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Wednesday, November 10, 1993 - Page updated at 12:00 AM

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Seattle's Medical Marriage To Put Cooperation To Test

ON THE FACE of it, Virginia Mason and Group Health seem unlikely partners, but they share health-care philosophies and visions that will work toward the success of their planned alliance.

It'll be a '90s kind of marriage: shared values and negotiated decision-making between two equal partners.

Still, the alliance of Group Health Cooperative and Virginia Mason Medical Center announced yesterday seems to some a pairing of unlikely bedfellows.

After all, Group Health Cooperative's reputation is somewhat minimalist - reach for the aspirin before the MRI, prescribe the cheaper drug before the expensive one, and emphasize prevention instead of the cure.

The Northwest's largest HMO, Group Health enrolls its nearly 500,000 patients through a fixed, prepaid fee with minimal copayments. If Group Health's reputation is Subaru station wagon, Virginia Mason's is BMW. The smaller group of Virginia Mason physicians is more heavily weighted toward specialty practices. The First Hill facility's prestigious reputation has been built on sophisticated, "cost-is-no-object" care.

Of Virginia Mason's patient care, only 15 percent (41,000 members) is through an HMO, the Virginia Mason Health Plan. The rest is fee-for-service, a lucrative arrangement that seems increasingly endangered by the advent of both state and national health plans.

Sure, the two partners are different, conceded Dr. Roger Lindeman, president and chief executive officer of Virginia Mason.

But theirs are "complementary differences," overshadowed by a shared philosophy of health care and vision of the future, he said.

Phil Nudelman, president and chief executive officer of Group Health, added: "What we've got to figure out is how we can combine those two styles or philosophies" and come out with better results for the consumer, both in quality and in cost. The two organizations have no plans to merge administrations, they said. There will be no layoffs, no moving of doctors, patients, or much of anything - yet.

Sometime in late 1994 or early 1995, the two plan to issue a "new insurance product," an insurance plan that would allow consumers to see doctors from both facilities.

That plan would compete against the separate plans that Group Health and Virginia Mason now offer. Such cooperation and competition has worked out well in other cities, said Cheryl Scott, executive vice president of Group Health. The partners also are exploring joint capital expenditures, they said. Nudelman said that could mean jointly buying equipment, building a facility, remodeling or other such projects.

This alliance, the latest of several, was propelled by the market pressures of health reform, leaders of the two organizations said.

To compete, providers appear to be seeking "vertical integration," providing the whole line of care from primary to ultra-sophisticated or "tertiary" care.

But to be a full-service provider, many need to fill in some gaps.

While Group Health was referring out some specialty work such as heart surgery, Virginia Mason was low on primary-care providers - who, under health reform, will become the gatekeepers of the system.

Under the new relationship, Group Health will increase its use of Virginia Mason's services in referrals, the partners said. But both plan to continue relationships with other providers and insurance companies.

Although both partners have been talking to other providers with an eye to an alliance, they recognized kindred spirits in the other when it came to their visions of the future, they said.

For one thing, both have been active promoters of the notion of managed care - the HMO approach.

"We discovered we shared uninformed prejudices about each other," but they soon were replaced by the realization that they had much in common, said Dr. Al Truscott, medical director of Group Health."The prejudices literally evaporated once we began talking to each other."

Because of health reform, every health-care-delivery organization has to change its ways, Nudelman concluded.

"The old days are over," agreed Lindeman. "I think we as physicians realize we can't do things the way we used to do it. . . . We took pride in being thorough. But . . . we were expensive."

Copyright (c) 1993 Seattle Times Company, All Rights Reserved.

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