Health Co-ops: Checking out Group Health Cooperative

by Clive Riddle, August 20, 2009

Health Care Cooperatives are certainly getting more than 15 minutes of fame as the health reform debate intensifies. Group Health Cooperative has been perhaps the most visible and referenced example referenced in discussions from all sides. For the less initiated, what follows is a quick overview of all things GHC. Group Health Cooperative is based in Seattle, Washington, with almost 10,000 employees and serves around 550,000 members in twenty Washington counties and two counties in Northern Idaho.


As a cooperative, GHC arranges the delivery of health care benefits and services for its members as a non-profit, member controlled organization. Unlike the traditional structure of a member-owned cooperative, financial surpluses are reinvested and not distributed to the members.

Group Health is governed by an 11-person Board of Trustees of volunteer consumer members, which hires the chief executive officer and makes major policy decisions. Any member of GHC eighteen years or older is eligible to vote to elect the Board of Trustees, and to vote on bylaw changes. The GHC bylaws are available for review online. Members must register to vote, and the registration deadline just passed (August 18th) to vote at the 2009 annual membership meeting (Oct. 17th 2009.)

Public Board meetings begin with an open microphone session during which any GHC can address the Board directly on all matters except those related to personal health care. Some GHC medical centers also have volunteer-led Medical Center Advisory Councils that work with staff to address care and wellness issues and meet at least four times per year. The councils are open to GHC members who reside near or receive care at a respective medical center.

GHC’s President and CEO is Scott Armstrong, who has been with the organization since 1986, starting as an assistant hospital administrator. He became president and CEO in January 2005. Prior to GHC he was the assistant vice president for hospital operations at Miami Valley Hospital in Dayton, Ohio.

Provider Network

GHC care is delivered by Group Health Permanente providers (880+ physicians) at Group Health-operated medical facilities, and in outlying areas and through POS options, also through a network of almost 9,000 providers and 40+ hospitals. After five decades serving as a staff model, the physicians formed Group Health Permanente, an independent professional corporation, in 1997, which operates under exclusive contract to serve GHC. 

History and Growth

In 1946, GHC, known as Group Health Cooperative of Puget Sound, was developed, acquired a Seattle medical clinic and hospital and starting with 1947 established a group practice, prepaid health plan. Initial coverage costs involved a $100 membership fee, plus $3 per month dues for each adult family member and $1.50 per month per child up tot four, with no charge for additional children. The local King County Medical Society undertook a highly organized campaign against GHC physicians and their members, resulting in a lawsuit and 1951 State Supreme Court unanimous ruling against the anticompetitive practices of the Medical Society.

Membership by the end of the 1950’s came close to 40,000. Enrollment surpassed 100,000 in 1967. Additional medical centers were developed and service area expanded each decade. In 1977 11,000 member Tacoma's Sound Health Association was acquired, and by 1979, enrollment surpassed 275,000. In 1982, the first agreement was signed to provide care by non-Group Health physicians on Vashon and Maury islands.  In 1983, enrollment surpassed 300,000 and GHC established the Group Health Center for Health Studies; the Center for Health Promotion; and Group Health Foundation., and acquired an existing Spokane 20,000 member health plan serving Eastern Washington, which evolved by 1987 into the affiliate Group Health Northwest, consolidating services east of the Cascades. In 1990, GHC launched Group Health Options, Inc., a subsidiary, which offered the Northwest's first POS plan. In 1994, Group Health membership passed 500,000. By the late 1990s membership approached 700,000.

In 1997, a strategic alliance was formed with Kaiser Permanente’s Washington operations, creating Kaiser/Group Health, a new non-profit corporation set up to oversee Group Health Cooperative, Group Health Northwest, and Kaiser Permanente Northwest.However, at the same time, GHC deficits began mounting, and GHC began cutting back in participation in various programs and markets, causing enrollment to begin shrinking down to its current level (550,000.). Kaiser and GHC agreed to dramatically scale back their affiliation to a more simple reciprocity of provider services agreement. GHC experienced a financial turnaround at the start of the new millennium. In 2005, GHC acquired KPS Health Plan, a 62-year-old nonprofit plan based in Bremerton, WA.

