SEATTLE, W
A PERMIT NO. 5203 e 100 e Ave. N., Suit 320 Westlak
Seattle, WA 98109-5233
Voting Guide & Ballot
REGARDING GROUP HEALTH
JOINING KAISER PERMANENTE
All ballots must be received
on or before
March 9, 2016.
Information for voting members
Group Health has signed an agreement to join Kaiser Permanente. For this to occur, Group Health’s
voting membership must approve a Plan of Member Substitution (the “Plan”) by a two-thirds
majority of those votes cast; the acquisition must also be approved by regulatory agencies. This
booklet contains information concerning the Plan that the Board has recommended and a ballot
on which you can cast your vote. If you did not receive a ballot in this publication, or you need a
replacement ballot, please call 206-448-5790 or, toll-free, 1-800-252-3305, ext. 21.
IMPORTANT DATES
Jan. 30, 2016: First day of Special Meeting
of the Membership; advisory vote taken.
March 9, 2016: Date all ballots must be
received by the independent, outside tabulator.
Mail your ballot well in advance of this date to help ensure it is received in time.
March 12, 2016: Final day of Special Meeting
of the Membership, when results of the mail
This is your
ballot vote are announced. See page 32 for
more details.
opportunity to vote.
You will not be able to vote in person at the
March 12 meeting.
Table of contents
VOTING INFORMATION CONTRACT SUMMARY AND FINANCIAL FACTS
Why you should vote/Advisory vote results ... 1 Summary of acquisition agreement ... 27
Chair message ... 2 Financial statement ... 30
Background statement ... 3 Fairness consideration ... 31
Board Resolution, including Plan of Member Substitution ... 4 ANNOUNCING RESULTS OF MAIL BALLOT VOTE March 12 meeting information ... 32
Board position statement ... 13
Pro statement ... 16 Meeting rules ... 33
Con statement ... 17
Changes at a glance ... 18
Frequently asked questions ... 19
Keeping voters informed ... 22
ENDORSEMENTS Senior Caucus/SEIU statements ... 23
Why you should vote
This Voting Guide and enclosed mail ballot give you the chance to vote on a crucial issue that affects
Group Health’s future. The question before voting members is whether to approve a Plan of Member
Substitution (the “Plan”) that will allow Kaiser Foundation Health Plan of Washington (“Kaiser”) to become the sole member of Group Health Cooperative—thereby terminating all other voting membership interests in Group Health—and enable the transfer of Kaiser’s purchase payment (net of refundable member fees and funds for escrow) to a new nonprofit organization, the Group Health Community Foundation. The Group Health Board of Trustees has unanimously recommended that Group Health voting members approve the Plan, which is found on pages 5–12 of this Voting Guide.
Who can vote: Members whose applications for voting membership were received by Dec. 1, 2015. How this vote differs from the advisory vote: The vote taken at the Jan. 30 Special Meeting of the
Membership was advisory only. It was not binding, only an indication of how eligible voting members in attendance viewed the Plan. The mail ballot vote will determine the final decision about the Plan.
Mail ballot vote results: To be approved, the Plan of Member Substitution requires a vote in favor by at least
two-thirds (2/3) of those eligible members voting in this mail ballot process. Results will be announced when the Special Meeting of the Membership resumes on March 12. For details about this meeting, see page 32.
Special Meeting highlights and advisory vote results
On Jan. 30, 2016, more than 1,600 voting members to speak or delegate their speaking time to another and others from the community attended the first day eligible voting member. The principal pro and con of the Special Meeting of the Membership regarding speakers concluded the debate with final remarks to Group Health joining Kaiser Permanente. the assembly.
• After more than four and a half hours of meeting • After discussion and debate, the rules for the meeting
program, eligible voting members had the opportunity and agenda were adopted as proposed (see pages 32
to take part in an advisory vote on the recommended and 33).
Plan of Member Substitution. Votes were tabulated • Brief comments were delivered by Susan Byington, electronically by the independent firm, Turning Point
Chair of the Cooperative; Scott Armstrong, President & Technologies. CEO, Group Health Cooperative; Stephen Tarnoff, MD,
• The meeting was temporarily adjourned, to resume President, Group Health Physicians; and Bernard J. Tyson,
March 12, 2016. Chairman & CEO, Kaiser Permanente.
• Voting members asked questions of a panel of
ADVISORY VOTE RESULTS
Group Health trustees and leaders, Kaiser PermanenteThe Jan. 30 vote was not binding, only an indication of leaders, and Group Health Physicians leaders during
how eligible voting members in attendance viewed the a 45-minute question and answer period. The
proposed Plan of Member Substitution. discussion was moderated by Bob Watt, Vice Chair of
the Cooperative.
1,094
• Trustee Katie Bell presented the Board’s resolution, with a summary of the Plan, to the assembly.
• Principal “pro” sponsor, Rosemary Daszkiewicz, moved approval of the Plan and presented opening remarks for the pro position. Principal “con” sponsor Maralyn
179
Chair message
Dear valued members of Group Health Cooperative,
With this ballot, you have the opportunity to vote on the Board of Trustees recommendation to join Kaiser Permanente. For each of us, this vote is personal. We all have a story about when Group Health has been there for us. Many of our children were born here; some families have been members for generations. Many of us work for Group Health—it is how we live our personal commitment to take great care of others.
As I’ve shared with many of you, we would not recommend this if we did not believe this choice is essential to protect and maintain access to the region’s best care and affordable rates.
Why change?
Quite simply, the future of Group Health, as a small, independent regional health delivery system, is at risk:
• Our system has lost about 70,000 members from 2011–2015—that means less money to pay for the great care and services you deserve.
• We can no longer delay investments. We must update facilities, medical equipment, and IT systems. We also must absorb rapidly escalating drug costs.
• Large national insurers are moving in—attracting members and taking ours. These for-profit companies have deep pockets that enable them to offer lower prices.
• In spite of financial pressures, we must pay competitive wages to retain our excellent teams and hire strong talent when vacancies occur.
In recent years, Group Health reduced costs and lowered rates to be more competitive. But there are trade-offs, like longer wait times and delays in improving facilities and billing systems. You’ve told us you don’t like the results. The Board, our employees, and our doctors don’t either.
This is why the Board decided to explore joining with another organization. Many were interested, including local and national, for-profit and nonprofit. To garner the strongest offer possible, this was a very competitive and confidential process. While our preferred choice was to remain independent, it became very clear that this is a better path forward. At the same time, the Group Health Physicians Board reached the same unanimous decision.
Joining Kaiser Permanente offers a strong future based on what we all value—affordable, patient-centered, integrated care provided by a nonprofit with local operations committed to the health of the communities we serve and resources to invest in the care and services you count on.
Why now?
