Area seeing uptick in HMO activity

09/15/2012 12:00 AM

09/15/2012 12:12 AM

Sacramento, not long ago considered a potential graveyard for health maintenance organizations, is now seeing a flurry of HMO activity.

Sacramento-based Western Health Advantage, the not-for-profit health plan provider, announced Friday that it has a partnership to form a provider and hospital network in Marin, Napa and Sonoma counties.

Also on Friday, nonprofit Sutter Health in Sacramento said it has applied with the California Department of Managed Health Care for an HMO license to sell its own insurance.

Pending DMHC approval, Sutter expects to offer HMO products for small- and midsize employers in the greater Sacramento and Central Valley regions in early 2014.

The department says it's doing a brisk business on HMO applications, a development that health care analysts say is a byproduct of the federal Affordable Care Act and other factors, including millions of aging baby boomers seeking affordable health coverage.

Locally, it's a far cry from May 1999, when Sacramento-based HMO Omni Healthcare, owned by Sutter Health and St. Joseph's Regional Health System of Stockton, announced it was pulling the plug on operations, designating Blue Cross of California as its successor.

At the time, Omni covered about 124,000 Northern Californians, but it reported a $2 million loss in 1998.

About the same time, in 1997, Western Health Advantage opened shop. President and CEO Garry Maisel later recalled that "people thought we were crazy." However, after more than five years in business – and losses totaling more than $7 million – WHA started seeing some success.

Now, WHA is teaming with Meritage Medical Network (health care and benefits provider for HMO members in Marin and Sonoma counties) and seven hospitals to reach into the North Bay. The hospitals are Healdsburg District Hospital, Marin General Hospital, Palm Drive Hospital in Sebastopol, Sonoma Valley Hospital, Petaluma Valley Hospital, Queen of the Valley Medical Center in Napa and Santa Rosa Memorial.

Petaluma Valley, Queen of the Valley and Santa Rosa Memorial are part of the Orange-based St. Joseph Health system.

WHA said it is finalizing discussions with the North Bay regional network of physicians and hospitals and intends to begin offering health coverage to employers, families and individuals on Jan. 1. The expansion is still pending DMHC approval.

"This expansion furthers our mission to improve the health and well-being of the areas we serve by responding to the changing needs of our members, providers and community," Maisel said.

Currently, Western Health members have access to more than 500 primary care providers, 1,800 specialists and eight hospitals in the Sacramento-Solano network.

For its part, Sutter Health says it's now in a much better position to offer HMO products, citing its 5,000-member Sutter Medical Network of doctors, two dozen acute care hospitals and a strong outpatient and home health network.

"Offering a health plan enables us to partner directly with patients to manage their total health needs, including their ongoing care experience and the total quality and cost of their care," said Pat Fry, Sutter Health president and CEO.


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