Insurance Commissioner Mike Kreidler has tentatively agreed to sell KPS Health Plans of Bremerton to Group Health Cooperative, a move that will enable the Kitsap Peninsula health insurer to emerge from a half-decade in receivership.
The proposed sale marks a significant step in a rehabilitation that began when the Office of the Insurance Commissioner assumed control of the financially strapped company in mid-1999 under authority of a court order.
“I believe that this sale is a positive development from all perspectives,” Kreidler said. “It serves the interests of subscribers, providers, the company and the community. KPS is a Washington non-profit insurer and it will retain that status under Group Health, another Washington-based non-profit with a proven record of performance.”
Under terms of the proposed sale, Group Health Cooperative (GHC) has pledged to keep the KPS name and identity, maintain operations in Bremerton and provide an infusion of capital that would ensure a more certain future for the company. GHC officials said KPS products and services provide a complement to Group Health’s services, and they don’t plan fundamental changes to products, or business operations at KPS.
Additionally, Group Health Cooperative will immediately return 50 percent of the $6 million in surplus notes that local providers, pharmacies and hospitals signed to keep the company operating in the early days of the receivership. Full repayment will be dependent on the company’s performance over a multi-year period.
The tentative agreement allows Group Health officials 45 days to complete a “due diligence” examination of the company, before tendering a final offer to Kreidler. If he is satisfied with the terms and conditions of the sale, the transaction will be submitted to Thurston County Superior Court for final approval by the receivership judge.
A change in ownership would not affect subscribers or their health care coverage.
Kreidler credited the dedicated staff at KPS and a deep well of community support for the company’s steady return from the brink of liquidation.
“This company occupies a prominent position in the Kitsap community, and ensuring that relationship endures was a primary consideration in my decision to sell it at this time,” he said.