Additional historical information is available at and in the GHC web site.

Current Financials

GHC yielded $2.8 billion in revenue in 2008, up from $2.6 billion in 2007, with operating expenses of $2.7 billion in 2008 and $2.6 billion in 2007. External provider network expenses (non GHC owned facilities or Group Health Permanente) comprised 50% of operating expenses. 2007 yielded a $71 million surplus primarily due to $57 million in investment income, while 2008 yielded a $9 million loss, primarily due to $60 million in investment losses. In August 2009 Standard&Poor's Ratings Services “lowered its counterparty credit, financial strength, and senior secured debt ratings on Group Health Cooperative (GHC) to 'BBB+' from 'A-'. The outlook on the counterparty credit and financial strength ratings is negative. The rating action is based on GHC's downward revision to its 2009 earnings forecast. The company is now expecting a pretax operating loss.”


A recent Commonwealth Fund case study notes that Group Health Cooperative is structured with incentives aligned "to launch innovations and organize services in ways that make the most sense operationally and clinically." The case study highlighted attributes contributing to the organization’s success:

  • Information Continuity  with EHR
  •  Care Coordination and Transitions and System Accountability, including medical homes and case management
  • Peer Review and Teamwork for High-Value Care, including clinical dashboards and P4P
  • Continuous Innovation
  • Easy Access to Appropriate Care, including same day appointments for urgent care, after hours urgent care and telephonic nurse advise linked to HER, direct specialist access, group visits and electronic visits

GHC touts that it has the "Highest Member Satisfaction among Commercial Health Plans in the Northwest Region" ranking by J.D. Power and Associates;

"Excellent" accreditation rating from the National Committee for Quality Assurance (NCQA) for the seventh year in a row; "America's Best Health Plans" rating by U.S. News & World Report and NCQA; and Highest ranked for health plan quality and prescription drug plan quality by the Centers for Medicare and Medicaid Services (CMS) Medicare Plan Comparisons.

Doubts about GHC as a nationwide model

But for all the success, these doubts have publicly surfaced regarding how realistic it would be to duplicate GHC as a nationwide model for health reform:

  1. As a recent New York Times article questions, is the governance aspect of a cooperative, as advanced by many reformers, the successful attribute of GHC, or is it the integrated delivery system, which is present in non-cooperative based programs such as Kaiser?

  2. Considering the infrastructure required to operate the GHC mixed delivery model that at its core is an integrated group practice, is it realistic to develop something similar from scratch for new markets in any reasonable time frame?

  3. Considering GHC’s financial position is no stronger, and perhaps weaker than other major health plans around the country, what are the financial dangers in replicating their model?



Lindsay Resnick on More Effective Medicare Marketing

by Clive Riddle, August 13, 2009

Lindsay Resnick, a fellow member of the MCOLBlog team this week provided an exclusive 34 minute podcast for MCOL on Reducing Medicare Marketing Costs ... While Boosting Enrollment which includes a companion follow-along presentation. I encourage you to check it out if Medicare Advantage is of interest to you.

Here’s some selected takeaways from his discussion:

· Medicare Advantage payments to plans will reduce to equal to Medicare FFS payments by 2014, and payments to plans in 2009 were cut by an average of 4.5%

· For 2010, member premium increases will range from $25 to $80, and on the chopping block for plans will be value-added benefits and zero premium products

· Regulatory scrutiny over the marketing and sale of Medicare products will intensify

· It takes 3 to 7 prospect touches—through a combination of media—to get a qualified Medicare lead

· 56% of Internet users who are age 64-72 make online purchases; 45% of all seniors age 70-75 are Internet users

· Post-sale for Medicare members:  4+ touches/year can yield over 90% retention

· Agent distribution- a key strategy in enhancing enrollment while reducing marketing costs, requires significant commitment in credentialing and monitoring agents

