KAISER PERMANENTE: Sells North Texas Plan To Sierra
Kaiser Permanente announced Friday the sale of its 124,000-member Dallas-Ft. Worth health plan to Sierra Health Services Inc. of Las Vegas, the Dallas Morning News reports. Citing "mounting debt and declining membership" in the Texas division, which saw first quarter losses of $9 million and nearly 5,000 members over the past year, the nation's largest nonprofit insurer divested itself of a division for the first time in its history. Kaiser admitted earlier this year that "Texas consumers ... want a larger selection of doctors than [Kaiser] provides."
"[T]he target of several investigations by state regulators and dozens of medical malpractice lawsuits" since local operations began in 1979, Kaiser's Texas division "could not overcome its financial and regulatory troubles," said health care analyst Sandy Lutz of Price Waterhouse. "Sometimes an unknown quantity will have an advantage over a company whose reputation has been tarnished. ... Sierra is not the monolithic health care system that Kaiser is." Sierra already owns Houston's 18,000-member HMO Texas. Under the new deal, Sierra will take possession of both Kaiser's North Texas HMO and the Permanente Medical Association of Texas. Details of the deal, expected to be completed by October 31, will be made public at a later date (Ornstein, 5/30).