Sutter moves to launch its own health plan in Sonoma County

Sutter Health, one of the largest health care providers in Sonoma County and California, has filed a request with the state to market its own health plan in Sonoma County possibly beginning next year, a move that locally would allow Sutter to develop a more integrated managed care model like that offered by Kaiser Permanente.

The step, if approved, could bring a more affordable health plan option to patients using the local Sutter Health system, according to insurance experts. It could also spur greater competition for patients between Sutter and the area’s two other dominant health care providers, Kaiser Permanente and St. Joseph Health, which operates Santa Rosa Memorial Hospital.

Monica Majors, a vice president of strategic sales and marketing for the new insurance plan, called Sutter Health Plus, said it would allow Sutter to see patients through the “full spectrum” of their medical needs, much like the HMO-model that Kaiser offers under its own exclusive health plan.

“Having our own health plan allows us to see the full patient picture,” Majors said.

Unlike Kaiser, which is generally closed to other insurance providers, Sutter-affiliated physicians would continue to accept other health plans such at Blue Shield and Health Net alongside its own.

Sutter Health Plus is already offered in an eight-county region taking in much of the Central Valley. Sutter’s request to the state is to add Sonoma County to that region, extending from Sutter County to the north; parts of Placer and El Dorado counties to the east; Stanislaus County to the south; and Solano and Yolo counties to the west.

The proposal is currently under review with the state Department of Managed Health Care, which regulates California health plans. Sutter filed a “notice of material modification” with the agency on Oct. 6 to advance its proposal.

The move, underway for some time, comes less than a month after Sutter opened its new $292 million hospital and 80,000-square-foot medical office building off Mark West Springs Road north of Santa Rosa. The new hospital, set to host or employ 950 doctors, nurses and other staff, is expected to receive about 50,000 hospital visitors annually.

Sutter patients greeted news of the potential new health plan with a wait-and-see outlook Monday, signaling that any new contender would have to offer them competitive benefits and rates to make them switch.

“I’d have to see the plan and compare it to my current plan,” said Lisa Steinkamp, who was taking her 4-year-old son Booker to his Sutter-affiliated pediatrician, Dr. Fred Brewer, for a wellness check and flu vaccination. Steinkamp said her family currently has a Health Net plan.

Santa Rosa health insurance broker David Hodges said Sutter’s new plan, if priced right, could offer a more affordable option for local residents who currently receive their medical care through Sutter-affiliated physicians. Such patients could switch from Blue Shield or Blue Cross to the new Sutter plan, he said.

“I’m thrilled that Sutter is coming out with its own plan,” Hodges said. “If it comes out with rates that are affordable, it will be a powerful, powerful plan.”

Majors, the Sutter health plan vice president, said that if approved the new plan offered in Sonoma County will be essentially the same as what is currently offered in the Central Valley.

Majors said the plan received state approval in April 2013 and began enrolling members in January 2014. Pending state approval, Majors said she hopes to begin marketing the plan in Sonoma County by early next year.

The plan would consist of a suite of HMO products. In the Central Valley, the suite offers 12 small group plans and about 35 large group plans. Sutter Health Plus will also offer four individual “metallic” plans that will mirror the plans offered in the Covered California health exchange.

“All of our plans are very competitively priced in the market,” Majors said.

Sutter officials said a Medicare Advantage supplemental plan is not currently available.

Hodges, the health insurance broker, confirmed that Sutter Health Plus is reasonably priced in the Central Valley but that it is likely to cost a little more in Sonoma County because health care costs are generally higher in this area.

Majors agreed that the rates are likely to be higher than they are in the Central Valley, but she said they will still be “competitive.”

She stressed there are no plans to move toward a closed health care system such as Kaiser, which only accepts its own health insurance. Sutter Health will maintain current relationships with existing health plans, she said.

“It’s another way to access the Sutter Health network,” Majors said, “not to replace the way we’re doing business today.”

The new health plan will likely ratchet up competition in the local health care market.

Wade Overgaard, a senior vice president with Kaiser Permanente, Sonoma County’s largest medical care provider, said Kaiser’s model of coverage and treatment represents the “gold standard for how health care can be better integrated and organized.”

“We welcome the competition because it will make us - and the entire industry - even better,” Overgaard said in a written statement.

Todd Salnas, president of St. Joseph Health in Sonoma County, said St. Joseph is committed to its two health plan partners, Western Health Advantage and Senior Care Action Network, or SCAN, a Medicare Advantage plan. St. Joseph also accepts other insurance plans.

“That strategy will stay constant regardless of the other offerings in the marketplace,” Salnas said. “We feel that we have a very high value health plan option that allows employees and community members to access the most robust health care network in Sonoma County and the region.”

Majors said the plan will be offered to small and large group employers without an exclusive participation requirement, which means that some employees can choose Sutter Health Plus while others can choose a different health plan, such as Blue Shield.

That’s good news, said Hodges, the insurance broker. He said it gives employees greater options that are more in line with their health care needs and their ability to pay.

You can reach Staff Writer Martin Espinoza at 521-5213 or martin.espinoza@pressdemocrat.com. On Twitter @renofish.

Editor’s note: This story has been modified to reflect that four individual plans to be offered under the new insurance package from Sutter would not be marketed through the Covered California health exchange. Instead, they will mirror plans that are offered on the marketplace.