King, Pierce County Health Plans Discuss Merger Proposal

King County Medical Blue Shield and Pierce County Medical Bureau are discussing a merger that would create the largest health-insurance organization in the state with more than one million customers.

The two carriers are founding members of the Benchmark Group, an alliance of Blue Cross and Blue Shield organizations in Washington, Oregon, Idaho, Utah and Montana.

By taking the next step and merging, the two companies would have enough size and clout to negotiate favorable contracts with employers throughout the state, health-care analysts said.

Tacoma-based Pierce County Medical has 340 employees and 193,200 enrollees. Seattle-based King County Medical is significantly larger, with 1,800 employees and 880,000 people in its health plans.

"For us, there's also a real opportunity to consolidate duplicative efforts," said Dale Francis, King County Medical's chief executive officer.

Neither company said it would anticipate many job cuts, but one incentive for a merger would be to cut costs by consolidating some administrative functions, including marketing and human resources.

The two companies have formed a seven-member committee to study how the merger could take place. If those talks go well, a merger could be implemented as soon as early 1997, officials said.

"It's more than a wait-and-see thing now," said Francis. "It's pretty much a question of how are we going to do it."

The news come days after Swedish, Evergreen and Stevens hospitals said they were considering forming a single operating company that would oversee all three organizations.

"This doesn't surprise me at all," said Gregg Bennett, president of HBS International, a Bellevue-based health-care consulting firm. "The perception right now is that bigger is better.

"Pierce County (Medical) is dominant in Tacoma, and King County Medical is strong in Seattle and throughout King County," he said. "It's natural for them to discuss merging and merging their products and making them available to companies who employ people in both counties."

The move is the latest example of consolidation among Blue Cross and Blue Shield plans throughout the country.

Pam Drellow, a spokeswoman for the Blue Cross and Blue Shield Association of America, noted that an increasing number of the Blues are merging or aligning to become more attractive to large employers and to capitalize on the strength of their brand name.

There are 63 Blue Cross or Blue Shield plans nationwide, roughly half the number there were two decades ago.

Group Health Cooperative and Virginia Mason Medical Center recently decided to bring all of their health plans under a single management team as part of their strengthened alliance.