We have worked hard to get to where we are today, with the best quality in the state but with shrinking market share and financial demands that threaten our viability. Growth and investment are critical. We must be brave in making hard choices now. We cannot wait until we are desperate and face far less appealing alternatives. This choice today enables us to continue to be there for you. It reflects the spirit of our founders who dared to challenge the status quo and push forward in unexpected ways to make quality care affordable and accessible for the greatest number. As you weigh this recommendation, I want to thank you for your participation in this pivotal vote. With your support, we can continue to be your trusted home for health care for decades to come. Sincerely,
Background statement
The member-elected Board of Trustees has unanimously approved an Acquisition Agreement with the nonprofit Kaiser Foundation Health Plan of Washington (Kaiser). Subject to the required voting member and regulatory approvals, the joining together of Group Health
Cooperative and Kaiser through this acquisition will have the following implications:
• Kaiser will be the sole member of Group Health; all other voting membership interests in Group Health will terminate.
• Kaiser will pay a purchase price of one billion eight hundred million dollars ($1.8 billion) for the acquisition of Group Health, a portion of which will be paid to current Group Health members to refund any one-time refundable membership fees they paid to become voting members; another portion of which will be set aside as an escrow account to pay certain legal obligations defined in the agreement; and the majority of which will be used to establish a new nonprofit foundation.
• This new Group Health Community Foundation will serve the people of Washington state to improve health and wellness for all and continue to serve the mission set forth by Group Health’s founders. The existing Group Health Foundation will become a subsidiary of the new foundation.
• Kaiser will invest an additional one billion dollars ($1 billion) in Group Health over 10 years following the acquisition to make improvements and investments in infrastructure to support, improve, and extend care and services provided to patients and enrollees in Washington state.
• Consistent with its ongoing commitment to community benefit, Kaiser expects to make additional community benefit contributions of eight hundred million dollars ($800 million) in Group Health’s service areas across the state over 10 years following acquisition.
An independent financial advisor, engaged by the Board, rendered its opinion to the Board to the effect that the purchase price, as adjusted for the refundable membership fees to be paid to current Group Health members, to be paid by Kaiser to Group Health Community Foundation is fair to Group Health from a financial point of view.
In order for the acquisition to go forward, Group Health voting members must approve a “Plan of Member Substitution” (the “Plan”) that the Board has
approved and recommended to the voting members. The Plan includes:
• The specific amendments to the Group Health Articles of Incorporation and Group Health Bylaws that would simultaneously terminate current voting member interests and substitute Kaiser as the sole voting member.
• The transfer of Kaiser’s purchase payment (minus the payment of refundable membership fees and the escrow) to the new nonprofit community foundation. The Plan is included in its entirety in this publication. A summary of the Acquisition Agreement and associated amendments is also included.
The Board of Trustees unanimously recommends that the voting members of Group Health vote in favor of the Plan. In order to proceed, the Plan must be approved by two-thirds of voting members who participate in this mail ballot vote.
Approved by the Background Statement Overview Committee: Susan Byington, Chair; Marie Anderson; Warren Kuwahara; Denyse McFadden; and Jim Yearby.
Board Resolution containing Plan of
Member Substitution for approval
Group Health Cooperative Board of Trustees Resolution No. 2015-08
WHEREAS, Group Health Cooperative (“Group Health”) has long been dedicated to caring for people and communities by providing exceptional health care, and has never stopped looking for ways to better serve those who trust us with their health care:
WHEREAS, pursuant to the Washington Nonprofit Corporation Act and the Group Health Articles of Incorporation and Bylaws, the Board of Trustees (the “Board”) is charged with management of the affairs of Group Health and, in furtherance of the purposes served by Group Health, may exercise all of the powers of the corporation, subject to rights granted thereby to Group Health’s voting members;
WHEREAS, the Board, after exhaustive review, has concluded that the best way to fulfill Group Health’s mission and purpose, serving Group Health’s members and the community for years to come, is to enter into an extraordinary transaction with an organization that shares Group Health’s values and deep commitment to both individual and collective health through patient- centered care, evidence-based medicine, prevention and wellness, and top-quality, coordinated systems that make it easier for people to reach their health and life goals; WHEREAS, the Board has determined (after careful consideration and deliberation, further described below) that the transactions contemplated by the Acquisition Agreement by and among Group Health, Group Health Community Foundation, a Washington nonprofit corporation (the “New Foundation”), and Kaiser Foundation Health Plan of Washington, a Washington nonprofit corporation (“Kaiser”), dated December 3, 2015 (the “Acquisition Agreement”) achieves the purpose described above;
WHEREAS, the Acquisition Agreement, in sum, provides for, among other things, changes to the membership structure of Group Health and specifics of payments and investments to be made by Kaiser, as described below:
(i) the substitution of Kaiser as the sole member of Group Health with the simultaneous termination of all outstanding membership interests of Group Health’s members by amending and restating Group Health’s Articles of Incorporation and Bylaws (the “Acquisition”);
(ii) the payment by Kaiser of a purchase price of One Billion Eight Hundred Million Dollars
($1,800,000,000) (the “Purchase Price”), a portion of which shall be paid to Group Health voting members to refund any one-time refundable membership fees paid by these members in satisfaction of refund obligations under current Group Health Bylaws (as adjusted for such amount, the “Adjusted Purchase Price”), and Seventy Five Million Dollars ($75,000,000) of which will be placed in an escrow account to satisfy indemnification obligations under the Acquisition Agreement (the “Escrow Amount”); (iii) the investment by Kaiser of One Billion Dollars
($1,000,000,000) in Group Health and its subsidiaries during the first ten (10) years following the closing of the Acquisition (the “Closing”) for ongoing capital improvements and key investments in technology, infrastructure and other improvements to support patient care and member experience; and (iv) the commitment by Kaiser to continue significant
investments in the local community in the form of community benefit, in an aggregate amount of Eight Hundred Million Dollars ($800,000,000) during the first ten (10) years following the Closing; in each case subject to the terms and conditions of the Acquisition Agreement; and
(v) the substitution of the New Foundation as the sole corporate member of Group Health Foundation, a Washington nonprofit corporation (“GHF”); WHEREAS, the purposes of New Foundation are charitable and social welfare and focus on improving the health and wellness of the people of the state of Washington;
WHEREAS, the Board retained Evercore Partners, LLC (“Evercore”) as an independent financial advisor to assist Group Health in evaluating strategic alternatives and evaluate the financial fairness of an extraordinary transaction; Evercore has presented and provided to the Board, and the Board has reviewed and considered, extensive materials analyzing the financial fairness of the Adjusted Purchase Price to be paid by Kaiser to New Foundation in connection with the Acquisition; and Evercore has confirmed in writing that the Adjusted Purchase Price to be paid by Kaiser to New Foundation in connection with the Acquisition is fair to Group Health from a financial point of view;
WHEREAS, implementation of certain portions of the Acquisition Agreement requires the approval by the members of Group Health who are entitled to vote (“Members”) through a Plan of Member Substitution which has the following elements: (i) the approval of amendments to the Group Health Articles of Incorporation and to certain provisions of the Group Health Bylaws requiring Member approval (the Preamble and Article 2) which, when restated (along with other Bylaw amendments not requiring Member approval), shall constitute the Amended and Restated Articles of Incorporation and the Amended and Restated Bylaws contemplated by the Acquisition Agreement, effective at Closing, the effect of such amendments shall include the termination of the membership of all Group Health Members and the designation of Kaiser as the sole voting member of Group Health, and (ii) the payment of the Adjusted Purchase Price (less the Escrow Amount, the payment of which shall be governed by the provisions of the Acquisition Agreement) to the New Foundation; WHEREAS, Group Health intends to commence a special meeting of Group Health’s Members on January 30, 2016 in order to conduct a vote by Members to seek adoption of a resolution approving the Plan of Member Substitution in accordance with applicable law and Group Health’s Bylaws; and
WHEREAS, the Board has approved the form, terms and provisions of the Acquisition Agreement and the transactions contemplated thereby.
