Group Health announces future layoffs

Layoffs are looming at Seattle-based Group Health Cooperative, which says it must cut $250 million over the next 16 months.

The Seattle-based health care system insures about 600,000 people in Washington and has annual revenues of $3.5 billion. The organization is aiming to climb back up to a 3 percent operating margin, according to a memo from CEO Scott Armstrong first reported by the Puget Sound Business Journal.

“This cannot continue,” Armstrong wrote. “We are better than this, and I am not going to let us have another year like this one.”

Armstrong said in the memo Group Health has faced three years of sharp declines in its finances. The company blamed rising health care costs.

The HMO sought a rate increase from state regulators earlier this year, arguing its costs for some individual plans were climbing by 18.8 percent. The state insurance commissioner granted a 17.1 percent rate increase, according to The Seattle Times. But company officials say it’s not enough to stem the losses.

Armstrong wouldn’t disclose how many people will lose their jobs. “This is about making sure that the last piece we need to position ourselves to be the model for the future of our industry gets put in place,” he said. “We’ll make (the number of layoffs) as small as possible.”