Kennewick General Hospital out of Group Health network

KENNEWICK -- Kennewick General Hospital no longer will be part of the Group Health network after the end of October.

The hospital and health insurer disagree about how contract negotiations reached this point, but both said Wednesday that they were disappointed.

Group Health members who use KGH starting in November will have to pay either a higher percentage of their cost of care or all of the cost, depending on their Group Health plan. Emergency room care will continue to be covered, although members will pay a higher percentage of the cost because KGH is out of network.

Kadlec Regional Medical Center in Richland and Lourdes Medical Center in Pasco continue to be part of the Group Health network. Group Health has about 35,000 members in Benton and Franklin counties, plus a few outlying communities that primarily use Tri-City hospitals.

Group Health's contract with KGH ended Dec. 31, but Group Health has extended the contract four times since then, said Bob Burden, the Group Health administrator for Eastern Washington and Northern Idaho.

"They just wanted a prohibitive increase" in the costs they charged to Group Health for care of its members, Burden said.

KGH contracted out negotiations to a Chicago consultant, and Group Health received an email from the consultant with what the insurer interpreted as KGH's final offer and an ultimatum.

"If GHC (Group Health) will not agree to these terms by the end of September, Kennewick will not extend the present contract beyond 10/31 of 11," the email said, according to Burden.

Group Health also had been told it was "not that big, not that important" to KGH, Burden said.

"We had to make other arrangements" and make them quickly, Burden said.

Kadlec agreed that if it had more of Group Health's business because KGH was not available, it could offer an even better deal than what it already offered, Burden said.

On Friday, it sent out 1,500 letters to Tri-City-area health professionals. The loss of the KGH contract does not include doctors, who have a separate contract, he said.

Group Health is preparing to send out letters to its members after receiving required regulatory approval for the notification.

KGH believed it was making significant progress in its negotiations to secure a new three-year contract by the end of this year, the hospital said in a prepared statement.

"We believed we were close to reaching this mutually beneficial agreement until late last week, when we were shocked and disappointed to hear that Group Health made a unilateral decision to suspend our good faith negotiations," the statement said.

"KGH did not walk away from the negotiating table and is willing to negotiate to bring this to resolution," the statement said.

The hospital's last communication with Group Health was a counter offer, said Elizabeth Syer, director of marketing and business development.

However, Burden said it already has guaranteed rates with key clients through 2012 and cannot raise rates on them.

It also would be unfair to ask members who use Kadlec and Lourdes to subsidize those who use KGH, he said. Kadlec receives by far the most use by Group Health members, he said.

Group Health hopes that sometime in the future it can return to working with KGH, he said.

In the past, it was Kadlec that did not have a comprehensive Group Health contract for several years. In late 1997, KGH won a contract to be the primary hospital for Group Health. Kadlec did not again become a network provider beyond some limited services until 2004, and then all Benton and Franklin county hospitals were part of the network.