Kaiser Permanente
Kaiser Permanente is an integrated
health maintenance organization (HMO), based in
Oakland, California, founded in 1945 by industrialist
Henry J. Kaiser and physician
Sidney R. Garfield. Kaiser Permanente is actually a consortium of three distinct entities composed of Kaiser Foundation Health Plans, Kaiser Foundation Hospitals, and The Permanente Medical Groups. "Kaiser Permanente" as a single entity does not technically exist.
As of 2006, Kaiser operates in nine states and Washington, D.C., and is the largest non-profit HMO in the
United States. Kaiser has 8.3 million health plan members, 134,000 employees, 11,000 physicians, 30 medical centers, 431 medical offices, and $22.5 billion in annual operating revenues. The umbrella organization Kaiser Foundation Health plan operates under the tax status of a
not-for-profit organization.
Kaiser provides care through eight regional divisions. Each of these regions are comprised of three co-dependent organisations. This structure has endured since Kaiser physicians and leaders agreed to this framework, known as the Tahoe Agreement, in 1955.
Kaiser is administered through eight regions, or divisions:
*
Northern California*
Southern California*
Colorado*
Georgia*
Hawaii* Mid-Atlantic (vicinity of Washington, D.C. including
Maryland and
Virginia)
* Northwest (Northwest
Oregon and Southwest
Washington)
*
OhioThe three organizations which make up each regional entity are:
* Kaiser Foundation Health Plans work with employers, employees, and individual members to offer prepaid health plans. The health plans are not-for-profit and provide infrastructure for and invest in Kaiser Foundation Hospitals and for-profit medical groups.
* Kaiser Foundation Hospitals operate medical centers in three states and
outpatient facilities throughout the Kaiser region. The hospital foundations are not-for-profit and primarily rely on the Kaiser Foundation Health Plans for funding. They also provide infrastructure and facilities that benefit for-profit medical groups.
* The Permanente Medical Groups are partnerships of physicians, which provide and arrange for medical care for Kaiser Foundation Health Plan members in each respective region. The medical groups are for-profit partnerships and also receive funding from Kaiser Foundation Health Plans. The first medical group, The Permanente Medical Group, formed in 1948 in Northern California.
There was a major reorganization of Kaiser in 1996 when twelve Kaiser medical groups were unified within the Permanente Federation, which focuses on standardizing patient care and performance under one name and system of policies and the Permanente Company, which provides a central governance structure for corporate activities.
[http://xnet.kp.org/permanentejournal/fall97pj/history.html]Early Years
Kaiser was founded in 1933 at
Eagle Mountain in
Desert Center, California. Garfield opened the Contractors General Hospital, with twelve beds, to treat construction workers building the
Los Angeles Aqueduct in the
Mojave Desert. The hospital was in a precarious financial state, due in part to Garfield's desire to treat all patients regardless of ability to pay.
[http://xnet.kp.org/permanentejournal/summer06/delivery.pdf Delivery of Meical Care. Garfield. Scientific American reprinted in Permanente J. Summer 2006 Vol 10 No. 2 page 49] Harold Hatch, an insurance agent, proposed that the insurance companies pay the hospital a total amount, in advance, for each worker covered. The financial relationship between the insurance companies and the hospital was efficient, and allowed Garfield to focus on a new idea:
preventive health care.
Observing the concept developed by Hatch and Garfield in the Mojave Desert, Henry Kaiser persuaded Garfield to open a prepaid practice for his construction workers who, in 1938, were building the
Grand Coulee Dam in Washington state. Coverage was later extended to the families of the workers. In 1942, Kaiser established health plans for workers and families at
shipyards in
Richmond, California and
Vancouver, Washington, and at a
steel mill in
Fontana, California. In 1945, Kaiser membership was opened to the public, as membership had dropped to 11,000 following
World War II. When the shipyards closed in 1946, membership dropped to 25,000, from a height of 200,000.
Post-War Growth
Between 1952 and 1955, membership grew to 500,000, as Kaiser worked with
union leaders to extend health care to all unionized employees. In 1958, Kaiser added Hawaii to its initial three regions in Northern California, Southern California, and Oregon. Membership reached one million by 1963. In 1969, Kaiser added regions in Colorado and Ohio.
1970s
By 1976, membership reached three million. In 1977, all six of Kaiser's regions had become federally-qualified HMOs. Some believe President Nixon specifically had Kaiser in mind when he signed the
Health Maintenance Organization Act of 1973, as the organization is mentioned in an
Oval Office discussion of the Act.
[Transcript of taped conversation between President Richard Nixon and John D. Ehrlichman] In 1980, Kaiser acquired a non-profit group practice to create the Mid-Atlantic region, encompassing the District of Columbia, Maryland, and Virginia. In 1985, Kaiser added Georgia.