NOW THEREFORE BE IT:
Board Adoption of Plan of Member Substitution for Recommendation to the Group Health Members
RESOLVED, in order to implement the aspects of the Acquisition Agreement requiring Member approval, the Board hereby adopts the following Plan of Member Substitution (“Plan of Member Substitution”):
Plan of Member Substitution
1. Effective at Closing, the Articles of Incorporation of Group Health shall be amended as provided in Exhibit 1 attached hereto and incorporated herein; 2. Effective at Closing, the Bylaws of Group Health shall
be amended to include the amendments requiring Member approval as provided in the attached Exhibit 2 and incorporated herein and other amendments approved by the Board;
3. Effective at Closing, and as a result of the foregoing amendments, the membership and all related rights of all current and former Members of Group Health shall be terminated, except the right of Members who paid refundable membership fees to receive a refund of those refundable fees; and Kaiser shall become the sole member of Group Health; 4. At Closing, the Adjusted Purchase Price (less the
Escrow Amount, payment of which shall be governed by the provisions of the Acquisition Agreement) shall be transferred to the New Foundation for its charitable and social welfare purposes as provided in the Acquisition Agreement;
5. The Plan of Member Substitution shall be
implemented by Group Health in accordance with the Acquisition Agreement; and
6. The Plan of Member Substitution, once approved by the Members in accordance with the Bylaws, may not be withdrawn by the Members.
Resolution, continued
Member Approval of Plan of Member SubstitutionRESOLVED FURTHER, that the Plan of Member
Substitution be submitted to the Members for adoption and approval at a Special Meeting commencing on January 30, 2016 and concluding on March 12, 2016 and conducted in accordance with Group Health Bylaws and state law;
RESOLVED FURTHER, that the Board unanimously recommends that the Members of Group Health vote in favor of the adoption of the Plan of Member Substitution for the purposes of delivering on our mission, reaching more people, and improving the health and lives of members and patients for years and generations to come.
Approved and dated this 14th day of December, 2015. Susan Byington
Chair
Sarah B. Yates Secretary
EXHIBIT 1
PROPOSED AMENDMENTS TO THE ARTICLES OF INCORPORATION OF
GROUP HEALTH COOPERATIVE
1. Article II is here amended by adding the following sentence as the first sentence thereof:
This corporation is organized and shall at all times be operated exclusively for charitable, scientific and educational purposes within the meaning of Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, including specifically to improve the health of the communities it serves and supporting the tax-exempt purposes of this corporation, its sole voting member Kaiser Foundation Health Plan of Washington and its affiliates and of Kaiser Foundation Hospitals and its subsidiaries.
2. Each reference to the “Board of Trustees” in Article II, Section 5, Article V, and Article VI is hereby deleted and replaced by the phrase “Board of Directors.” 3. Article IV is deleted in its entirety and replaced with
the following new Article IV:
ARTICLE IV.
This corporation is a nonprofit corporation and is not organized for the private gain of any person. The corporation shall have no capital stock and shall have a single member — Kaiser Foundation Health Plan of Washington, a Washington nonprofit corporation. All of its income, after paying operating expenses, shall be devoted to the above purposes of the corporation. In case that the corporation is dissolved, any monies or assets remaining after payment of creditors shall be donated by the Board of Directors to a health organization that is described in Section 501(c)(3) of the Code and has purposes similar to those of this corporation, or to the federal government or a state or local government for a public purpose.
4. Article VI is here amended by changing the word “members” to “member” in the first sentence of Article VI and by adding the phrase “or herself” after the word himself in the second sentence thereof:
EXHIBIT 2
BYLAWS OF GROUP HEALTH COOPERATIVE PROPOSED AMENDMENTS TO PREAMBLE
PREAMBLE
This Cooperative shall endeavor:
a. To develop some of the most outstanding hospitals and medical centers to be found anywhere, with special attention devoted to preventive medicine.
b. To serve the greatest possible number of people under generally consistent with consumer cooperative principles and values, except for corporate membership, without discrimination.
c. To promote individual health by making available comprehensive personal healthcare services to meet the needs and desires of the persons being served and to reduce cost as a barrier to healthcare.
d. To place matters of medical practice under direction of Permanente physicians on the staff employed by the Cooperative and to afford strong incentive for the best possible performance on their part.
e. To recognize other employees of the Cooperative for purposes of collective bargaining and to provide incentive, adequate compensation and fair working conditions for them.
f. To educate the public as to the value of the cooperative method of health protection, and to promote other projects in the interest of public health.
Proposed Amendments to Article 2
ARTICLE 2
ARTICLE 2MEMBERSHIP MEMBER AND MEMBER RIGHTS
2.1 2.1 Purpose of Article 2
The members sole Member of this Cooperative shall have those rights described in this Article 2 and under Washington law. The rights of members include the determination of qualifications for membership, the election and removal of members of the Board, the election and removal of the chair of the standing nominating committee, adoption of resolutions that are advisory to the Board, approval of extraordinary actions listed in Article 2.9, and amendment of the Preamble and this Article 2.
2.2 2.2 Definitions
The following terms used in this Article 2 are defined as follows:
2.2.1 2.2.1 “Board” means the Board of Trustees of the Cooperative.Directors of the Corporation.
2.2.2 “Member” means Kaiser Foundation Health Plan of Washington, a Washington nonprofit public benefit corporation.
2.2.2 “Consumer” means any person subject to adult medical dues or who is eighteen (18) years of age or older who is entitled to receive medical or hospital services from the Cooperative either (1) as a member of
the Cooperative or (2) as a party to or beneficiary of an agreement with the Cooperative or with an organization affiliated with the Cooperative and so designated by the Board.
2.2.3 “Member” means a person admitted to membership in the Cooperative as provided in
Section 2.3.
2.3 Member Meetings and Action by Written
Consent
2.3 Qualification for Membership
Membership in this Cooperative shall be open to those consumers eighteen (18) years of age or older, current in monthly premiums, who believe in its purposes and in democratic cooperative principles, and who indicate the same by applying for membership. The Board shall establish requirements and procedures for consumers to become members and a consumer shall become a member upon compliance with such requirements and procedures. The Board shall maintain an accurate roster of members.
2.4 Expulsion of Members
Any member may be expelled from membership upon two-thirds (2/3) vote of the Board, after notice and hearing before the Board. Grounds for expulsion shall be established in policy adopted by the Board. Any member so expelled shall have the right to appeal, with notice and hearing, at the next succeeding annual meeting of the members or at any special meeting called for that purpose, if a notice of appeal is filed with the Secretary within thirty (30) days after expulsion. The expulsion shall be confirmed, or reinstatement effected, by majority vote of the members present at such a meeting.
