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Group Health looking for cuts as hospital costs rise

Post by John Gillie / The News Tribune on Sep. 19, 2012 at 2:29 pm |
September 19, 2012 3:08 pm

Group Health Cooperative is telling its employees to expect a fresh round of economy measures as the health maintenance organization looks for ways to pare $250 million in costs over the next 16 months.

Those adjustments may include some layoffs, Group Health told employees in a company-wide memo last week. Also as part of the restructuring, Richard Magnuson, executive vice president and chief financial officer, is resigning, the memo said.

Those savings measures won’t mean Group Health will halt patient care enhancements in the South Sound, said a Group Health spokesman today.

“Group Health is investing in the South Sound,” spokeman Mike Foley. “We will have a open house for our new 24-hour urgent care facility in Tacoma the first week in October. And we are opening a new Puyallup Medical Center in December.

“We announced a new collaboration agreement with Franciscan Health System a couple of months ago,” noted Foley.

In Friday memo to employees, Group Health Chief Executive Scott Armstrong said Group Health’s financial results have declined for the third year in a row.

The HMO had hoped that new initiatives Group Health has undertaken would reduce the need for Group Health members to undergo expensive hospital procedures, but the new programs haven’t produce the savings he had hoped.

Group Health contracts with hospitals to provide inpatient care for its patients, and their charges are continuing to rise.

Group Health isn’t the only local health care provider cutting back in anticipation of higher costs and lower reimbursements. Tacoma’s MultiCare Health System last fall said it would lay off up to 350 workers to cope with higher charity care costs and reduced reimbursement.

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