27,000 — or 4.5 percent — of Group Health’s 600,000 members are registered to vote, Rakow said. Under terms of the bylaws, members must register at least 60 days before a special meeting. Group Health announced the acquisition on Friday, 57 days before the meeting.
Rakow said the timing was not intended to prevent members from voting on the merger.
“We were excited to get this out to the public as soon as we had an agreement signed,” she said.
In addition to the vote, the agreement must be approved by Washington state Insurance Commissioner Mike Kreidler, who promised to review the deal “very closely.”
“My job is to ensure that the proposal benefits policyholders at Group Health and all consumers buying health insurance in Washington,” he said. “I want to ensure that we maintain healthy competition and the wide selection of plans we currently have in our state.”
Group Health Physicians, which includes about 1,400 doctors and other health-care providers, fully support the merger said Dr. Steve Tarnoff, the organization’s president.
“This is an exciting new chapter,” he said. “This both preserves and promotes our legacy.”