Health Net Reaches Two-Year Contract Agreement with Sutter Health

Woodland Hills-based Health Net Inc. has resolved a contract dispute with Sutter Health and has signed an agreement that will expire Dec. 31, 2003, the San Francisco Chronicle reports. Health Net reached the contract agreement with Sutter Health, a network of 26 hospitals and 12 medical groups in Northern California, after eight months of negotiations. The agreement will allow about 220,000 patients to retain their physicians after the current contract expires Dec. 31 (Colliver, San Francisco Chronicle, 11/30). Although the companies did not release the details of the agreement, the Santa Rosa Press-Democrat reports the "unusual" contract covers two years, rather than one (Rose, Santa Rosa Press-Democrat, 11/30). The agreement covers all Health Net members in Northern California who use Sutter Health doctors and hospitals. Sutter Health spokesperson Bill Gleeson said, "Our request of Health Net all along was for terms that were fair and equitable and in keeping with what we receive from other big HMOs. We are satisfied with the agreement we reached." Health Net late Wednesday also reached a "verbal agreement" with the John Muir/Mount Diablo Health Network, which will affect about 31,000 Health Net members (San Francisco Chronicle, 11/30).

Meanwhile, the "world-famous" Scripps Clinic Wednesday announced a two-year contract with Health Net that covers the health plan's HMO, PPO and point-of-service plans. Scripps also agreed to a one-year contract with Cigna, which will take effect Jan. 1. Under the contract, Cigna will provide Scripps fee-for-service, rather than capitated payments. Scripps hopes that the new contracts will allow the clinic to raise reimbursement rates from health plans. The Union-Tribune reports that the clinic has "struggled financially for several years," and a move from capitation "was necessary for the clinic to survive" (Fong, San Diego Union-Tribune, 11/29).