Kaiser Permanente and Group Health Cooperative have signed a definitive agreement in December for Kaiser to acquire the Seattle-Based Group Health for $1.8 billion.
Group Health is one of the three largest health insurers in Washington state, with more than 518,000 policy holders, 17.5 percent of the market and a surplus of more than $888 million.
Kaiser FHP operates in eight states plus the District of Columbia. It has more than 10 million policy holders and it reported $60 billion in revenues in 2014.
Through the transaction, Kaiser Permanente would acquire Group Health Cooperative, which would become the eighth Kaiser Permanente region.
Bernard J. Tyson, chairman and CEO of Kaiser Foundation Health Plan and Hospitals, said the combination will advance the growth of the integrated model for health care and coverage together, whiled expanding Kaiser Permanente’s reach.
“This agreement is a natural extension of our long, successful working relationship with Group Health and it provides us with the opportunity to expand access to high-quality, affordable care and coverage,” Tyson said in a press release. “Kaiser Permanente and Group Health Cooperative are a natural fit. The opportunity to unite will allow us to best serve the current and future needs of our members, customers and employees.”
Susan Byington, chairwoman of Group Health Cooperative’s board of trustees, said that from 2011 to 2015, Group Health has lost about 70,000 members, resulting in less money to pay for care and services.
“We can no longer delay investments,” Byington said in a letter to Group Health members. “We must update facilities, medical equipment and IT systems. We must also absorb rapidly escalating drug costs.”
Group Health’s board of trustees unanimously approved the acquisition agreement, but it must also be approved by Group Health members, who had until March 9 to vote. The results of that vote were to be announced at a special meeting Mar. 12.
Washington Insurance Commissioner Mike Kreidler has received the formal application for the acquisition from Kaiser health plan and is reviewing the application.
However, if the Group Health voting memberships votes against the proposal, all proceedings end.
If the membership approves the sale, Kreidler will continuing reviewing the application. The commissioner will consider the proposal’s impact on the overall stability of the health insurance market in Washington, including competition and consumer choice.
The entire process is expected to take at least six months and likely longer. The Insurance Commissioner’s office will post all public documents and official orders related to the proposed sale during the review on its website. Regional public meetings will be held later this year, followed by a formal public hearing once the review is complete.
For more information, go to insurance.wa.gov.
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