Kaiser Permanente will acquire Seattle-based Group Health Cooperative in a deal valued at nearly $3 billion, reports the Seattle Times.

In exchange for Group Health, Kaiser is contributing $1.8 billion to set up a new Group Health Community Foundation. Kaiser said it will also invest up to $1 billion in new facilities, staff, technology and research in Washington state.

“This is an exciting new chapter,” said Dr. Steve Tarnoff, president of Group Health Physicians. “This both preserves and promotes our legacy.”

Group Health had 2014 annual revenue of $3.7 billion in 2014 and 600,000 members. 

Kaiser Permanente has nearly $57 billion in annual revenue and about 10.3 million members in seven regions, including Colorado, Georgia, Hawaii, the mid-Atlantic states, Northern California, Southern California and the Northwest, including Oregon and parts of southwest Washington. The Group Health acquisition will form Kaiser’s eighth region and brings total enrollment to nearly 11 million.

The deal is subject to approval by state and federal regulators, as we all as Group Health’s voting membership.

Our Take: In one of the higher profile deals this year, if approved would have a significant impact on the West Coast—with Kaiser physicians and facilities from San Diego to Seattle. That’s a compelling offering to employers in the region.

More importantly, the move makes Kaiser more competitive with the other large system in the region, Renton, Wash.-based Providence Health & Services. It is true that Kaiser is much larger and is more integrated than Providence, and Providence doesn't have nearly the number of managed lives that Kaiser does.

But with 34 hospitals and 475 physician clinics in Alaska, Washington, Montana, Oregon and California, Providence has a new competitor to worry about in its own back yard.

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