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The success of the Seattle-based medical provider, Group Health, has put new attention on whether a cooperative health plan can work on a national level. Betty Ann Bowser reports.
'Group Health'

Robert Wood Johnson


JIM LEHRER: And next tonight, we continue our coverage of the health care reform debate. NewsHour correspondent Betty Ann Bowser has a Health Unit report on a Seattle medical co-op that's been in the national headlines lately. Our Health Unit is a partnership with the Robert Wood Johnson foundation.

BETTY ANN BOWSER: Just weeks after being treated for blood clots in his legs, 72 year old Jerry Campbell was out biking in his Seattle neighborhood. He gives much credit for his rapid recovery to his medical provider: Group Health.

One of the reasons Campbell is a big fan of the Seattle-based HMO is because it's a cooperative. Its policies are determined by consumers like Campbell, who subscribe to a Group Health medical plan, either through their employer or on their own. Each policyholder can vote for the board of trustees at an annual meeting. And it is consumers who actually sit on the board.

JERRY CAMPBELL, board member, Group Health: What we do is monitor the policies that are set up, approve the policies that are set up. Here is how Group Health is going to operate. Here is the strategic plan. Here are the expectations. And then we monitor meeting those expectations on a monthly basis. What's the quality look like? Are we doing the things we need to do? How are we doing with our people?

BETTY ANN BOWSER: Recently, Group Health has gotten a lot of attention in the national health care reform debate, since lawmakers in the other Washington think a patient-governed health insurance company might be politically more viable than a government-run option.

DOCTOR: We will investigate that more and then we will be able to figure out why you're becoming more anemic.

BETTY ANN BOWSER: Although there is no specific plan of how such a national co-op would work, the idea is to create an organization where consumers review policies and can hire or fire the CEO. It's a concept that works well at Group Health, according to its CEO, Scott Armstrong.

SCOTT ARMSTRONG, chief executive officer, Group Health: The result is, as you can imagine, there's a kind of accountability that my management team and I feel to our patients, not to shareholders, not to purchasers, but to patients, which does define how Group Health prioritizes its investments.

NURSE: So, this is for your blood pressure. It's going to give your arm a little hug.

BETTY ANN BOWSER: Armstrong says it's that kind of consumer influence that actually leads to providing better care and ultimately healthier patients. But not everyone agrees co-ops are the answer. University of Washington public health professor Aaron Katz.
            
"An evidence-free idea"

AARON KATZ, University of Washington: I think this is an evidence-free idea. I don't think there's much evidence that the existence of co-ops in any market has transformed those markets just because of their existence. And there are so many ways that the health care insurance market is dysfunctional that just plopping down a new organization is not going to transform it in a way that will produce what we want, which is good, effective, efficient care for people when they need it.

BETTY ANN BOWSER: In fact, premiums for individuals and businesses are only incrementally lower at Group Health than other area insurance companies. And they have been rising rapidly, 13 percent last year alone.

Still, Group Health says it has been transforming the marketplace in ways that are not reflected in premium rates, by integrating health care delivery with prepayment of services.

That idea was so radical back in 1947, when Group Health was started, the medical establishment often called the organization "Group Death." Its doctors were considered communists, and weren't allow to practice at many area hospitals.

It's come a long way from those days. The not-for-profit now has 600,000 members and is the third largest health care provider in Washington State. In fact, one criticism of Group Health is that it's become so corporate, it's not much different than its privately-owned counterparts. But Group Health says it is unique because it combines insurance with the delivery of health care. And, although lawmakers haven't indicated that a national co-op would do that, CEO Armstrong says it should.
   
Doctor incentives

SCOTT ARMSTRONG: You need to have the insurance functions, the financing component of what we typically imagine health insurance to look like. But our view is that you have to connect that then to the care delivery system in order to create the reform, the alignment, the innovations in the care system.

DR. BARBARA DETERING, family practice physician: How are you today? Good?

BETTY ANN BOWSER: The reforms include hiring doctors as employees, and putting a strong emphasis on family practice medicine.

DR. BARBARA DETERING: As we get older, we actually need exercise more than we did when we were young.

BETTY ANN BOWSER: Barbara Detering has been a physician with Group Health for 18 years. She says, in a single day, she may only see six or seven patients in traditional office visits. But she will communicate with many more via e-mail and in lengthy phone calls.

DR. BARBARA DETERING: So, I got the message from Terri that you called in and you are not kind of emotionally feeling really good.

BETTY ANN BOWSER: And patients can always access their medical records online from home. She says that leads to healthier patients who are more actively involved in their own care.

DR. BARBARA DETERING: You know, I also get incentivized for good patient satisfaction scores. And if my patients feel like I'm rationing their care and not giving them what they need, I would get horrible scores, you know? So, we are incentivized to have good patient care from their perspective.

BETTY ANN BOWSER: So, in plain English, does that mean you get a bonus at the end of the year if your patients have good outcomes?

DR. BARBARA DETERING: Yes. I get -- I get a report once every three months. And I have a quality score and I have a patient satisfaction score. And they are able to take data out of our computer system about, are my diabetics getting the right care? Are my heart care patients? Are my pregnant patients getting prenatal care? Are my -- all my women getting their paps and their mammograms? We are able to come up with a good score of all that stuff. And, if I am above a certain threshold, I get a -- I get a bonus. It's not huge, but it's an incentive to do well.
   
Replicating on a national scale

BETTY ANN BOWSER: Even supporters of Group Health acknowledge the system wouldn't be easy or cheap to replicate on a national level. It has taken Group Health 60 years to be able to compete with large insurance companies, and startup costs for a national co-op are likely to cost taxpayers more than $6 billion.

Even once it was started, it's not clear whether it would actually bring medical prices down. Professor Katz says, Group Health hasn't brought down medical expenditures in Washington State.

AARON KATZ: We're ranked 19th among states. And, so, there are states that have no co-ops, like California, Texas, Arizona, that are doing better than we are. So, it's not -- I don't think it's clear at all that the presence of Group Health has led to a very efficient, very effective marketplace. This is not to take anything away from Group Health. I don't think that's the question. Really, the question we should be trying to answer is, if Group Health is so good, how come they haven't spread like wildfire around the country? And the fact is, they haven't.

WOMAN: Now, what we're going to do is, we're going to repeat your echocardiogram

BETTY ANN BOWSER: In spite of such reservations, health co-ops are still expected to be very much a part of the health care discussion when lawmakers return from their summer recess.

JIM LEHRER: We have extended excerpts of Betty Ann's interviews and an explainer of how a co-op actually works at NewsHour.PBS.org.