2.5 Refunds
The Board shall authorize the refund of the membership fee or capital dues in excess of $25 paid by any member after termination of membership. Any refund shall be made in the manner set forth in policy adopted by the Board.
Resolution, continued
2.6 Membership Meetings
2.3.1 2.6.1 Annual Meeting
An annual meeting of members shall be held in the Cooperative’s service area during the fourth quarter of each calendar year. The time and place of the annual meeting shall be determined by the Board not later than March 31 of each calendar year.
2.6.2 Special Meeting
A special meeting of members may be called by (1) the Chair of the Cooperative, (2) a majority of the Board, (3) the Board upon receipt of a petition for the removal of a trustee or the chair of the standing nominating committee signed by two hundred fifty (250) or more members and filed with the Secretary in accordance with Section 2.8.2, (4) the Board upon receipt of a petition containing a resolution to amend Article 2 of these bylaws signed by two hundred fifty (250) or more members and filed with the Secretary in accordance with Section 2.6.5, or (5) as otherwise provided by law. Special meetings shall be held in the Cooperative’s service area at a time and place designated by the Board.
There shall be an annual meeting of the Member to be held within or outside the service area.
2.3.2 Other Action by the Member
The Member may, by unanimous written consent or unanimous written consent by electronic transmission, take any action which the members of a Washington nonprofit corporation are permitted to take under Washington law without a meeting, and any action so taken shall have the same effect as, and be in all respects as valid as, action taken at a meeting duly held.
2.6.2.1 Special Meeting Agenda
The agenda of a special meeting of members shall be limited to the matters described in the notice of such special meeting. Such matters may be discussed and amended at the special meeting and final member voting shall be conducted in accordance with Section 2.8. 2.3.3 2.6.3 Notice of Member Meetings Members The Member shall be provided notice of an annual or special meeting as required by law.
2.6.4 Member Resolutions at Annual Meetings Members may place a resolution to amend Article 2 of these bylaws or an advisory resolution on any other matter on the agenda for consideration at an annual meeting of members pursuant to this section. In order for the Board to promptly and directly address matters that may become the topic of such a resolution, the sponsors of a proposed resolution shall first present the resolution to the Board for consideration and possible solution of the issue without the need for a vote of the membership. The sponsors of a proposed resolution shall not be required to obtain signatures of members prior to taking the matter to the Board, but must file such a proposed resolution with the Secretary not less than one hundred twenty (120) days prior to the annual meeting.
The Secretary shall present the proposed resolution to the Board for consideration within fifteen (15) days after receipt of the resolution. The Board shall consider the resolution and provide the resolution sponsors with a written response to the resolution within ten (10) days of the meeting at which the Board considers the resolution. If, after receipt of the Board’s response, the resolution sponsors still want to place the resolution on the agenda of the annual meeting, they shall file a request to do so with the Secretary not less than eighty (80) days prior to the date of the annual meeting. The request shall (1) be in the form of a resolution signed by two hundred fifty (250) or more members eligible to vote on the date that the resolution is filed, (2) identify three individual members as the resolution sponsors and which individual will serve as the principal sponsor, and (3) be submitted in accordance with rules and procedures established by the Board.
Resolutions submitted to the membership in accordance with this section may be discussed and amended at the meeting, so long as the amendment is germane to and does not expand the subject matter of the resolution. An advisory vote to the membership on any resolution shall be conducted at the meeting, and final member voting shall be conducted in accordance with Section 2.8. Submission of a resolution to the members for a vote pursuant to this section shall not derogate from the duty and authority of the Board to manage the affairs of the Cooperative, and the vote of members on any such matter shall be advisory to the Board and be binding and determinative only as provided by law.
2.4 Changes in Membership
Changes in membership may be effected in such manner as the Member shall determine. Only the Member has the power to make changes in membership.
2.4.1 Member Election of Directors. Directors shall be elected by the Member. 2.6.5 Member Resolutions at Special Meetings Members may petition the Board to call a special meeting to consider a resolution to amend Article 2 of these bylaws pursuant to this section. The Board shall first consider such a petition in order to promptly and directly address matters raised by the proposed amendment of Article 2.
Members may request a special meeting to consider a resolution to amend Article 2 by filing a petition signed by two hundred fifty (250) or more members with the Secretary. The proposed resolution to amend Article 2 of these bylaws shall be set forth as part of the petition. The petition shall also identify three individual members as the resolution sponsors, identify which individual will serve as the principal sponsor, and shall be submitted in accordance with rules and procedures established by the Board.
The Secretary shall present the petition for a special meeting to the Board for consideration within twenty (20) days after receipt of the petition. The Board shall consider the proposed resolution to amend Article 2 and provide the resolution sponsors with a written response to the resolution within ten (10) days of the meeting at which the Board considers the resolution. If, after receipt of the Board’s response, the resolution sponsors still want the resolution to be considered at a special meeting, they may refile the petition with the Secretary within ten (10) days of notice of the Board’s response. The Board shall then call a special meeting of the membership to consider the proposed resolution to amend Article 2 within sixty (60) days of the date the petition is refiled with the Secretary, unless the annual meeting is scheduled for not less than sixty (60) nor more than one hundred twenty (120) days after the date the petition is refiled with the Secretary, in which case the proposed resolution shall be placed on the agenda of the annual meeting.
Resolutions submitted to the membership in accordance with this section may be discussed and amended at the meeting, so long as the amendment is germane to and does not expand the subject matter of the resolution. An advisory vote to the membership on any resolution shall be conducted at the meeting, and final member voting shall be conducted in accordance with Section 2.8. Submission of a resolution to the members for a vote pursuant to this section shall not derogate from the duty and authority of the Board to manage the affairs of the Cooperative, and the vote of members on any such matter shall be advisory to the Board and be binding and determinative only as provided by law.
2.7 Quorum
A quorum of one hundred (100) members shall be required to transact business at any annual or special meeting of the members.
2.8 Member Voting
Only eligible members are entitled to vote in the election of trustees and standing nominating committee chair and on other matters submitted to a vote of members at a meeting or by mail ballot.
Only those consumers who are members at least sixty (60) days before the date of a membership meeting are eligible to vote at such meeting or by mail ballot. Each member shall have one and only one vote. Voting by written proxy and cumulative voting shall not be allowed. Voting shall be conducted in accordance with time periods, procedures, and rules as may be established by the Board.
The election of trustees and the chair of the standing nominating committee shall be conducted in accordance with Section 2.8.1. An appeal filed under Section 2.4 shall be determined as described in Section 2.4. On other matters submitted to a vote of members, an advisory vote to the membership shall be conducted at the membership meeting and final voting shall be by mail ballot after the meeting.
Resolution, continued
Standing Nominating Committee Election of trustees and the chair of the standing nominating committee shall be by mail ballot voting of members before the annual meeting or through voting by ballot at the annual meeting. The names of all persons nominated shall appear on the ballot.
