The governing board of the financially troubled Georgetown University Community Health Plan, which provides medical care to 54,000 subscribers, voted early yesterday morning to transfer the plan's ownership and management to the gigantic and successful Kaiser-Permanente Medical Care Program.
Kaiser's takeover of the plan which is only loosely associated with Georgetown University, ensures that the health plan will have sufficient capital to survive and grow. The takeover is expected to have no immediate effect on the benefits provided to subscribers or the premiums they pay.
Sources said it is also unlikely that the transfer, which takes effect today, will cause layoffs of doctors or nurses. It undoubtedly will mean new managers and management policies for the plan. Kaiser may, in time, alter benefits and premiums in an attempt to compete more successfully with the area's other two health management organizations or HMO's.
Like other HMOs, the Georgetown plan provides comprehensive health services -- doctors' visits, lab tests, hospitalization and other services -- to subscribers who pay a fixed amount each month.
Originally the plan accepted individual subscribers, but it currently enrolls only members who elect it as an alternative offered by their employers to traditional health insurance. A Kaiser official said individual memberships may again bemade available, in keeping with the policy followed at other Kaiser health plans.
Kaiser's takeover of the plan will mark the foundation's first establishment of a prepaid health program on the Eastern seaboard. The behemoth of prepaid health programs, Kaiser enrolls 3.8 million of the nation's 9 million HMO subcribers. The foundation runs one health plan in Cleveland, but most of its client are in the western United States.
Trustees of the Georgetown plan formally approached Kaiser about a takeover three weeks ago, according to Dr. Matthew F. McNulty Jr., chairman of the health plan's board and chancellor of Georgetown University Medical Center. McNulty said the offer to Kaiser followed an all-night meeting on July 10, at which the trustees concluded the health plan did not have sufficient capital to sustain continued losses and fund needed development.
The Georgetown University Community Health Plan was founded in late 1972 and despite steady growth has not reached the break-even point.
The plan started as a single health center in Northeast Washington, and has since opened four additional Centers -- in Reston, Springfield, Kensington and Gaithersburg. It has become the second largest of the area's HMOs, with 54,000 members. Group health Association, founded in 1937, is the largest with about 112,000 members. The George Washington University Health Plan, also established in 1972, has about 21,000 members, but it is in the black financially, according to director of marketing Brian Moore.
McNulty said that, despite the Georgetown plan's growth, it has continued to require financial boosts in the form of grants and bank loans backed up by the university's credit. This year it has been especially hard hit by inflation, which has raised the plan's costs for subscibers' hospitalizations and visits to consulting doctors.
McNulty said the rise in costs out-stripped subscirbers' payments, which were set by the HMO last July and which it must keep constant for the duration of each year's contracts.
The board also decided at the July 10 meeting to immediately lay off 15-to-20 percent of the staff at each of with five health centers and to do away with the positions of two of the plan's vice presidents. The layoffs were an economy move. McNulty said and had not impaired patient care at the centers.
Sources at one of the plan's health centers said remaining doctors and nurses have had to struggle during the past month to handle the patient load.
"We feel pressed, that's for sure," one employe said.
HMOs have burgeoned since the early 1970s, when they were first espoused by the federal government as a means of cutting health care costs. Since then, HMOs across the country have been assisted by grants and legislation.
Kaiser-Permanente predates those developments by 40 years and takes pride in never having accepted federal grants.
Founded in California, Kaiser-Permenente had operating revenues last year of $1.4 billion. The foundation has three branches: an association of Kaiser hospitals, a collection of physician partnerships that contract to provide care to subscribers, and a group of corporatins that enroll members and administer health plans.
A nonprofit organization, Kaiser-Permanente has a reputation for efficiency stemming from its size and vast capital, which allow it to manage programs as effectively as other giant corporations. If it were organized for profit, it would be about midway down the list of the Fortune 500, the nation's biggest companies.
Kaiser-Permanente operates its own hospitals in most areas it serves, but it will not do so in Washington. As in Denver, which like Washington is considered by planners to have enough hospital beds, the plan's subscribers will continue to use existing hospitals, according to a Kaiser official.
Sources said nurses and technicians working in the Georgetown plan will become Kaiser employes. The plan's doctors will have to set up their own corporation or partnership to contract with Kaiser-Permanente, rather than being salaried employes as they are under the present plan. Only one physician -- a new medical director -- will be brought in from outside, the sources said.