After Public Falling-Out, Salem Health and Kaiser Reach New Contract

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Setting aside a public spat over rising prices charged by Salem Health, insurer Kaiser Permanente Northwest on Monday announced it has agreed to a new contract to keep the Salem health care system on its provider network.

Salem Health, with its flagship Salem Hospital, is the dominant provider in the Marion County region.

Terms of the four-year contract – most notably the higher rates that Salem Health will charge Kaiser -- were not released.

Salem Health’s previous seven-year contract with Kaiser expired in the fall, as the two fought over Salem Health’s requested price increases.

At the time, California-based Kaiser said Salem Health wanted to raise prices by about 30% on almost all its services for roughly 40,000 Kaiser commercial and individual insurance members in the Salem market.

Salem Health did not deny it was seeking the steep increase. Prices in the old contract lagged the market by 30%, Salem Health spokesman Michael Gay said at the time.

The sides had been negotiating a new contract for a year, Salem Health said.

Any prices increases will be passed along to Kaiser businesses and individuals in the Marion County area, Kaiser said at the time.

Kaiser and Salem Health on Monday said they would not release financial terms of the new contract.

In the fall, Kaiser went so far as to take out a full-page ad in the Salem Statesman-Journal newspaper in October hammering Salem Health. “Salem Health is raising health care costs for local businesses (a lot)” says the ad’s headline.

“These overinflated prices (being sought by Salem Health) are unnecessary, and they are not the direction we want to be going regionally and nationally. And so if we feel there is a player in the market that is doing this, it is for us to speak up,” King said.

Salem Health is in effect a monopoly in its region. Its flagship is Marion County’s only major hospital – Salem Hospital. The system also owns an extensive network of primary care and urgent care clinics in the Salem market, and it is the majority owner of several Salem-area specialty practices. So if a health insurer like Kaiser wants to hold on to customers in the Marion region, it likely must offer Salem Health on its panel of providers.

But on Monday, Kaiser and Salem Health looked to calm troubled waters.

“For nearly 40 years, Salem Health and Kaiser Permanente have worked together to provide high quality, affordable health care in the Willamette Valley, and we are proud to continue this collaboration,” said Jeff Collins, Kaiser Permanente Northwest president in a news release. “We feel honored to serve this community.”

The release also quoted Cheryl Nester Wolfe, Salem Health’s CEO: “Kaiser Permanente plays an important part in serving the health care needs of our community and Salem Health looks forward to continuing our partnership as we work to provide high quality, affordable care that is close to home.”

 You can reach Christian Wihtol at [email protected].



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