· Agent Credentialing: Gather demographic information about your agents and use it to verify their credentials. A credentialing program needs to include: –Agent portal for establishment of e-file for agents; –Verification of licensure; =–Check state regulatory actions; –Verify and store E&O; –Background checks; –Link documents to agent file on an ongoing basis; –Manage agents slow to submit required documentation; –Agent contracting

· Agent Monitoring: A Monitoring Program should be developed that can: -Accumulate agent data; -Track allegations by agent; -Manage disciplinary actions; -Audit-friendly print views; -Track investigations; -Offer Remedial training information; Provide Licensure confirmation. Agent oversight should address and incorporate: Complaints (Allegations); Credentialing; Training; Certification; State DOI Notifications of Terminated Representatives; Accurate & Timely Commission Payments; and Targeted Sales Audits.


Rating Consumer Reports New Hospital Ratings

By Clive Riddle, August 6, 2009

Consumer Reports this week announced “for the first time, Consumer Reports will provide patient satisfaction Ratings for more than 3,400 hospitals across the U.S. Subscribers to will be able to look up their local hospitals to see how they stack up and the types of challenges that patients have experienced there. CR notes several areas of concern at hospitals nationwide; the vast majority of hospitals received the worst Ratings for communication about new medications and discharge planning.”

In order to access this new tool, one must subscribe to Consumer Reports Health at a cost of $19.00 annually or $4.95 monthly. The subscription also gives you access to their rating tools for health plans, treatments, prescriptions, related products and provides various supplemental information.

Questions for those in the business of health care include, how influential will these Consumer Reports tools be? How many consumers will use them? How reliable is the information? How are providers, plans and products portrayed?

Consumer Reports touts that the hospital ratings, “are based on patient surveys collected by the federal government's Hospital Consumer Assessments of Healthcare Providers and Systems Survey, known as HCAHPS. For the first time, the HCAHPS data will be available to consumers in a user-friendly interface with CR's familiar Ratings. A team of statisticians and health experts analyzed the government data to develop the Ratings. The Health Ratings Center also integrated intensity of care rankings, revealing a link between patient satisfaction and intensity of care; the hospitals that have above average patient satisfaction Ratings provide, on average, a more conservative (and less expensive) type of medical care. The intensity of care rankings are based on data from the Dartmouth Atlas of Health Care and the Dartmouth Institute for Health Policy and Clinical Practice.”

HCAHPS and the Dartmouth Atlas of Health Care are perhaps the most mainstream established comparative data sources, so the reliability of the Consumer Reports data is not so much the issue, and hospitals are already accustomed and have access to how they are portrayed by these sources. So the remaining questions to address are how influential will the Consumer Reports tools be and how many people will use them. Should hospitals and other professionals invest energy in monitoring this?

If you’re a professional looking to research data from the Consumer Reports hospital ratings tool, you need not bother investing the $19 annually. I did, and while the Consumer Reports tool is darn easy to use and provides a choice of summary and detailed information, you can get the same data and much more for free direct from the sources. HCAHPS data in incorporated into the CMS Hospital Compare Web Site. The Consumer Reports tool lets you compare up to five hospitals at once, and Hospital Compare only lets you compare up to three. But the Consumer Reports detailed data is limited to the HCAHPS patient survey results and Dartmouth data on Chronic Care and Average Costs, while the Hospital Compare detailed information incorporates many more measures in addition to the HCAHPS survey data and provides optional graphs and tables.

