A Cooperative Outlook On Governance

How the cooperative principles guide the governance of a non-profit based in Washington state. A Q&A with Anne-Marie La Porte, Director of Governance Services, Group Health Cooperative.

Group Health Cooperative is a major health insurer and healthcare delivery system headquartered in Seattle, WA. When Group Health’s founders established the company in 1947, they included the cooperative principles in its articles of incorporation and bylaws. Although the 501(c)(3) non-profit is not technically a cooperative, it is governed by its consumers and operates according to the cooperative principles.

Today, Group Health serves 660,000 people in Washington and Northern Idaho. It contracts with 1,000 doctors and runs 25 group health medical centers. In areas where it does not own a medical center, policyholders have access to nearly 9,000 clinicians and 41 hospitals through Group Health’s network. Group Health’s annual revenue is $3.3 billion.

Anne-Marie La Porte is Group Health’s director of governance services. The Callahan Report asked her how cooperative principles informed Group Heath’s outlook and direction, especially with respect to democratic control.

Can you provide an overview of your governance?

Anne-Marie La Porte: We operate under a board of 11 members, each of whom serves no more than three, three-year terms. Each board member must be a voting member of Group Health who is older than 18 and up-to-date in dues. Here at Group Health there can be no outside directors as there often are in for-profit corporations. We serve 660,000 residents. A person served by Group Health can become a voting member, but that person has to proactively become one. To become a voting member, a person can call, register online, or send an email. At present we have 42,000 voting members. No hospital, health center, or anyone we contract with can be a voting member. Employees of Group Health cannot be voting members unless they use Group Health as their health insurer. In other words, the 660,000 people who use Group Health as their insurers are the only ones who can become voting members. Group Health is accountable to the community it serves.

How do members vote?

A-MLP: Voting members can receive an email newsletter twice a month that discusses Group Health issues. Once a year we send a voting guide to all voting members announcing the annual meeting. This voting guide includes a ballot. People can mail in the ballot or attend the annual meeting and vote at that time. People vote for board candidates and bylaw changes. They can also vote on non-binding advisory resolutions. Any of these that pass are presented to the board for consideration.

How many people vote and show up at the annual meeting?

A-MLP: About 4,000 of the eligible 42,000 voting members vote in any one year. About 400 will show up at the annual meeting. As you might imagine, more people vote when there are contentious issues; fewer people vote when they are happy with the way things have been running. Naturally we would like more people to vote and to be registered voting members. We work to make more of the people we serve voting members.

Do you offer any incentives for voting or becoming a voting member? Are board members compensated?

A-MLP: We offer no incentives other than the satisfaction of participation. Board members receive a modest stipend for the considerable time and talents they contribute.

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In what other ways do you run a democratic institution?

A-MLP: Voting members vote on bylaws when they are under consideration for change. As mentioned, members also vote on resolutions that can be placed before the board. And any voting member can place herself or himself as a petition candidate for the board.

In addition, all committee charters are posted on the Group Health website for people to consider. We believe this helps with transparency and also with encouraging participation in the organization. We are trying to make this section of the website more attractive to our members.

Do you feel your governance structure is helping Group Health be an institution well-regarded by the people it serves?

A-MLP:We do, and others agree. Consumer Reports considers us the No. 1 HMO in the country. JD Power has designated us highest in member satisfaction. US News and World Report ranks us among the top 25 Medicare plans in the nation.

How do you vet board candidates?

A-MLP: We have what we call the Standing Nominating Committee of the Membership. Members of this committee are all voting members of Group Health. Staff and board members cannot serve. The Nominating Committee vets each candidate pretty thoroughly, conducts background checks, and interviews and nominates whom it feels are the best people to serve. This year it nominated five people for four board openings. As noted, people can also self-nominate through the petition process.

How do people apply for the board?

A-MLP: Flyers and magazines that go to all policyholders discuss the democratic nature of our organization. This raises awareness and is an attempt to attract good people who are voting members of Group Health. We have attracted excellent people, but we also know some good, rather high-profile people resist candidacies because they would rather not submit to a public election they might lose, thus sullying their reputations. This barrier is somewhat difficult to overcome.

What other means do you use to assure Group Health’s democratic governance?

A-MLP: Early on in Group Health’s history it established what we call Advisory Committees. These are composed of members who meet and pass along advice and comment to the board. The advisory groups include the Leadership Advisory Group, which comprises smaller groups reporting from various geographic regions, and the Senior Caucus, which advises on issues important to the Medicare population. These groups can advise on anything from detail to strategy. But they advise only. They do not set policy. Our feeling is that if they are just airing opinion and urging action then they are more likely to address significant issues and express what they are hearing from others for scrutiny and debate.

We also have what we call the Member Appeals Committee. Members can appeal a medical insurance decision denial. The appeal goes to this committee, which comprises two members alongside two Group Health staff, one of whom is always a physician. These four people review appeals; tie votes go in favor of the consumer. This is a chance for members to voice their concerns and have a panel of their peers. The people who serve on this committee feel strongly about the importance of the committee’s work. And the members who have gone through an appeals process with the committee feel they have been given a fair hearing. Overall, the committee seems to work well and it gives the membership a feeling that as individuals they are not lost in a vast bureaucracy but are genuinely heard and considered.

How does working with cooperative principles help Group Health?

A-MLP: Working with cooperative principles puts the consumers the members at the center of the institution’s focus. The members are the fabric of our organization, our DNA. We feel very strongly about running a democratic institution. We work to get people involved. We note, however, that it is a challenge sometimes matching members who want to participate with participation positions. You would not, for example, want to put a member with no knowledge of pharmaceuticals on a panel requiring pharmaceutical expertise and advice. But for the most part we enjoy members who want to make contributions, feeling that they are making meaningful contributions in the right place and to the right people.

Do you consider cooperative principles during planning sessions?

A-MLP: Mainly we have been talking about my field of expertise, which is governance or democratic member control, but there are other cooperative principles the board keeps in mind when working for the institution and developing strategy. Obviously, we are an independent organization we offer no membership to anyone who is not a consumer of our insurance services and no one can be on the board who is not a voting member. So we satisfy and are sensitive to the principle of autonomy and independence.

We also feel strongly about supporting the principle of concern for the community. Group Health sponsors a community needs assessment that identifies health gaps in our service area. Then it works to close gaps and solve problems. Efforts along these lines come both from the board level and from activist members who work to disseminate health education in communities where it is needed. Our board and our institution feel strongly about this kind of community work, which reflects the seventh cooperative principle. In fact, we say that as an organization we are accountable to our members but add that we also feel accountable to our community.


August 1, 2017

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