In Brief: Cottage Health, Sansum Intend To Merger; Historically Low Premium Increases For CalPERS
Cottage Health, Sansum Clinic Intend To Merge
Cottage Health System and Sansum Clinic, Santa Barbara-based non-profit hospital and clinic operators, have signed a letter of intent to merge.
Under the terms of the transaction, Sansum's 23 healthcare delivery sites in the region would become part of the Cottage system. Sansum would also serve as Cottage's medical foundation. Cottage would also provide capital for Sansum for future expansion.
Sansum has 150 physicians and 150,000 patients. Its operations, which include 16 specialty clinics, five multi-speciality clinics and two urgent care sites, extend from southern Santa Barbara County to northern San Luis Obispo County.
“As healthcare reform takes hold, we are taking the necessary steps to meet the needs of patients in our communities. Sansum Clinic has the mission, infrastructure and track record to play an essential role in meeting these demands,” said Ron Werft, Cottage Health's chief executive officer.
Due diligence on the intended transaction is expected to be completed in October, officials said.
CalPERS Announces Historically Low Premium Increases
The California Public Employees Retirement System has approved an historically low 3% overall premium increase for 2014 for its 1.3 million members and their dependents.
The increase is the lowest since 1998, and is a fraction of the 9.6% premium increase that was imposed this year. Of the increase, 2% is attributable to requirements attached to the Affordable Care Act.
CalPERS officials attribute the low rate increase in part to a decision to expand the number of health plans offering HMO coverage from two to six. Blue Shield of California and Kaiser Foundation Health Plan had been for years the primary plans. They are joined by Anthem Blue Cross, Health Net, UnitedHealth and Sharp Health, a plan owned by San Diego-based hospital operator Sharp Healthcare.
Although four of the plans will offer coverage throughout most of California, Health Net will provide coverage in six counties, while Sharp will operate in San Diego County only.
“The lower rates most members will see next year are the result of successful rate negotiations with existing and new health plan providers that incorporated the underlying premise of CalPERS health initiatives: providing quality healthcare to our members at the lowest possible cost,” said said George Diehr, M.D., vice chair of CalPERS' Pension and Health Benefits Committee.
Premiums for commercial health plans will go up an average of 3.7%, while those for Medicare Advantage plans will decrease 2%. In some specific kinds of plans, the difference is stark: PPO premiums will increase 2.5% in 2013, compared to a 13.9% increase this year.
“In certain geographic areas, we do see slightly higher rate increases because of the impact of regional pricing differences,” said Ann Boynton, CalPERS deputy executive officer for benefit programs and planning.
