PROVIDER-BASED SYSTEMS: Sutter Health Withdraws Knox-Keene Application

      Sutter Health has "quietly withdrawn" its application with the state Department of Corporations for a limited Knox-Keene license. Modern Healthcare reports that the "modified HMO license" would allow Sutter to "take on insurance-like risk through globally capitated contracts." Sacramento-based Sutter, one of the state's "most prominent hospital systems," withdrew the application in mid-May. Sutter "plans to rework the application and refile it in early August," hoping to obtain a license in hand by the end of the year, according to Sutter spokesperson Bill Gleeson. The new application will not include a Medicare risk-contracting business, according to executives. "Our intention in withdrawing the plan was to reflect in our application a more efficient way of organizing the plan that we expect will reduce the overall administrative burden," said Gleeson. Sutter put its Omni Healthcare HMO up for sale in mid-April and said this restructuring precipitated a need to rethink its application. However, some "industry sources had questioned whether Sutter was forced to withdraw its original filing because of financial concerns." One Department of Corporations spokesperson said Sutter withdrew its application voluntarily but neglected "to answer some questions about the application." Gleeson maintains, however, that operational changes, not financial, caused the withdrawal. "There is no sense of urgency. We're not operating against the clock," he said (Rauber, 7/6 issue).