Group Health Cooperative, a Seattle institution since 1947, soon will be no more. GHC announced this morning in an e-mail to members that it has agreed to be acquired by Kaiser Permanente, a California-based nonprofit. However, the deal is subject to member and regulatory approval, and Washington Insurance Commissioner Mike Kreidler pledged to “look very closely” at whether this proposed merger will benefit or harm consumers.
GHC has 600,000 members and annual revenue of $3.5 billion, compared to KP’s 10.3 million members and $60 billion of revenues, according to the Seattle Times. By my calculations, revenue per member works out to $5833.33 for Group Health and $5825.26 for Kaiser Permanente. (These figures are based on inexact round numbers, of course.)
The Seattle Times story (read it here) suggests Group Health isn’t financially distressed, so I assume the leaders of the two organizations, which are combined health insurers/health care providers, see the deal as offering efficiencies and economies of scale, and from GHC’s perspective access to greater resources. But whether this is a good deal for Group Health members (I am one) may be more complicated.
Right now, some Washington residents can choose between Group Health and Kaiser Permanente. This merger would reduce competition and give consumers less choice of insurers and providers. For doctors, nurses, and other staff, it means fewer employers to choose from, which is rarely to their advantage in terms of bargaining for salaries and working conditions. I’m skeptical whether this transaction is a good thing for anybody but the managers who put it together — who I’m guessing very likely wrote lucrative bonuses and/or raises for themselves into the terms of the deal.
But I just talked by phone with a friend — a Medicare senior like me — who gets his health care from Kaiser Permanente, and he says he’s very satisfied with that organization.