Advance mail ballot voting shall be permitted only for election of trustees and the chair of the standing nominating committee and shall be conducted in accordance with Section 2.8. Mail ballots for this purpose shall be prepared and distributed with the notice of the meeting and shall be made available to all eligible members either upon request or as may otherwise be established by the Board.
2.4.2 2.8.2 Member Removal of Trustees and Chair of the Standing Nominating Committee Directors. The Member may remove any director at any meeting or by written consent.
The members may, by affirmative vote of not fewer than two-thirds (2/3) of the votes cast, remove any trustee or the chair of the standing nominating committee at any annual meeting or a special meeting called for the purpose of such a vote, pursuant to this section. A petition for removal signed by two hundred fifty (250) or more members must be filed with the Secretary. The petition shall be submitted in accordance with rules and procedures established by the Board.
If the petition is filed not less than sixty (60) nor more than one hundred twenty (120) days before the annual meeting, the Secretary shall place the matter of removal on the annual meeting agenda. If the petition is filed at another time, the Board shall call a special meeting for the purpose of considering the matter of removal within ninety (90) days of receipt of the petition. Final voting on such petitions shall be in accordance with Section 2.8.
2.5 2.9 Member Approval of Merger, Consolidation, Dissolution, or Sale, Lease, Exchange, or Other Disposition of Assets
The merger or consolidation of the Cooperative with another entity, the voluntary dissolution of the Cooperative, or the sale, lease, exchange, or other disposition of all or substantially all the property and assets of the Cooperative must be approved by vote of the membersMember. By resolution, and upon notice provided under Section 2.9.12.5.1, the Board shall present a proposed plan of merger, consolidation, dissolution, or sale, lease, exchange, or other disposition of all or substantially all the property and assets of the Cooperative to the members for approval. Such resolution shall first be considered at an annual or special meeting. Final voting on such resolution shall be conducted in accordance with Section 2.8Member for approval. The proposed plan shall be approved upon receiving not fewer than two-thirds (2/3) of the votes cast by the membersapproval of the Member. Approval of the proposed plan of merger, consolidation, dissolution, or sale, lease, exchange, or other disposition of all or substantially all the property and assets of the Cooperative shall constitute approval of such action by the membersMember.
2.5.1 2.9.1 Notice
Written notice of an annual or special meeting at which any matter referred to in Section 2.9 2.5 shall be considered shall be provided to the members Member as required by law and shall set forth the proposed plan containing relevant information necessary for the members Member to make an informed decision including, but not limited to, any changes concerning the health care services to consumers and members, staff, facilities, the scope of consumer governance, and the financial impact on the Cooperative.
2.6 2.10 Board Composition
The Board shall be comprised of eleven (11) trustees elected at large by the members pursuant to Section 2.8.1.
2.11 Board Terms 2.13 Nomination of Trustees and Chair of the Standing The terms of all trustees shall be for three years. Trustees
elected at the annual meeting shall take office on January 1 following their election. Any trustee who has served three consecutive three- year terms shall be ineligible for re-election. In no single year shall this limitation of terms be applied to more than two trustees. In the event that three or more trustees shall be ineligible in one election year under this limitation, the Board shall determine which two positions shall be vacated at the end of the current terms and which one or more trustees shall be eligible to run for a maximum of one more term. After a period of not less than one year, a former trustee shall again be eligible for election to the Board.
2.6.1. The number of Directors may be changed at any time by amendment of these Bylaws by the Member. Until changed by the Member, the Board shall be comprised of a range of between five (5) and eleven (11) Directors, as determined and elected by the Member. 2.6.2. At least one-third of the Directors shall be public Directors who shall be representatives of enrollees under contracts issued by the Corporation and of the general public with no vested interest, financial or otherwise, in the operations of the Corporation.
2.7 Board Terms
The term of office of each Director shall be three years, to expire at the later of the first regularly scheduled meeting of the member’s Board of Directors in the third year following their election or when their successors are elected. Directors may be elected for additional terms of office.
2.12 2.8 Board Vacancies
Vacancies occurring on the Board shall be filled temporarily by election by the remainder of the Board, until a successor is elected in accordance with the
procedure set forth in Section 2.8.1 to serve the unexpired term.
Nominating Committee
A vacancy shall exist whenever a Director resigns, for any reason becomes unable to serve, is not re-elected, is removed in accord with law, or is removed by the Member. Additional vacancies shall arise whenever and to the extent that the number of Directors is increased as provided in Section 2.6.1. Any vacancy may be filled only by the Member.
2.9 Advisory Committee
2.13.1 Qualifications
Any member entitled to vote at an annual or special meeting as provided in Section 2.8 may serve as a trustee or as chair of the standing nominating committee except an employee of the Cooperative, a person providing professional services on behalf of the Cooperative, or a person providing professional services to the Cooperative. 2.13.2 Standing Nominating Committee of the
Membership
There shall be a standing nominating committee comprised of members selected according to these bylaws and procedures and rules as may be established from time to time by the Board. The committee shall be responsible for nominating candidates for the Board not less than one hundred twenty (120) days prior to the annual meeting according to these bylaws and rules approved by the Board. Every effort shall be made to provide for contested elections.
The committee shall be comprised of not fewer than eight persons, including a chair elected by members, a vice chair appointed by the Chair of the Cooperative, and not fewer than six persons appointed by Board-designated advisory groups and/or the Board committee charged to address governance issues.
The Board committee charged to address governance issues shall nominate candidates for chair of the standing nominating committee according to these bylaws and rules approved by the Board.
Resolution, continued
The chair shall be elected by a vote of the members pursuant to Section 2.8.1. The elected chair shall take office on January 1 following election and shall serve one three-year term. If the chair is unable to serve, the vice chair shall serve until a new chair is nominated and elected.
Nominating committee members appointed by the Board-designated advisory groups shall serve one three-year term. The terms of committee members appointed by advisory groups shall be staggered so that approximately one-third (1/3) are appointed each year. The member appointed by the Chair of the Cooperative shall serve for a term of one year and may be reappointed for a maximum of two additional consecutive one-year The Board shall establish a Consumer Advisory Committee in order to afford its enrolled members an opportunity to participate and provide input in matters of policy and operation and to promote the effective use of health care services within the Corporation, and to suggest ways that the program can better serve its members. The Consumer Advisory Committee will meet at least quarterly and consist of a minimum of twenty five (25) members, none of whom will be employed by the Corporation. Members of the Consumer Advisory Committee will have three (3) year terms, and will be limited to serving for two (2) terms. ARTICLE 3
Members of the nominating committee, including the chair, shall not be eligible to serve on the committee for one year after completion of their term. Notwithstanding this limitation, any committee member other than the chair shall be eligible to be nominated and to serve as chair of the committee for one three-year term. In the event that a nominating committee member runs but is not elected to serve as chair of the committee, that member may continue to serve on the committee until the completion of his or her term.
If an appointed nominating committee member is unable to serve on the committee, the vacancy shall be filled by the appointing body.
2.13.3 Petition Candidates for Trustee and Chair of the Standing Nominating Committee After nominations by the respective nominating committee for trustee and standing nominating committee chair candidates are completed, members may nominate additional candidates by petition signed by two hundred fifty (250) or more members, if filed with the Secretary not fewer than ninety (90) days before the annual meeting. The petition shall be submitted in accordance with rules and procedures established by the Board.