As discussed in a previous blog, Checking Out CMS’ Hospital Compare, you can download the entire database from the Hospital Compare web site if you wish. There aren’t such data download capabilities from Consumer Reports. In fact, outside of providing a comparison to the top national ranked hospital in any results page (Oakleaf Surgical Hospital in Eau Claire, Wisconsin) I couldn’t find national or state average data using the Consumer Reports tool. I did find a very nice Summary of HCAHPS Survey Results indicating state and national averages for each survey indicator for free from the HCAHPS web site.  Here’s the national average of hospital satisfaction levels for their various components, which are interesting:

  • Communication with Nurses: 74%
  • Communication with Doctors: 80%
  • Responsiveness of Staff: 62%
  • Pain Management: 68%
  • Communication about Medicines: 59%
  • Cleanliness: 69%
  • Quietness: 56%
  • Discharge Information: 80%
  • Overall Hospital Rating: 64%
  • Recommend the Hospital: 68%

The Consumer Reports tool does include some Dartmouth data, and The Dartmouth Atlas of Health Care does cost $59 to purchase in print form. But while its not entirely simple to use, you can drill down through the site and query the databases, download applicable files and review applicable report, all for free.

So, a professional will find much more data, and free at that, going to the original sources rather than Consumer Reports. I can’t that I’d recommend the Consumer Reports tool to a consumer either for the same reasons, unless they really want and need something very simple and centralized to use, that doesn’t confuse them with too many data choices and options, and don’t mind paying for the privilege.

Of course, the Consumer Reports Health tool does offer much more than hospital comparisons, and because its offered by Consumer Reports, it will yield some influence over a number of consumers’ health decisions, and a number of consumers will undoubtedly use the service.


H1N1 Flu: Key Info, Web Resources and News Headlines

by Clive Riddle, July 29, 2009

So the health care community has been warned for some time to brace for a surge in swine flu this fall. As August approaches, what’s the latest? The following is a summary compiled of some key information, key web resources, and recent news headline:


CDC provides this summary in their latest situation update: “On June 11, 2009, the World Health Organization (WHO) signaled that a global pandemic of novel influenza A (H1N1) was underway by raising the worldwide pandemic alert level to Phase 6. This action was a reflection of the spread of the new H1N1 virus, not the severity of illness caused by the virus. At the time, more than 70 countries had reported cases of novel influenza A (H1N1) infection and there were ongoing community level outbreaks of novel H1N1 in multiple parts of the world.  Since the WHO declaration of a pandemic, the new H1N1 virus has continued to spread, with the number of countries reporting cases of novel H1N1 nearly doubling. The Southern Hemisphere’s regular influenza season has begun and countries there are reporting that the new H1N1 virus is spreading and causing illness along with regular seasonal influenza viruses. In the United States, significant novel H1N1 illness has continued into the summer, with localized and in some cases intense outbreaks occurring. The United States continues to report the largest number of novel H1N1 cases of any country worldwide, however, most people who have become ill have recovered without requiring medical treatment.”

According to the CDC Novel H1N1 Flu Situation Update as of July 24, 2009, the U.S. has experienced 43,771 cases involving 302 deaths. The top five states by number of cases are:  

  1. Wisconsin 6222 cases; 6 deaths
  2. Texas 5151 cases; 27 deaths
  3. Illinois 3404 cases; 17 deaths
  4. California 3161 cases; 52 deaths
  5. Florida 2915 cases;  23 deaths

For the week of July 12 -18 the CDC reported that:

· Widespread influenza activity was reported by seven states (California, Delaware, Georgia, Hawaii, Maine, Maryland, and New Jersey).

· Regional influenza activity was reported by Puerto Rico and 13 states (Arizona, Arkansas, Connecticut, Florida, Nevada, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Virginia, Washington, and West Virginia).

· Local influenza activity was reported by the District of Columbia and 13 states (Alaska, Illinois, Massachusetts, Michigan, Minnesota, New Hampshire, New Mexico, Oklahoma, Oregon, Tennessee, Texas, Utah, and Wisconsin).

· Sporadic activity was reported by 17 states (Alabama, Colorado, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, South Dakota, Vermont, and Wyoming).

