Group Health Deal Approved Hmo To Become An Affiliate Of Kaiser Permanente

Group Health Northwest and its Puget Sound parent will soon be affiliates of Kaiser Permanente, the largest health maintenance organization in the United States.

Members of Group Health Cooperative of Puget Sound, by an 80 percent majority, approved bylaw changes that authorized formation of Kaiser/ Group Health.

The new organization will serve more than one million members in Idaho, Washington and Oregon.

Leaders were quick to stress patient treatment would be unaffected by the restructuring, which they said could lead to job cuts at administrative levels.

“Patients will continue to see their own doctors in their own locations,” said Phil Nudelman, president of Group Health Cooperative.

He will become chairman and president of Kaiser/Group Health. Mike Katcher, president of the Portland-based Kaiser Foundation Health Plan, Northwest Division, will be the chief operating officer.

Bill Saraceno of Spokane, now chairman of Group Health Northwest, will be a member of the 11-person Kaiser/Group Health board.

Kaiser Northwest, Group Health Northwest and Group Health Cooperative will keep their assets and identities.

Katcher said members of the different affiliates could begin using Kaiser facilities in 18 states and the District of Columbia as soon as this summer, pending review by state insurance officials and Internal Revenue Service approval of the organization’s nonprofit status.

Nudelman said the affiliation will provide the benefits of size without the disruption of an acquisition. Control of the separate Portland, Seattle and Spokane operations will remain local, he said, and patient ties to their health care provider will be preserved.

“This is a third-century organization, a little virtual,” Nudelman said.

David Lawrence, chairman of Kaiser Foundation Health Plan Inc. and Kaiser Foundation Hospitals, said the organization is particularly interested in the membership governance of Group Health Cooperative.

“We believe there are opportunities in other parts of the country to apply similar models,” he said.

Lawrence said Kaiser and Group Health corporate cultures are alike in almost every other respect.

Group Health employs 10,000 and provides care to 670,000 members in Washington and North Idaho. Kaiser’s Northwest Division employs 6,000 and serves 410,000 patients in Oregon and Washington.

Kaiser delivers care to 8 million.

Nudelman said any cutbacks in administrative positions would be tempered by offers of jobs elsewhere in the Kaiser organization, where 90,000 are employed, or generous severance packages.

Expenses must be controlled, he said. “We’re very serious about being highly competitive.”

Lawrence said lean management will help assure that medical-care decisions remain with the doctor.

“We have a responsibility to take every possible dollar out of administrative cost,” he said.

Nudelman said members will also benefit because premium increases will be kept to a minimum.

Lawrence said potential new accounts are responding enthusiastically to Kaiser/Group Health. “They see it as a very exciting marriage that will benefit them,” he said.

Difficulty signing new national and regional accounts was one reason given for pursuing an affiliation when discussions between the two organizations were disclosed last fall.

A lack of capital, also cited, will be addressed with a minimum $20 million investment by Kaiser in an enhanced information system for Group Health.

Dr. Al Weiland, medical director for Kaiser Northwest, said doctors from the three organizations are exploring ways to share developments in clinical care, and the potential within Kaiser/Group Health for “centers of excellence” treating disorders such as cancer.

, DataTimes