Seattle Co-Op Focus of Health Debate

Group Health Cooperative was created in Washington state more than six decades ago, started up by members of local granges, unions and cooperatives who were inspired by a physician who had established America's first cooperative hospital in Elk City, Oklahoma.
Now, the Seattle-based co-op that serves nearly 600,000 people in Washington state and Idaho is being mentioned as a potential model in the national health care reform debate.
Group Health officials, while not taking an official stand in the debate, welcome the national discussion centered on their model of care.
"It's patient-focused. What the founders of Group Health wanted was prepaid care that was affordable and patient-centered," said Pam MacEwan, who is responsible for communications and public policy for the cooperative.
The cooperative is a consumer-governed, nonprofit health care system that coordinates care and coverage, which means not only is it the insurance company, but also the health care provider.
Group Health runs its own medical centers, and employs its own doctors, but contracts out hospital care and some specialized care. HealthPartners of Bloomington, Minn., is the other major nonprofit health cooperative in the nation.
So unlike a private physician, who may be covered by private insurers like Aetna or United Health, doctors at Group Health are only seeing patients who are covered under the Group Health plan.
Group Health says that the focus on preventative care, combined with the fact that doctors are salaried -- instead of paid based on the number of tests they order or office visits they have -- helps make them more cost efficient.
"There's no incentive to encourage doctors to do tests," said Dr. Barbara Detering, a family medicine doctor at Group Health's Capitol Hill campus in Seattle. Instead, the focus is on keeping patients "as healthy as possible so we're avoiding high cost situations."
The company hasn't escaped financial challenges. It closed a hospital in Redmond last year, and to deal with rising health costs, Group Health raised its premium rates by 13 percent this year, after a 9.7 percent rate increase last year. Private insurers in the state also spiked their rates -- Regence raised its rates nearly 17 percent this year, and Premera's increased by about 6 percent.
"We're subject to the market just like everyone else is," MacEwan said.
The Senate Finance Committee has been negotiating for months to come up with a health care bill that could garner bipartisan support, and the idea of nonprofit co-ops, being pushed by moderate Democratic Sen. Kent Conrad of North Dakota, is one that has been mentioned.
Under Conrad's proposal, co-ops could be formed statewide or in geographic regions. They would be the insurer that would contract directly with health care providers, and like Group Health, would be self-governed by an elected board. Startup money could come from the federal government through grants or loans.
While some Democrats, like Conrad, see the co-op as the compromise on a government-run plan that can get support from moderate Republicans, unions and others have said the government option is the only way to bring real competition to the private insurance industry.
And some aren't convinced the co-op model will offer enough competition to bring down health costs.
"If we want to have co-ops in addition to the public plan and in addition to private insurance, that's great, let's see if it works," said Timothy Stoltzfus Jost, a law professor at Washington and Lee University who has written on health care policy, including health insurance co-ops. But if co-ops are the only alternative to private insurance, "then essentially what we have will be private insurance."
"They just won't prove to be an acceptable alternative," he said.
MacEwan said she thinks the reason that health co-ops haven't sprouted up across the country is because the market doesn't generally support the co-op model.
"If we do more for our patients, we don't get compensated more. In fact we get less money," she said. "There's a reason we've been able to dig in our roots and be able to thrive. But we've been going against the grain and what the market rewards."
MacEwan said that while she does believe that the co-op system can be duplicated, "I don't know that it's the total answer for health care nationwide."
Jost said that one challenge in the market is that many doctors are already locked into agreements with the major insurance companies, and are well compensated under the private insurance fee-for-service system, which may make them less likely to jump at the idea of a getting a flat fee salary in a co-op situation.
"Fee-for-service, if you're a provider, is great," he said. "Who wouldn't want an arrangement where the more you do, the more you get paid?"
Group Health is among the three largest insurance companies in Washington state and holds about 20 percent of the market. According to the state insurance commissioner's office, there have been just 69 complaint claims filed against Group Health in the past three years, a fraction of the combined more than 700 filed against private insurers Premera and Regence during that same timeframe. In its September edition, Consumer Reports ranked Group Health the No.1 HMO health plan, based on reader responses.
State Insurance Commissioner Mike Kreidler, who was a Group Health optometrist for 20 years, said that much of the group's consumer satisfaction comes from the fact that Group Health patients are the ones serving on the company's board.
"It has an influence on the nature of how they conduct business, their sensitivity to consumer complaints," he said. "They're driven a great deal by the fact that these are people who have a vote in their organization."
Ann Daley, a Group Health member since 1978 who has been on the company's board of trustees for the past nine years, said the board's goal is to keep costs low without affecting quality.
"We're very conscious of the quality of care delivered because we're all Group Health members," said Daley, who will be getting knee replacement surgery in November.
Everything at Group Health's 26 clinics are integrated. So when a patient meets with their doctor, all their records with any other Group Health specialist is immediately available. Patients are encouraged to make appointments online, and e-mail or call their physicians with questions, keeping them from having to make frequent office visits for easily answered concerns. Group Health says that it saves more than $12 million a year by resolving routine patient questions through a 24-hour phone line that is staffed by nurses and doctors.
Dr. Kevin A. Schulman, a professor of medicine at the Duke University School of Medicine who is also the director of the Health Sector Management Program at the university's business school, said that from a fiscal standpoint, replicating the co-op model nationally would be a challenge.
