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Group Health To Cut Work Force Citing Losses Due To State Programs, Company Plans To Lay Off 10 Percent Of Its 1,000 Workers

Thu., Dec. 4, 1997

Group Health Northwest is laying off up to 10 percent of its 1,000 employees because of serious financial losses.

As many as 100 people will lose their jobs over the next five months in Spokane, Yakima, the Tri-Cities and Wenatchee. A sizable chunk of those cutbacks will be in Spokane.

The first of three rounds of layoffs will start today.

Group Health will tell 21 employees in Yakima, the TriCities and Wenatchee that their jobs are being cut.

Eleven positions will be lost in Spokane, including six that aren’t filled currently and five filled by temporary workers. Those layoffs will be effective Feb. 2.

The managed-care company is trimming its work force after withdrawing from two state-funded programs that provide care for low-income residents in central Washington.

Group Health is losing too much money through Healthy Options and the Basic Health Plan in central Washington, said Dr. Henry Berman, Group Health president.

The state programs don’t reimburse enough to cover the high cost of providing patient care, Berman said.

Group Health still will offer Healthy Options and the Basic Health Plan in Eastern Washington.

By dropping the central Washington plans, the company will lose about 20 percent of its 192,000 members in January.

“It’s been a very tumultuous year,” Berman said. “We’re losing several million on these contracts and more than that in general.”

He declined to be more specific because of competition with other companies. But Group Health has been losing money for the past two years.

The company is trying to stem the losses by negotiating better rates with doctors in central Washington and contracting with only one hospital in the Tri-Cities instead of three.

It also will increase premiums to try to break even in 1998.

Group Health decided not to bid on the two state-funded programs in central Washington in August.

“This is not something that caught us by surprise,” said Dave Wasser, spokesman for the state Health Care Authority, which includes the Basic Health Plan. He said the plan would still offer consumers a choice of insurance plans.

Group Health expects to lose up to 40,000 members, mostly in Central Washington, Berman said. Others may drop out after the premium hike, he added.

The second phase of layoffs is planned after the company determines how the membership drop affects the workload. Those employees will be notified the week of Feb. 9, and the layoffs will be effective March 16.

The third round of layoffs will be announced the week of March 23, and become effective May 1.

Most of the employees from the second and third rounds will be from Spokane, Berman said. But it’s not clear yet who will lose their jobs.

Group Health will first cut employees who voluntarily resign from targeted departments or job classifications, temporary workers, employees hired this year, and employees working less than half-time. Group Health also will consider seniority and performance.

“We’ve had to make a difficult decision,” Berman said.

Group Health, long a giant in the managed-care industry in Washington, hasn’t laid off any employees since 1988, when six or seven people were cut.

The cutbacks are a symptom of problems with low reimbursements in government-funded programs, Berman said.

“Health care used to be kind of this rock that didn’t change much from one year to the next,” he said. “Health care is now in the real world. … Our story is really the story of our industry.”

, DataTimes

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