Group Health Cooperative, Seattle, tentatively agreed to acquire physician-owned KPS Health Plans, a Bremerton, Wash.-based PPO, a deal that would allow 55,000-member KPS to emerge from five years in receivership. Group Health will complete due diligence before making a final offer. Under the deal, Group Health would immediately return 50% of the $6 million in surplus notes that local providers signed to keep KPS operating after the state seized the not-for-profit in August 1999. Full repayment would depend on the PPO's performance over a few years. The acquisition would bring Group Health, which has 540,000 members in staff model HMO and point-of-service plans, into the thriving PPO market. "Group Health is interested in pursuing this opportunity because it reflects our commitment to responding to marketplace demands for innovative health plan products," Group Health Chief Financial Officer Jim Truess said in a news release. Kaiser Permanente, another staff model HMO, began offering PPO-style products last year. -- by Laura B. Benko
Group Health agrees to buy PPO in effort to diversify
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