A Washington state judge approved a proposal by Group Health Cooperative, Seattle, to acquire KPS Health Plans, Bremerton, Wash., a 55,000-member physician-owned PPO. The $25 million sale, expected to close within 30 days, will allow KPS to emerge from six years in state receivership and bring Group Health, a 540,000-member staff-model HMO, into the thriving PPO market. Local doctors and civic leaders had tried to block the sale, arguing it would allow Group Health to move KPS' headquarters and 175 jobs out of the area. But Thurston County Superior Court Judge Richard Hicks ruled that state Insurance Commissioner Mike Kreidler acted within his authority when he arranged the sale after steering KPS out of an $8 million deficit. Kreidler has said KPS remains shaky with a net worth of $4 million as of June 30 and needs the $19 million Group Health promised as part of the deal. Group Health also agreed to immediately return half of the $6 million in surplus notes that local providers signed to keep KPS operating after the state seized the not-for-profit PPO in August 1999. The remaining $3 million will be repaid over the next three years, based on the company's performance. -- by Laura B. Benko
Group Health gets court OK to purchase Wash. PPO
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