The World Health Organization’s (WHO) latest update, as of July 24, 2009, states “in most countries the majority of pandemic (H1N1) 2009 cases are still occurring in younger people, with the median age reported to be 12 to 17 years (based on data from Canada, Chile, Japan, UK and the United States of America). Some reports suggest that persons requiring hospitalization and patients with fatal illness may be slightly older.... The development of new candidate vaccine viruses by the WHO network is continuing to improve yields (currently 25% to 50 % of the normal yields for seasonal influenza for some manufacturers). WHO will be able to revise its estimate of pandemic vaccine supply once it has the new yield information. Other important information will also be provided by results of ongoing and soon-to be-initiated vaccine clinical trials. These trials will give a better idea of the number of doses required for a person to be immunized, as well as of the quantity on active principle (antigen) needed in each vaccine dose. Manufacturers are expected to have vaccines for use around September. A number of companies are working on the pandemic vaccine production and have different timelines.”


Pandemic (H1N1) 2009

World Health Organization

Key Facts About Swine Influenza

Centers for Disease Control and Prevention

Novel H1N1 Flu (Swine Flu) and You

Centers for Disease Control and Prevention

 Novel H1N1 Flu Situation Update

Centers for Disease Control and Prevention

Interim Guidance on Antiviral Recommendations for Patients with Novel Influenza A (H1N1) Virus Infection and Their Close Contacts

Centers for Disease Control and Prevention

H1N1 Influenza A (Swine Flu) Alert Center



H1N1 Flu Spreads to Remote Corners of the World

Reuters Health Information, July 28, 2009

Pregnancy Likely to Be Swine Flu Shot Priority

Associated Press via Google, July 28, 2009

H1N1 Flu Shots Ready in Months, Winter a Risk: WHO

Reuters Health Information, July 27, 2009

China Presses Quarantine Against Flu

New York Times, July 27, 2009

Swine flu could hit up to 40% in U.S. this year and next without vaccine

Associated Press via USA TODAY, July 26, 2009

US: 160M doses of swine flu vaccine due in Oct.

AP via GoogleNews, July 23, 2009

First Trials of Swine Flu Vaccine Begin in Australia

Bloomberg News, July 22, 2009

Grants to States and Territories, July 2009

HHS Press Release, July 10, 2009


Trendwatching: MarCom to MarSales

By Lindsay Resnick, July 20, 2009

Squeezed between an economy in disarray and the rapid rise of social media, let's face it, marketing has changed forever. Budgets have been slashed, customer priorities have shifted, and intense pressure on companies to grow organically is changing corporate cultures across the country.

MarCom has long been the abbreviation for "marketing communications"—interaction with customers and prospects through messaging and media to speak to the marketplace. Its tradition is in the printed word, usually categorized under advertising, public relations, branding or promotion. Of course recently, a surge of online activity has been added to the mix (if not taken over). MarCom's primary focus has always been around audience awareness. The conversation is usually a monologue.

That has changed. Now, we are seeing MarCom morph into MarSales—interaction with customers and prospects through messaging and media to sell the marketplace. MarSales takes a growth-oriented vantage point which is actively aligned with the sales process. And, it's all about quantifiable results.

This perspective elevates growth and profitability in the marketing hierarchy within the context of current business drivers: economic volatility, regulatory threats, competitive rivalry and customer dialogue. MarSales cuts across product-line and operational silos to reshape internal marketing-think and reengineer distribution channels. It improves marketing spend and, rallies your team around a mantra of "leverage value to turn growth into revenue."

Core principles of a MarSales strategy include:

  • Refresh your brand position in light of any product or service changes, new consumer spending and buying habits, and competitor moves.
  • Micro-segment your prospects for improved targeting and more efficient budget management.
  • Redefine and shorten your sales cycle, from lead generation to retention.
  • Synchronize your creative platform and media strategy with specific sales objectives.
  • Deploy new outreach tactics moving from awareness-oriented marketing to an action-based sales relationship with your customers.
  • Link marketing budgets and sales results to accurately measure return on investment and lifetime value of new customers.

MarCom has been built around the philosophy that good marketing grabs attention, creates awareness, and is driven by emotion. MarSales embraces these attributes, but recognizes that great marketing accomplishes all of this with one critical difference—great marketing sells.