Canopy Health, a fast-growing Bay Area medical alliance, is expanding into the North Bay, partnering with one of Sonoma County’s largest hospital operators and affiliated doctors in a bid to compete more closely with Kaiser Permanente, the region’s dominant health care provider.
The partnership with Providence adds four of its hospitals — Santa Rosa Memorial, Petaluma Valley, Healdsburg and Napa’s Queen of the Valley — and nearly 500 medical providers to Canopy’s network, which now comprises 29 hospitals and nearly 6,000 medical providers in the Bay Area.
The network gives Canopy’s 50,000 members an easier way to seek referrals across a vast network that includes UCSF, John Muir Physician Network, Hill Physicians Medical Group (the largest network of independent doctors in Northern California), Meritage Medical Network, Dignity Health Medical Network Santa Cruz and Santa Clara County Physician Network, according to Canopy.
The expansion is subject to approval by the state Department of Managed Health Care.
Canopy Heath was founded in 2015 by UCSF Health and John Muir Health, two of the largest Bay Area health care providers in the Bay Area.
Mike Robinson, CEO of Canopy Health, said the expansion builds on the network’s goal of offering an affordable North Bay alternative to Kaiser Permanente, with a similar integrated system but more flexibility.
“In the end, our objective is to compete with Kaiser both in terms of cost, affordability and member experience,” Robinson said.
The network, he said, was founded on the principles that physicians, not Canopy or health plans, should be the ones making decisions about patient health care and any subsequent cost savings should benefit Canopy members.
“If we can lower that cost of care, it lowers the premium,” Robinson said. “We wanted to make sure that the improvements, instead of dropping in the back pockets of the health plans, were passed along to consumers and employers. That was the critical piece of what we set out to do.”
Kaiser Permanente, in response to the promise of new competition, said in a statement that it has honed “unique integrated care experience” over the course of 70 years, 40 of them in Sonoma County. The Kaiser model is comprised of an exclusive partnership between the Permanente Medical Group doctors; Kaiser Permanente Hospitals and the Kaiser Foundation Health Plan.
Beyond providing medical care, Kaiser said it has made significant contributions to the region, including $106 million in community health investments last year in Sonoma and Marin counties.
With inflation nearing double digits nationally, some health industry experts expect medical costs will soon reach double-digit annual increases.
Covered California, the state health insurance exchange that offers subsidies under the Affordable Care Act, warned this week that premiums for 1 million low-income consumers will likely double if Congress allows federal assistance to sunset in December with the expiration of funding from the American Rescue Plan Act.
The health exchange said an estimated 220,000 California low-income residents could become uninsured, and mid-income residents participating in the exchange could see their premiums increase by an average of $272 a month.
Robinson said employers in the past few years have seen health plan premium increases in the mid-single digits, compared to double-digit increases during the 1980s and ‘90s. It’s unclear if the annual premium increases will get as high as they were then, but they’re likely to respond to skyrocketing inflation, he said.
“That is absolutely going to find its way into the health care system,” Robinson said. “People are going to see costs increase because health systems, providers, doctors offices are feeling the brunt of that — costs for supplies. are going up, costs for people are going up.”
Cameron Ghazzagh, a spokesperson for Canopy, said double-digit increases in the 1980s and ’90s occurred at a time when health care costs were much lower than they are now. “Increases were proportionately not as bad,” he said.
Bob Just, chief executive for Providence Medical Group in Northern California, said the Canopy network and efforts to break down barriers between health care providers are in line with Providence’s own efforts to create a more seamless system of health care in the North Bay.
Providence operates 52 hospitals and 1,085 clinics across California, Oregon, Washington, Alaska, Montana, New Mexico and Texas.
Providence operates the four local hospitals joining the Canopy network, while Providence Medical Group ‒ the affiliated doctors ‒ runs the outpatient clinics. The combined Providence network also includes other local physician practices, medical groups and providers that it contracts with as a way of expanding services to local patients.
The alliance with Canopy, Robinson said, is “another opportunity for growth, another opportunity to work with a health plan partner that is out there competing with Kaiser and Sutter and trying to grow membership and that, of course, aligns with our own goals.”
Sutter Health owns and operates Sonoma County’s newest hospital, Sutter Santa Rosa Regional Hospital, which recently unveiled a 60,000-square-foot expansion. Based in Sacramento, Sutter Health is one of the largest health care providers in the state, operating more than 20 hospitals across Northern California and partnering with numerous medical groups.
Taking a page out of Kaiser’s playbook, Sutter secured permission from state insurance officials in 2015 to market its own HMO product, Sutter Health Plus, in Sonoma County.
Robinson and Just said the new alliance through Canopy could give greater health care options to those who split their lives between the North Bay and the core Bay Area. For example, southern Sonoma County residents who commute to work in San Francisco or the East Bay.
“For patients who aren’t currently part of the (Providence network) and have an employer in the Bay Area who chooses Canopy, this would be giving those patients an opportunity that they don’t have today, which is they could get their care locally,” Just said.
Ghazzagh said Canopy’s 50,000 members include employees for MarinHealth, UCSF, UC Berkeley, UC Santa Cruz, the city and county of San Francisco, Sonoma Valley Hospital, CalPERS in the Bay Area, San Francisco Playhouse, Benioff Children’s Hospital Oakland, John Muir Health and Hill Physicians Medical Group.
Robinson said employers who want coverage through Canopy have to enroll in a plan with either United Healthcare or Health Net that uses the Canopy health network.
“We’re very competitive with Kaiser,” Robinson said. “So people do have an option. I would say if an individual is frustrated with Kaiser, give us a try. I think what they’ll find is with a Canopy plan, maybe they have more choice, more flexibility.”
Editor’s Note: This story has been updated to clarify that the expansion is pending state approval.