Download Health Care Cooperatives

Healthcare Cooperatives
Phil Kenkel
Bill Fitzwater Cooperative Chair
The health care debate has put cooperatives in the news, for better or for worse. I won’t begin to
speculate on what policymakers mean when they discuss health care cooperatives. I can supply a
little insight into the current role of cooperatives, or cooperative like organizations in the health
care sector. According to a Wisconsin Center for Cooperatives, there are also over 600 group
purchasing organizations (GPOs) in the health care industry. Over 70% of all hospitals purchase
through these organizations. Many GPOs are organized as cooperatives but some are organized
as non-profit or for-profit firms. Regardless of the legal form, most GPOs are formed to pass the
savings from group purchasing back to the participants.
In addition to the GPOs there are over 300 other firms that were categorized in the health care
cooperative sector. These firms had 960,000 members and 73,000 employees. These firms
include health networks that lower costs for rural health providers by centralizing administrative,
human resource and specialized health care services. Many employer groups have also formed
cooperatives to purchase health insurance. Statutes specifically authorizing employer health
insurance cooperatives are in place in over 25 states. Legislation that would have mandated
state or employer-sponsored purchasing cooperatives was discussed during the Clinton health
care reform debates, but never passed.
In recent years worker-owned cooperatives have also developed in the health care sector, most
commonly as worker-owned assisted living facilities. The worker cooperative structure emerged
as a means of reducing high staff turnover while improving the quality of home care services
provided to the elderly and disabled. In addition to these cooperatives there are a few health
maintenance organizations (HMO’s) that are organized as true cooperatives. Wisconsin is one of
the few states to allow HMOs to incorporate as cooperatives, while still having nonprofit and
charitable status.
The oddest subset of cooperatives in the health care sector includes approximately 450
cooperatives formed in California to distribute legalized medical marijuana. Guidelines for the
marijuana cooperatives/collectives were articulated in California SB420, which passed in 2004.
According to the internet (the source of all truth) legislation authored by Tom Coburn (ROklahoma) which requires marijuana to undergo the same Food and Drug Administration
approval process that other prescription drugs do, may threaten this sector.
Cooperatives have been part of the US healthcare since the early 1900s. The largest subsets are
purchasing cooperatives that collectively negotiate with vendors for supplies and services,
alliances that pool administrative and HR services and insurance purchasing cooperatives. Firms
in all of these sub-sectors are organized under a variety of business forms making it difficult to
precisely define the cooperative health care sector. Cooperatives, and cooperative like firms are
clearly successful in the health care sector.
A final question for the day: Do applicants at a California marijuana cooperative have to fail a
drug test to be employable?
9-9-2009