2.14 Advisory Groups
The Board shall establish advisory groups such as medical center councils, district advisory groups, and others for the purpose of providing consumers opportunities to participate in democratic processes for discussion of policies and services of the Cooperative. These groups, comprised primarily of consumers, will also serve in an advisory role to consumers, management, medical leadership, or the Board and will be asked for input from the consumer perspective on specified issues.
2.15 Amendment of Article 2
Article 2 of these bylaws may be amended only by vote of the members of the Cooperative in accordance with this Section 2.15 and Section 2.8.
The Board may propose amendments to Article 2 by resolution presented to the members. The members may propose amendments to Article 2 by resolution in accordance with Section 2.6.4 and Section 2.6.5. The text of a proposed amendment to Article 2 shall be provided to the members as part of the notice provided of the meeting. A proposed amendment to Article 2 may itself be amended by the members at an annual or special meeting if such amendment is germane to and does not expand the scope of the previously proposed amendment.
Board position statement
Group Health Cooperative was created to offer a better way to meet your health and health
care needs—and to make this a stronger, healthier, more vibrant community.
We, your
Trustees, are unanimous in asking you to support joining Kaiser Permanente so we
can continue to give you the best care possible, respond to your needs, and do the right
thing for you, your life, and your family.
YOU RELY ON GROUP HEALTH TODAY—BUT THE STATUS QUO IS NOT AN OPTION
Over the past few months, we have spoken with and heard from thousands of you through Town Hall meetings around the state, as well as through e-mails and calls. We hear your passion for Group Health: your unwavering commitment to access to care, the importance of reducing wait times and keeping your doctor, providing the services you need conveniently and with the latest technology, and especially lowering costs. We hear concerns about losing consumer governance, and share the knowledge that there are tradeoffs in this as in any change.
But the future of great care for ourselves and our families depends on our ability to change and adapt. Membership in the Group Health system has declined—about 70,000 members from 2011–2015—at a time when the state population is growing. Large national insurers with deep pockets have entered our community, making it harder for small regional nonprofits to keep up. Drug costs are increasing rapidly, an average of 10–12 percent per year. We have cut costs significantly—including the elimination of jobs—in order to keep prices more affordable this year. And unless we can sustainably increase our membership and revenues, and invest in improvements, we risk reducing services, raising premiums, and losing more members. We, your Trustees, faced the hard reality; the status quo is not an option. As a result, and as part of our accountability to you, we made a decision to explore the possibility of a relationship with a partner. After a comprehensive, competitive process to assess our options, and thoughtful assessment to weigh these against our future as an independent regional organization, we determined that an acquisition by Kaiser Permanente now is the best way forward. Following their independent yet parallel process, we are joined unanimously in this recommendation by the Group Health Physicians Board of Directors.
Joining Kaiser Permanente would ensure:
• Local care and caring—You will keep your doctor and care team. If this acquisition is approved, we will be
the eighth region of Kaiser Permanente, based in Washington:
› You will get care with the same independent medical group—Group Health Physicians—and the same community hospitals, patient focus, and local decision-making.
› We will be better positioned to attract and retain talent for your care. As we grow, so will local jobs. › You will have locally-designed benefits, including preventive care and SilverSneakers®.
› That same great care will travel with you across the Kaiser Permanente regions.
Board position statement, continued
• Better service and access—You will benefit from clinic upgrades and expansion, updated technology
for accurate and timely service and billing, and new ways to get convenient care and service. Kaiser Permanente has committed to invest $1 billion in this region over 10 years in clinics, medical equipment, and technology. In contrast, Group Health has only been able to make investments of $20–50 million annually for such improvements in the last few years.
• Reasonable costs—As we grow, we can spread costs across more people to keep premiums down. Kaiser
Permanente’s goal is to provide stable, reliable, and affordable rates and they have made major strides, keeping health care costs in line with inflation—a significant change from prior years. Part of Kaiser Permanente’s mission is to offer its plans to Medicaid members, something we are no longer able to do on our own. We share the belief that everyone deserves great care.
• Listening to members—Consumers will continue to have a strong voice through a formal Consumer
Advisory Committee to address policy and operations with regional leaders. Enrollees will also make up one-third (1/3) of a new local board to govern the Washington Region of Kaiser Permanente. The Senior Caucus will continue to provide the important perspective of seniors’ health and health care needs.
• A commitment to quality and a record that proves it—Just as Group Health sets the standard for
Washington, Kaiser Permanente received the highest ratings from the National Committee for Quality Assurance (NCQA), and in the J.D. Power & Associates Member Satisfaction study in each region. Also, six of Kaiser Permanente’s seven regions earned the top 5-star rating from Medicare this year, representing half of all 5-star plans in the country and 90 percent of all Medicare enrollees in 5-star plans.
• Compatible values—As a nonprofit, Kaiser Permanente has deep community roots and strong
partnerships in each of its individual regions. They expect to spend at least $800 million over 10 years here in Washington in local community initiatives and programs like Medicaid and sponsored care. Like us, they are strong advocates for policies that improve health for all, and they have put in writing their commitment to uphold Group Health’s policy to ensure access to care, including reproductive services and end-of-life care.
• Group Health Research Institute will remain and will be part of Kaiser Permanente’s research network,
powered by broader access to data and resources—part of our commitment to support you in making the best health care choices for yourself and your family.
YOU WILL HELP CREATE A GROUNDBREAKING ORGANIZATION TO IMPROVE
HEALTH FOR ALL IN WASHINGTON
This change will also create a new Group Health Community Foundation (GHCF)—with a nearly $1.8 billion endowment—to extend Group Health’s purpose to all people in Washington. Such an entity is often formed in transactions of this kind involving nonprofit, charitable organizations like Group Health. GHCF will engage people across the communities of Washington and be guided by research and data to inform and prioritize its work—a further expression of Group Health’s mission to serve the greatest number.
This organization could, for example, fund local public health initiatives and clinics, advocate for health policy options, fill gaps in health, mental health, addiction or social services for women, seniors, children, or low income families. The new foundation could find ways to spread research and best practices, or provide local communities across Washington state with resources for building health from the neighborhood and family up through education, nutrition, safe and healthy environments, and more. Because it is independent and not tied to any business, the foundation can be a strong voice for important needs and changes across our state.
CHANGING STRUCTURE IS REQUIRED
This will change our existing governance structure. As your member-elected Board, we know this is a significant change. But what truly makes Group Health special is our commitment to honor your choices and your voice in your health and health care—and that by lending your voice you can create a better way forward for you, your family, and your community. We chose Kaiser Permanente because of its passionate commitment to the same values through patient-centered care, and its pledge to engage consumers in the local board, Community Advisory Committee, and Senior Caucus so that we can meet your and your family’s needs for years to come.
YOU ARE KEY TO MAKING GREAT CARE POSSIBLE FOR YEARS TO COME—
PLEASE VOTE YES ON THE PLAN
Supporting this choice today, we can create a strong future together. If we do not take action now, we put at risk our ability to serve you, your family, children, and grandchildren to come. We unanimously ask you to vote YES on the Plan of Member Substitution.
