Co-Op May Pocket Big Payment Group Health-Kaiser Deal Triggers $35 Million Windfall

Group Health Cooperative of Puget Sound will receive a cash infusion of as much as $35 million if members approve a joint-venture agreement with Kaiser Foundation Health Plan of the Northwest.

The money, according to a Group Health summary of the pact, would help the cooperative meet its needs for short-term capital.

Financial pressures were among the reasons identified by both health care providers when they first disclosed talks about a possible merger or other arrangement last fall.

Group Health, the parent of Spokane-based Group Health Northwest, lost $11 million in 1995, the most recent year for which figures are available.

But Dr. Henry Berman, president of Group Health Northwest, said the funds from Kaiser would be used to update information systems and make other improvements, not for operating capital.

Portland-based Kaiser is a subsidiary of Kaiser Permanente, the largest health maintenance organization in the United States with more than 7 million clients in 17 states and the District of Columbia.

The Portland affiliate covers 400,000 enrollees. Group Health covers 650,000, about 170,000 of those in Eastern and Central Washington.

The summary of the joint-venture pact says cooperation at the administrative level will not interfere with the relationship between those enrollees and their personal physicians.

Control will rest with a board of 11 directors, six picked by Kaiser, five by Group Health.

The board will set budgets and do strategic planning.

Besides improving access to capital for the participating affiliates, who will continue to operate independently, officials say the venture will also enable the new combine to bid for contracts with regional and national employer groups who want to place their employees with a single health care provider.

About 40,000 members of the Puget Sound cooperative will vote in March on a bylaw change necessary to establish the joint venture. If approved, the relationship could be forged as early as April.

, DataTimes