The Obama administration floated the idea of healthcare cooperatives as one solution to fix the nation’s broken delivery system - a proposal that was rejected out of hand by the opponents of reform.  Co-ops thrive in environments where people with mutual economic interests share resources to maximize their market power.  Because co-ops don’t pay dividends to stockholders, they reinvest profits and have a strong track record of providing innovative, cost-effective healthcare.

There are downsides to healthcare co-ops, though.  They are often too small to compete with the insurance companies and so lack the ability to negotiate effectively with large hospitals or physician groups.  Most can’t afford computer systems for electronic billing or the technologies to deliver physician services.

Yet there are stories of extremely successful healthcare co-ops.  The major players - in Seattle and Minneapolis/St. Paul - have more than 500,000 members and each runs their own hospitals, clinics, physician groups and insurance plans.  Bloomington, MN-based Health Partners compensates physicians based on productivity.  Between 1998 and 2002, the co-op saw physician productivity soar by 38 percent and costs fall by 20 percent.  In 2007 Health Partners paid $27 million in incentives to caregivers who met productivity and patient satisfaction objectives.

The 62,000-member Group Health Cooperative of South Central Wisconsin, based in Madison, is another success story.  The co-op has used electronic records for seven years, according to executive director Larry Zanoni, and a prominent industry group ranks it eighth nationwide among HMOs for the quality of healthcare it provides.