While Group Health has been a Washington institution for nearly
70 years, the health care industry is facing profound changes.
Joining Kaiser Permanente will enable Group Health to make needed
investments in care delivery with an organization that shares
Group Health’s values, increase coverage for Washington Medicaid
members, enrich the health of Washington communities through the
new Group Health Community Foundation, and keep prices more
affordable. This change will enhance the economic vitality of our state
and the health of our families and neighbors.
I urge voting members to vote YES. Your vote will ensure that
Group Health’s legacy continues to live on—not just in our collective
memories, but as a thriving, vibrant health system that has impact in
our state for decades to come.
Pro statement
As current and former member and physician leaders, we support the proposed acquisition of our beloved Cooperative. The business case is solid. Equally important, we believe that becoming part of the Kaiser system is the only way to preserve the most important elements of Group Health, our model of care, member involvement and leadership, and our commitment to improving the health of our members. We are proud of the Cooperative’s history and independence. We grieve the loss of that independence. But given changes in health care delivery and financing, we believe this is the only way to take our founders’ vision into the rest of this century. We support the acquisition because:
• Group Health’s delivery system will remain intact, and will be enhanced by $1 billion in capital investment. This ensures top notch medical equipment, facilities, and technology to provide our families with high quality care. This is one reason that the Group Health Physicians’ Board supports this proposal unanimously. • The new governance model ensures a strong member voice in the new entity. One third of the Board will be
consumers, there will be a new 25-35 member Consumer Advisory Group that will meet quarterly, and the Senior Caucus will continue.
• The creation of the Group Health Community Foundation, with initial funding of $1.8 billion, significantly enhances our ability to positively influence health across our state. Part of Group Health’s mission from the beginning, this new, highly capitalized foundation will give us an incredible ability to move ahead in this area. Despite the emphasis on cost cutting in recent years, Group Health is not well-positioned financially for the future. Enrollment is declining. Revenue is decreasing. The cost of care and infrastructure are serious problems. Continuing to go it alone is not a viable option. We need the advantages of a strong partner, and a larger scale. Kaiser, as a nonprofit organization that shares our values, is such a partner.
Our founders established a unique model to respond to the challenges of their time. That model served us well for almost 70 years. We believe this proposed acquisition offers the only chance to ensure that Group Health will be serving our descendants 70 years from now. We believe we are honoring our founders by taking this route to the future. PLEASE JOIN US IN VOTING YES.
Tom Brewer. Member since 1982. Board member of Group Health 1989–91 & 1998, Senior Caucus Chair 2006–09.
Rosemary Daszkiewicz, JD. Member since 1992. Board member and chair of Group Health 2003–2012.
Mike Wanderer, MD. Member since 1972. GH Physician 1972–2014. Board member and chair of GHP for 12 years.
Con statement
Vote “No” on the “Plan of Member Substitution”
Group Health Cooperative (Coop) managers have approved a secret Acquisition Agreement. Managers and Kaiser Permanente are asking us to terminate our membership interests and approve the substitution of a sole California corporate member. Members should vote “No” on the “Plan of Member Substitution”.
Kaiser is the largest private managed care organization in the U.S. Over the past decade Kaiser has also gone from a reasonably priced alternative for health care to one of the most expensive in the country. Kaiser offers no explanation for the increased costs, only that this is part of doing business. Decades ago Kaiser was a non-profit that helped all people, then they changed to a for-profit model, using wording that still claims non-profit status. Although, Kaiser did report almost $3 billion in non-taxed profit in 2012, and CEO George Halvorson’s annual compensation was $6.7 million.
Our bylaws, section 2.9, say the managers shall present the proposed plan of sale [Acquisition Agreement] to the
members for approval. We have requested a copy of the Acquisition Agreement in order to prepare this statement. They have refused to provide it. How can members discuss the plan and make an informed decision without knowing the terms of the Acquisition?
We are concerned, that like so many non-profit companies, including many Blue Cross-Shields, the Acquisition could be only the first step towards converting to an investor driven company. In undisclosed second steps, managers could: Raise premiums to pay back the $3.6 billion Acquisition costs; Move corporate offices; Relocate employees; Sell local clinics; Raid pension assets ($579 million); Convert to a stock company; Sell stock to corporate raiders; Give corporate raiders board seats; and, Get multiple million dollar windfalls.
The Coop seems to be following the road, going public or trying to go public, like Premiere, WellPoint, Care first, Anthem, et cetera. Our $888 million of surplus could be at risk. Kaiser’s managers could sell us to a national insurer, like they have done to other Kaiser affiliates around the county.
We don’t need Kaiser’s unaccountable corporate managers motivated by profits and bonuses; we need a strong Cooperative insurer that provides quality care, flexible coverage and lower insurance prices.
We urge all members who are eligible to vote “No” on the “Plan of Member Substitution”.
We urge you contact Mike Kreidler, Insurance Commissioner who must give final approval of the Acquisition.
Changes at a glance
Below is a summary of some of the key changes associated with this acquisition.
FORMER STATUS NEW STATUS IMPACT
Nonprofit NO CHANGE Both are nonprofit organizations, focused on their founding purpose of providing access to quality care.
Independent and locally operated
NEW: One of eight regions in a national nonprofit NO CHANGE: Locally operated
Local operations include clinical operations, quality, sales and marketing, finance, HR, regulatory, compliance, communications, government and community relations, and IT, among others. Functions are connected to Kaiser Permanente program offices and are supported by shared learning across regions.
Consumer-elected board NEW: Kaiser Permanente– appointed board
of directors
Kaiser Permanente will appoint a regional president and board. At least one-third of the board will be regional enrollees. There will also be a formal Consumer Advisory Committee of 25–35 members, made up of a diverse mix of regional enrollees to address policy and operations with regional leaders.
Name: Group Health Cooperative
NEW: Kaiser Foundation Health Plan of
Washington
The organization’s name and its products will change after the acquisition transition.
The Group Health name will live on in the new Group Health Community Foundation. (The foundation will be completely independent of Kaiser Permanente.)
Doctors and hospitals NO CHANGE The same independent medical group serving Group Health patients today will continue to provide your care. Contracts with hospitals like Swedish, Overlake, and others around the state will continue. Kaiser Permanente has no plans to add hospitals in the state.
Access to model of care
NO CHANGE Both organizations are fully committed to caring for the whole person, with an emphasis on prevention, integration of primary care and specialty care, and providing access to services, including reproductive choices and end-of-life care.
Labor contracts NO CHANGE Kaiser Permanente has agreed to assume all labor contracts under the terms in effect immediately prior to the close of the acquisition.
Investment: $20–$50 million annually
NEW: $1 billion in the organization during the next 10 years
Increased pace for making necessary improvements and
innovations in care settings and operations without raising rates or making further staff cuts to fund needed upgrades.
Retiree medical coverage NO CHANGE Kaiser Permanente will continue to offer retiree medical coverage subject to the terms of the plans.
SilverSneakers® NO CHANGE Kaiser Permanente will continue the SilverSneakers® fitness program.
