Cooperatives are businesses that are owned and democratically controlled by their members-the people who use the co-op's services or buy its goods-not by outside investors; Co-op members elect their board of director from within the membership.

They return surplus revenues (income over expenses and investment) to members proportionate to their use of the cooperative, not proportionate to their "investment" or ownership share.

Types of Cooperatives

Consumer Cooperatives—Consumer cooperatives are owned by the people who buy the goods or use the services of the cooperative. They sell consumer goods such as food and outdoors equipment. They provide housing, electricity and telecommunications. And they offer financial (credit unions), healthcare, childcare and funeral services.

Producer Cooperatives—Producer cooperatives are owned by people who produce similar types of products-by farmers who grow crops, raise cattle, milk cows, or by craftsmen and artisans. By banding together, they leverage greater bargaining power with buyers. They also combine resources to more effectively market and brand their products, improving the incomes of their members.

Worker Cooperatives—Worker cooperatives are owned and governed by the employees of the business. They operate in all sectors of the economy and provide workers with both employment and ownership opportunities. Examples include employee-owned food stores, processing companies, restaurants, taxicab companies, sewing companies, timber processors and light and heavy industry.

Purchasing/Shared Services Cooperatives—Purchasing and shared services cooperatives are owned and governed by independent business owners, small municipalities and, in some cases, state governments that band together to enhance their purchasing power, lowering their costs and improving their competitiveness and ability to provide quality services. They operate in all sectors of the economy. (Text adapted from the National Cooperative Business Association)

HealthPartners, Inc., based in Minneapolis, Minn., is the nation's largest consumer-owned HMO. The co-op and its related organizations provide health care services, insurance and HMO coverage to nearly 660,000 members.

Independent Pharmacy Cooperative, based in Sun Prairie, Wis., has more than 1000 affiliates and 4,000 members. It is the largest purchasing organization owned by independent pharmacies. It negotiates rebates with suppliers on prices for pharmaceuticals and over-the-counter products.

Cooperative Home Care Associates, South Bronx, NY, is a 600 member, worker-owned home health care service that offers worker-owners higher pay and ownership benefits. It provides home health care aides on a contract basis to large health-care providers and has served as a model for the development of other worker-owned home health care cooperatives.

Business Model: 

Cooperatives follow typical business models, but since the owners share an interest other than deriving profit from the business they can often serve that shared interest at a lower cost than another for-profit business can. 

 

Assumptions:

1. All owners share a common interest other than profit.
2. Cooperatives can better serve that common interest because they are formed specifically to do so and are governed by the members to achieve that goal.
3. Group governance can be efficient.

Speaks to multiple leverage points.

• Potential  of new alliances to create risk pooling or collective purchasing/action
• Any alliance that transacts business can form a cooperative as the cooperate form in which they transact that business
• Worker, purchasing, and consumer cooperatives already exist in the healthcare field.
• Rebalancing of Intermediation and Disintermediation
• Consumer owned cooperatives could completely change the relationship between provider and consumer.