Cooperatives tough to launch

While co-ops do provide good care and the right incentives, they still face market pressures that have historically destroyed them

Group Health Cooperative of Puget Sound in Seattle-a 62-year-old not-for-profit-is governed by a board of its own members and is probably the most successful co-op in healthcare history. While board members aren't involved in the day-to-day brass tacks, they do steer the plan's direction. The current members have impressive backgrounds in finance, health, business and law, and each serves a three-year term.

"In reality, the CEO reports to consumers, and that does affect the decisions in organizing care around patients," Mike Foley, Group Health Cooperative's media relations manager told me.

But cooperatives are unlikely to evolve overnight. They would need seed money of $4 billion to $10 billion, depending on whose estimate you believe. They would also need critical mass to actually change the nation's healthcare infrastructure from the inside out.

Many cooperatives have failed under conflicts between consumers and medical groups. Some don't have consumer boards, and one large cooperative in New York is now converting to for-profit status. In some states, regulations would need to change to allow physician employment by co-ops.

The Commonwealth Fund recently identified takeaway lessons about cooperatives:

1. Local cooperative health organizations can and do provide top-quality integrated, coordinated care, but they have faced formidable obstacles in their formation, operation, and growth.

2. A national organization with authority to purchase healthcare at reasonable rates is integral to controlling costs successfully.

3. Transforming healthcare delivery in the United States into a mission-driven, patient-centered, value-enhancing system of care will require incentives for physicians to practice in healthcare organizations that are accountable to patients and consumers, as well as disincentives for continuing our current fragmented fee-for-service system.

Advocates believe cooperatives could work if they were given sufficient authority to act in the public interest. However, the barriers to implementation could make them a less-viable option.


In other news, managed care is losing a great leader. Charlie Baker, CEO of Harvard Pilgrim Health Care in Wellesley, Mass., is turning in his keys to pursue an elected state office.

Under his tenure as CEO, Harvard Pilgrim saw nine years of positive financial performance and six straight years of membership growth. It is also a top-ranking plan in terms of quality and satisfaction year after year. With more than 1 million members, its quality and satisfaction have true influence on the community.

Charlie is a straightforward, personable executive, and MHE wishes him all the best.

Julie Miller is editor-in-chief of MANAGED HEALTHCARE EXECUTIVE. She can be reached at