Sutter Health, which operates a number of North Bay hospitals and other care services, has filed plans with the state to launch its own health maintenance organization by 2014 and aims to offer a commercial health plan to employer groups.Health Care TrendsSept. 24, 2012Providers anticipate Western Health arrivalSutter Health pursues launch of own HMOHealth care column

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"Offering a health plan enables us to partner directly with patients to manage their total health needs, including their ongoing care experience and the total quality and cost of their care," said Pat Fry, president and chief executive officer of the Sacramento-based nonprofit health system.

On Sept. 14, Sutter submitted an application with the California Department of Managed Health Care for a Knox-Keene license. Should Sutter obtain approval, it would first offer the plan in the Sacramento region.

"We expect to debut our new plan products in the greater valley areas and move into other parts of our Northern California service area sometime later," Sutter senior spokesman Bill Gleeson said.

In the North Bay, Sutter operates hospitals and outpatients facilities and offers home care in Marin, Sonoma, Lake and Solano counties.

Mr. Fry said Sutter's HMO would help employers provide better care for their workers.

"The Knox-Keene license filing represents our first formal step toward delivering the type of high-value health plan products that consumers and employers want and expect," Mr. Fry said in announcing the initiative. "Our proposed Sutter-sponsored health plan will be locally run and will provide superb service and the great quality we're known for, along with competitive rates."

It wouldn't be the first time that Sutter Health has run an HMO. It operated Omni Health Plan in the mid- to late-1990s then sold it to Blue Shield.

Much has changed across the health care landscape since then. The establishment of an HMO reflects vast changes under way spurred by health care reform, particularly accountable care organizations that pair hospitals with physician networks and insurance products.

"Employers have been asking us to find a way for them to have direct relationships with Sutter Health," said Peter Anderson, Sutter Health senior vice president of strategy and business development. "We're also seeing the emergence of new care delivery models, such as accountable care organizations  and new care approaches from the Centers for Medicare and Medicaid Services. A Knox-Keene license gives us greater flexibility to participate."

Mr. Gleeson said health care reform encourages doctors, hospitals and other care providers to work more closely together to manage the total health needs of patients, including their ongoing experience with and the quality and cost of care.

Sutter's 5,000-member physician network, Sutter Medical Network, has experienced significant growth. Its 24 hopsitals,  outpatient facilities and home-care service will provide a large network with which to form an HMO, according to Mr. Fry.

Upon state approval, Sutter Health said it will offer a range of HMO products for small- and mid-sized employers. Sutter Health will continue to contract with and care for patients covered by other commercial health plans as well as MediCal and Medicare.