Senior Caucus NO CHANGE Kaiser Permanente will continue Senior Caucus to engage and represent the perspectives of seniors in the region.
Frequently asked questions
In Town Hall meetings held across the state, calls and e-mails to our staff, and discussions
at the Special Meeting of the Membership, the following questions are among the most
frequently asked by our members about the proposed acquisition of Group Health by Kaiser
Foundation Health Plan of Washington.
1) Why is Group Health considering joining Kaiser Permanente?
Last year, the Board of Trustees made a decision to explore the potential of a relationship with a strategic partner to ensure that our model of care and coverage remains sustainable. The Board conducted a confidential and competitive process and considered a variety of options. Throughout the process, the Board’s preferred choice was to stay independent, but pressures from large, national competitors and decreasing enrollment trends pointed toward joining another health care organization as being the best path forward.
From our current financial position and reputation, we had the unique opportunity to examine different options from a position of strength. After reviewing the options, including the option of remaining independent, the Board unanimously determined that joining Kaiser Permanente—a like-minded, nonprofit organization with a focus on affordable, integrated, evidence-based care—presented the best future for our system, our membership, and our community.
2) What will happen to my care?
Your Group Health doctors, nurses, and other clinicians will still care for you after the acquisition, in a system that is enhanced by ongoing Kaiser Permanente investments. Our clinics will continue to provide the convenience of doctor visits, pharmacy, lab tests, and X-ray in most locations. And Kaiser Permanente will honor our contracts with providers and facilities such as Swedish and Overlake that are in effect when the acquisition closes.
3) What will happen to my Group Health coverage? Will my premiums go up?
Like Group Health, Kaiser Permanente is committed to providing high-quality health care at affordable rates. Both organizations are recognized nationally for keeping patients healthy. In part because of their size—10 million members in eight states—Kaiser Permanente is able to offer highly competitive health plans, some priced at about 10 percent lower than the competition. Your health plan would continue to be regulated by Washington and federal requirements, and the objective is that over time, with greater ability to reduce costs through economies of scale and a broader enrollment base, rates will become even more competitive here.
4) What happens if members do not approve the acquisition?
If you vote no, you are not protecting what you have today. We cannot stay the same with our current resources. At our current size and in our fast-changing industry, it’s getting harder to do everything our patients need us to do—like tackle rising drug costs and invest in necessary upgrades. We need to do these things to be more appealing and grow. These things will be difficult to do without joining another organization.
Frequently asked questions, continued
Our Board determined that our best path forward is to make this significant organizational change while market conditions are favorable and before we’re unable to weather these challenges. By doing so, we expect to improve service and care and lower costs. We may not have the same leverage in the future.
5) How do we know that Group Health got a fair deal?
The Board retained an independent financial advisor, Evercore Group, LLC (see page 31), to assist the Board in its work and evaluate the fairness of the purchase price. That independent advisor concluded that the purchase price is fair to Group Health from a financial point of view. The full text of the Evercore fairness opinion is posted on Group Health’s public website.
The Board’s decision did not focus exclusively on the $1.8 billion purchase price. The Board considered additional, key elements, including: Kaiser Permanente’s commitment of a $1 billion investment in capital improvements in the business during the decade after the acquisition closes, and the intent to make a significant financial commitment to the community in the form of $800 million over 10 years. Equally important were other criteria including alignment of culture, values, nonprofit business model, and top quality care.
Through the competitive and thorough process led by the Board and informed by advisors, the Board concluded that the price was fair and reflected current market conditions. The Board felt confident that this transaction with Kaiser Permanente provided the best path forward to continue our unique model of health care delivery in the future.
6) With $800 million in reserves, why do we need help from Kaiser Permanente?
While $800 million may sound like a lot of money, it covers only three months of health plan and care delivery operations. Group Health is required by law and regulated by the Office of the Insurance Commissioner to maintain balances sufficient to pay claims in the event of an emergency or significant draw on funds. The $800 million meets those regulated guidelines. But Group Health also has significant need for capital, to support and invest in our statewide care delivery system, information technology tools and infrastructure, and other needs. Being part of Kaiser Permanente will enable us to reduce certain expenses (through use of shared tools, group purchasing arrangements, and more) and improve our access to capital.
7) Why is Kaiser Permanente interested in making this deal?
Kaiser Permanente is recognized as one of America’s leading health care providers and not-for-profit health plans. Founded in 1945, Kaiser Permanente serves approximately 10 million members in eight states, through a patient-centered, mission-driven model of care.
For years, Kaiser Permanente has held Group Health in high regard, collaborating with Group Health on research, developing improvements in care quality, advocating for health policy reform, and more. Further, as a nonprofit and near perfect fit with respect to philosophy of care, Group Health offers a logical extension of the Kaiser Permanente footprint, giving its members care up and down the entire West Coast.
8) What happens to the Group Health name?
The Group Health name and legacy will live on in the Group Health Foundation and the newly formed Group Health Community Foundation (see question 9 below).
If the transaction is approved, Kaiser Permanente has indicated that it plans to operate the new entity as Kaiser Foundation Health Plan of Washington, with the new region being known as the Washington Region of Kaiser Permanente. But like everything, that change will take time to take effect. Our region will be branded Kaiser Permanente of Washington, if approved.
9) What is the new community foundation? Why is it being created?
Group Health’s Board of Trustees wanted to ensure that our mission of improving lives in our communities continues. That’s why, as part of the agreement to be acquired by Kaiser Permanente, nearly $1.8 billion will be used to establish the new Group Health Community Foundation (GHCF), dedicated exclusively to the health and well-being of Washington residents.
GHCF will be operated as a nonprofit organization completely independent from Kaiser Permanente if the acquisition is approved. Its founding Articles of Incorporation and bylaws, posted online on Group Health’s public website, require that its strategies and priorities be informed by the community, research, and data; that it address both health care and the factors that impact or determine health outcomes; and that it take a long-term view to tackle challenges and improve health for all. The existing Group Health Foundation will become a subsidiary of GHCF.
If the transaction is approved and GHCF is funded, it will be able to serve our communities in multiple ways. It could, for example, support local public health initiatives and clinics, advocate for policy changes to improve access to services for all, regardless of ability to pay, or fill gaps in mental health, addiction, or social services for women, seniors, children, or low income families. Because the organization is so new and will not have funds until the close of the acquisition (which could take up to a year), specific programs have not yet been determined.
From a governance perspective, a transitional board for GHCF is in place to facilitate the legal incorporation of the entity and to select the first, regular board. If the Plan of Member Substitution is approved, more information will be made available as these transitions and plans develop over the next year.
10) What will happen to consumer participation? What happens to our local voice?
Member participation will remain a part of the new organization. However, member election of trustees and voting on resolutions and bylaws will end.
Kaiser Permanente will set up a local board for this new region, with one-third of its membership representing enrollees. They’ll also establish a Consumer Advisory Committee of at least 25 consumers to offer input on policy, operation, and enrollee experience. And they’ll continue the Senior Caucus, an important advisory group that provides input on topics particularly relevant to those aged 60 and older.
