CDPHP Reaches Agreement With Kaiser Permanente.

ALBANY--(BUSINESS WIRE)--July 22, 1999--

Capital District Physicians' Health Plan, Inc. (CDPHP) today announced that it has reached an agreement with Kaiser Permanente to pursue the asset acquisition of Kaiser's New York business, including all product lines and certain assets for an undisclosed amount.

Last month Kaiser announced its departure from the Northeast market effective Jan. 1, 2000.

The transactions are expected to close before Dec. 31, 1999, contingent upon the signing of a definitive agreement and approvals by boards of directors and state and federal regulatory agencies.

"Acquiring Kaiser's membership is a natural fit for CDPHP," said John H. Carter, M.D., CDPHP chairman. "In Kaiser Permanente we have found a unique opportunity to acquire a stable business base with a history of demonstrated commitment to delivering top-quality health care and preventive services. As we finalize negotiations, the integrity of the doctor-patient relationship and the ability to deliver quality not-for-profit health care to our community will remain a primary concern for both organizations."

New markets

"This acquisition complements our operations within the state, particularly in the Capital Region," said Diane Bergman, CDPHP president. Once finalized, "the agreement will likely expand CDPHP's presence from 11 New York counties to 28 counties, more than doubling our current membership." New service areas will include additional counties in the Hudson Valley, Mohawk Valley, Southern Tier, North Country and Westchester.

"We are pleased that our New York members will now be served by CDPHP, a quality-focused organization that, like Kaiser Permanente, has a strong commitment to its members and employees," said Marilyn Kawamura, Kaiser Permanente's president. "It was a difficult decision to divest our New York operation after 23 years contributing to the health and well-being of thousands of New York families. Every effort is being made to provide continuity of quality care for Kaiser members and employer groups, as well as career opportunities for our employees."

Member concerns

Efforts will begin shortly to work with current Kaiser employer groups and members to ensure a smooth transition. Negotiations are also underway for CDPHP to contract with Kaiser's current providers including the Northeast Permanente Medical Group which includes physicians practicing at Kaiser health centers. This will further ease the transition for Kaiser members.

In addition, CDPHP remains committed to working with regulators to continue serving Kaiser members enrolled in government programs including the Child Health Plus, Medicare and Medicaid programs. CDPHP just received approval from the Health Care Financing Administration (HCFA) to offer a Medicare product beginning Jan. 1, 2000 in Albany, Schenectady, Saratoga and Rensselaer counties.

Kaiser Permanente members do not need to take any immediate action and can continue to seek care from their current providers. They will be notified of details and specific timelines regarding the transition to CDPHP. Kaiser members with questions should contact Kaiser Permanente's Member Services Department at the number on the back of their I.D. cards.

Common goals

The two not-for-profit health plans share similar characteristics, including their local roots and mission to provide affordable, quality health care. The Kaiser Permanente plan in the Capital Region began as Community Health Plan (CHP) in 1977. It became part of Kaiser in 1996 as a mixed model network that contracts with the Kaiser Foundation Health Plan and Northeast Permanente Medical Group providers as well as community physicians. CDPHP, established in 1984 by a group of physicians sharing a common vision - to provide quality health care at a reasonable cost -- is an Individual Practice Association (IPA) model which contracts with a wide-reaching network of community based doctors. Both plans have strong reputations and have consistently been recognized by national publications and organizations for superior quality and high member satisfaction.

CDPHP has more than 3,000 locally participating physicians and providers and serves more than 3,000 employer groups. Currently, CDPHP has more than 215,000 members enrolled and operates in Albany, Columbia, Fulton, Greene, Montgomery, Rensselaer, Saratoga, Schenectady, Schoharie, Warren and Washington counties.

Kaiser Permanente was founded in 1945 and is headquartered in Oakland, California. Kaiser Permanente serves the health care needs of 8.5 million members in 17 states and the District of Columbia. Today, it encompasses Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals, and the Permanente Medical Groups, as well as an affiliation with Group Health Cooperative, based in Seattle. Nationwide, Kaiser Permanente includes about 90,000 technical, administrative and clerical employees and about 10,000 physicians representing all specialties.