"Even if we changed the system overnight, we'd have to make serious investments to mirror an organization that developed over 60 years," he said.
Group Health officials, while not taking an official stand in the debate, welcome the national discussion centered on their model of care.
"It's patient-focused. What the founders of Group Health wanted was prepaid care that was affordable and patient-centered," said Pam MacEwan, who is responsible for communications and public policy for the cooperative.
The cooperative is a consumer-governed, nonprofit health care system that coordinates care and coverage, which means not only is it the insurance company, but also the health care provider.
Group Health runs its own medical centers, and employs its own doctors, but contracts out hospital care and some specialized care. HealthPartners of Bloomington, Minn., is the other major nonprofit health cooperative in the nation.
So unlike a private physician, who may be covered by private insurers like Aetna or United Health, doctors at Group Health are only seeing patients who are covered under the Group Health plan.
Group Health says that the focus on preventative care, combined with the fact that doctors are salaried -- instead of paid based on the number of tests they order or office visits they have -- helps make them more cost efficient.
"There's no incentive to encourage doctors to do tests," said Dr. Barbara Detering, a family medicine doctor at Group Health's Capitol Hill campus in Seattle. Instead, the focus is on keeping patients "as healthy as possible so we're avoiding high cost situations."
The company hasn't escaped financial challenges. It closed a hospital in Redmond last year, and to deal with rising health costs, Group Health raised its premium rates by 13 percent this year, after a 9.7 percent rate increase last year. Private insurers in the state also spiked their rates -- Regence raised its rates nearly 17 percent this year, and Premera's increased by about 6 percent.
"We're subject to the market just like everyone else is," MacEwan said.
The Senate Finance Committee has been negotiating for months to come up with a health care bill that could garner bipartisan support, and the idea of nonprofit co-ops, being pushed by moderate Democratic Sen. Kent Conrad of North Dakota, is one that has been mentioned.
Under Conrad's proposal, co-ops could be formed statewide or in geographic regions. They would be the insurer that would contract directly with health care providers, and like Group Health, would be self-governed by an elected board. Startup money could come from the federal government through grants or loans.
While some Democrats, like Conrad, see the co-op as the compromise on a government-run plan that can get support from moderate Republicans, unions and others have said the government option is the only way to bring real competition to the private insurance industry.
And some aren't convinced the co-op model will offer enough competition to bring down health costs.
"If we want to have co-ops in addition to the public plan and in addition to private insurance, that's great, let's see if it works," said Timothy Stoltzfus Jost, a law professor at Washington and Lee University who has written on health care policy, including health insurance co-ops. But if co-ops are the only alternative to private insurance, "then essentially what we have will be private insurance."
"They just won't prove to be an acceptable alternative," he said.
MacEwan said she thinks the reason that health co-ops haven't sprouted up across the country is because the market doesn't generally support the co-op model.
"If we do more for our patients, we don't get compensated more. In fact we get less money," she said. "There's a reason we've been able to dig in our roots and be able to thrive. But we've been going against the grain and what the market rewards."
MacEwan said that while she does believe that the co-op system can be duplicated, "I don't know that it's the total answer for health care nationwide."
Jost said that one challenge in the market is that many doctors are already locked into agreements with the major insurance companies, and are well compensated under the private insurance fee-for-service system, which may make them less likely to jump at the idea of a getting a flat fee salary in a co-op situation.
"Fee-for-service, if you're a provider, is great," he said. "Who wouldn't want an arrangement where the more you do, the more you get paid?"
Group Health is among the three largest insurance companies in Washington state and holds about 20 percent of the market. According to the state insurance commissioner's office, there have been just 69 complaint claims filed against Group Health in the past three years, a fraction of the combined more than 700 filed against private insurers Premera and Regence during that same timeframe. In its September edition, Consumer Reports ranked Group Health the No.1 HMO health plan, based on reader responses.
State Insurance Commissioner Mike Kreidler, who was a Group Health optometrist for 20 years, said that much of the group's consumer satisfaction comes from the fact that Group Health patients are the ones serving on the company's board.
"It has an influence on the nature of how they conduct business, their sensitivity to consumer complaints," he said. "They're driven a great deal by the fact that these are people who have a vote in their organization."
Ann Daley, a Group Health member since 1978 who has been on the company's board of trustees for the past nine years, said the board's goal is to keep costs low without affecting quality.
"We're very conscious of the quality of care delivered because we're all Group Health members," said Daley, who will be getting knee replacement surgery in November.
Everything at Group Health's 26 clinics are integrated. So when a patient meets with their doctor, all their records with any other Group Health specialist is immediately available. Patients are encouraged to make appointments online, and e-mail or call their physicians with questions, keeping them from having to make frequent office visits for easily answered concerns. Group Health says that it saves more than $12 million a year by resolving routine patient questions through a 24-hour phone line that is staffed by nurses and doctors.
Dr. Kevin A. Schulman, a professor of medicine at the Duke University School of Medicine who is also the director of the Health Sector Management Program at the university's business school, said that from a fiscal standpoint, replicating the co-op model nationally would be a challenge.
"Even if we changed the system overnight, we'd have to make serious investments to mirror an organization that developed over 60 years," he said.