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Kaiser Permanente to buy major Washington state insurer, looks to future expansion

Goal is to continue to grow, Kaiser chief executive says

Kaiser Permanente, the nonprofit health maintenance organization and health system, has reached an agreement to buy a major insurer in Washington state and wants to continue to expand into new and existing markets.

Kaiser Permanente plans to acquire Group Health Cooperative, a nonprofit Seattle-based insurer with almost 600,000 members, according to the Los Angeles Times. As part of the deal, Kaiser will contribute $1.8 billion to establish a new community foundation in Washington to improve health in that state's communities.

The acquisition requires approval from Group Health's voting members and insurance regulators, according to the Wall Street Journal. Kaiser said the acquisition would strengthen its position on the West Coast, giving it hospitals and clinics that stretch from San Diego to Seattle. Like Kaiser, Group Health has an increasingly popular integrated model that includes both an insurance arm and ownership of healthcare providers.

At a time of mergers and consolidation across the healthcare industry, Kaiser says it is ready to look for similar acquisitions across the country. "Our goal is to continue to grow," Bernard J. Tyson, Kaiser's chief executive, told the Wall Street Journal. The company hopes to expand in its current areas and into contiguous markets, but is interested in getting into new markets as well. "We'll continue to look at where there might be strategic fits," he said.

Based in Oakland, California, Kaiser operates hospitals, medical clinics, physician groups and an HMO in eight states and the District of Columbia but has the most members, nearly 80 percent, in California.

The Kaiser acquisition is just one more in the wave of consolidation being seen across the country that has included two planned mega-mergers in the health insurance industry. This year has seen the planned acquisition of Humana by Aetna for $37 billion and a deal in which Anthem will acquire Cigna for $54.2 billion. Those two mergers would result in three health insurance giants in the U.S.

To learn more:
- read the Los Angeles Times report
- check out the Wall Street Journal article

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