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.