Group Health Cooperative is no more: State approves GHC’s sale to Kaiser Permanente

Wash­ing­ton State Insur­ance Com­mis­sion­er Mike Krei­dler today signed off on Kaiser Per­ma­nen­te’s bid to acquire the state’s home­grown health provider Group Health Coop­er­a­tive, which means GHC will be no more as of Feb­ru­ary 1st, 2017.

“After an exten­sive and thor­ough review by my office, it’s clear that Kaiser met all of the legal require­ments nec­es­sary for approval,” Krei­dler said in a state­ment. “I’m sat­is­fied Wash­ing­ton state will retain a com­pet­i­tive health insur­ance market.“

“This acqui­si­tion is a sig­nif­i­cant change for the health insur­ance mar­ket in our state,” Krei­dler added. “I trust that Kaiser and Group Health will hon­or their com­mit­ment to improve ser­vice for consumers.”

Kaiser plans to drop the Group Health name when it assumes con­trol of GHC and its assets, but the name will live on through the Group Health Com­mu­ni­ty Foun­da­tion, a new inde­pen­dent enti­ty which will be seed­ed with $1.8 bil­lion in fund­ing… the pro­ceeds of GHC’s sale to Kaiser. Both GHC and Kaiser are nonprofits.

“We are hon­ored by the Commissioner’s approval and excit­ed to build upon Group Health’s strong lega­cy by serv­ing the fam­i­lies and com­mu­ni­ties of Wash­ing­ton with high-qual­i­ty and afford­able health care,” said Susan Mul­laney, who Kaiser has des­ig­nat­ed as the Pres­i­dent of its Wash­ing­ton oper­a­tions.

“Our mem­bers can look for­ward to invest­ments in the clin­ics, tech­nol­o­gy and peo­ple that deliv­er the care and ser­vices which trans­late to bet­ter health.”

“Today marks the cul­mi­na­tion of thou­sands of hours of con­sid­er­a­tion, analy­sis and dis­cus­sion amongst the Group Health Board of Direc­tors, our lead­er­ship team, our mem­bers through­out the state and now ulti­mate­ly, the tire­less work of the Commissioner’s office. This work is in ser­vice to ensur­ing the best for our mem­bers and our com­mu­ni­ties as a whole,” said Scott Arm­strong, cur­rent pres­i­dent and chief exec­u­tive offi­cer of Group Health Cooperative.

“Con­sumers in our state will be even bet­ter served with the strength, tal­ent and resources of what will soon become Kaiser Per­ma­nente of Washington.”

GHC’s Arm­strong and Kaiser’s Mul­laney have claimed that the merg­er would help keep insur­ance pre­mi­ums low­er for GHC mem­bers. That remains to be seen.

There is one notable upside: Kaiser accepts patients cov­ered by Med­ic­aid, where­as Group Health pre­vi­ous­ly stopped accept­ing Med­ic­aid clients direct­ly a few years ago. The acqui­si­tion ought to result in bet­ter ser­vice for Wash­ing­to­ni­ans on Medicaid.

Krei­dler’s order approv­ing the acqui­si­tion com­pletes a process that began over a year ago when GHC announced that it and its sub­sidiary Group Health Options had agreed to a sale to the Cal­i­for­nia-based Kaiser.

Mem­bers of Group Health pre­vi­ous­ly vot­ed to approve the sale, and Krei­dler’s staff last week he rec­om­mend­ed he give his assent as well.

Oppo­si­tion to the deal was muted.

“While mem­bers no longer will be able to vote on gov­er­nance issues, Kaiser Per­ma­nente will estab­lish a Region­al Con­sumer Advi­so­ry Com­mit­tee,” notes a FAQ on GHC’s web­site devot­ed to the acqui­si­tion. “The com­mit­tee will include 25–35 mem­bers, meet­ing quar­ter­ly to pro­vide input in mat­ters of pol­i­cy and oper­a­tion. Kaiser Per­ma­nente will [also] con­tin­ue the Senior Cau­cus, a trust­ed advi­so­ry group, to engage and rep­re­sent the per­spec­tives of seniors in our region.”

GHC mem­ber­ship had plateaued pri­or to the deci­sion to sell to Kaiser. The two non­prof­its had pre­vi­ous­ly dis­cussed a tie-up in the 1990s, but it fell apart.

This time, it’s going to happen.

Kaiser does not have much of a pres­ence in Wash­ing­ton State present­ly, and no jobs are expect­ed to be lost as a result of the acqui­si­tion. Kaiser has pledged to hon­or exist­ing union con­tracts and retain nonunion employ­ees as well.