Recent History
The geographic footprint of the organization has changed over time. Kaiser ultimately abandoned outposts in
Texas,
North Carolina, and the
Northeast. In 1998 Kaiser sold its
Texas operations, where reported problems had become so severe that Kaiser directed its lawyers to attempt to block the release of a Texas Department of Insurance report. This prompted the state attorney general to threaten to [https://wwwapps.tdi.state.tx.us/inter/asproot/commish/news/clips1997.asp?id=76 revoke the organization's license]. In
North Carolina, the Industrial Union Department of the
AFL-CIO issued a 1996 report critical of Kaiser's quality. Kaiser closed health plans in
Charlotte and Raleigh-Durham in North Carolina four years later. Kaiser also sold its unprofitable Northeast division in 2000.
In 1995, Kaiser celebrated its 50th anniversary as a public health plan. Two years later, membership reached nine million. In 1997, Kaiser established an agreement with the AFL-CIO to explore a new approach to the relationship between management and
labor, known as the Labor-Management Partnership.
During the 1990s, Kaiser hired
public relations firm
Bain and Associates to position their brand in Washington, D.C. The organization has hired
Strategic Partnerships LLC to secure tax incentives and a special hearing for government grants.
In 1999, a number of groups successfully sued Kaiser in regard to its "In the Hands of Doctors" advertising campaign. The lawsuit revealed that Kaiser doctors were not fully in control of decision-making and that they had been persuaded to limit care with financial bonuses. In 2004, Kaiser hired
Campbell-Ewald to develop a $40-million-dollar ad campaign called "
Thrive". The campaign, which focuses on the theme of
preventative care, was the first since Kaiser's "In the Hands of Doctors" campaign.
U.S. News and World Report, in its 2005 annual ranking of
US commercial health plans, listed Kaiser Hawaii 45th (out of 257 health plans), Kaiser Colorado 55th, Kaiser Northern California 58th, Kaiser Mid-Atlantic 73rd, Kaiser Georgia 81st, and Kaiser Southern California 88th.
[http://www.usnews.com/usnews/health/best-health-insurance/rankings/commercial.htm] A 2004
Consumer Reports survey of planholders ranked Kaiser overall as average or better. It showed below average ratings in the Colorado and DC/MD/VA regions for two measures of quality of care: 'care from doctors', and the 'quality of their primary care physician'; other Kaiser divisions received average scores. The same survey ranked Kaiser's Northern California region as the best HMO overall among rated plans.
[[1]] In contrast, in a 2003 patient satisfaction survey of 35,000 California patients, Kaiser received the lowest overall satisfaction score for in-patient experience.
[ Patients criticize Kaiser the most Statewide survey rates experiences of 35,000]A review of 100 surveys of opinion on healthcare provision indicated that most Americans using managed care plans are happy with their own provision.
[http://content.healthaffairs.org/cgi/content/abstract/20/2/33?ijkey=24a9b7b89e3abd2496850028de02d4fb6faea0e0&keytype2=tf_ipsecsha Health Affairs, Vol 20, Issue 2, 33-46]International Reputation
Early in the 21st century the NHS and UK department of health became impressed with some aspects of the Kaiser operation, and initiated a series of studies involving several healthcare organisations in England.
[http://www.networks.nhs.uk/39.php#kaiser UK NHS reports and briefings on the mode of operation of Kaiser and its effectiveness][http://news.bbc.co.uk/1/hi/health/1764713.stm] Visits occurred and suggestions of adopting some KP policies are currently active. The management of hospital bed-occupancy by KP, by means of integrated management in and out of hospital and monitoring progress against care pathways has been admired, and given rise to trials of similar techniques in eight areas of the UK.
In 2005 a controversial British Medical Journal editorial
reported a study by California-based academics which compared Kaiser to the British .
The editorial in the
BMJ suggested that KP managed comparable costs to the NHS, but this generated
argument mainly that American costs were in fact higher than NHS, and it was generally accepted that the NHS was cheaper and more efficient whereas Kaiser may be more rapid.
Kaiser doctors and others carry out research publishing in peer-reviewed journals and in the organisation's own journal
Permanente Journal.
Kaiser operates a
Division of Research which in 2006 declared around 200
active studies in progress. Kaiser's bias toward prevention is reflected in the areas of interest - vaccine and genetic studies are prominent.
;Edmonston-Zagreb Measles Vaccine ProjectBetween June 1990 and October 1991, Kaiser, along with the
Los Angeles County Department of Health,
Johns Hopkins University and the
CDC carried out a clinical trial of the Edmonton strain of Measles vaccine. The Los Angeles arm of the trial involved 1500 (900 receiving the study treatment) mostly black and Latino babies. Other arms ran in Haiti and several African countries. The aim was to induce immunity to Measles earlier, as cases in young children had been causing alarm. The trial was ended early when increased mortality appeared in other countries. Inadequate consent had been obtained, in that parents were not informed that the vaccine, licenced in other countries and registered with the FDA as a trial medication, was unlicensed in the U.S. This raised concerns over US government department ethics, and occasioned an apology by the CDC
[http://www.newscientist.com/article.ns?id=mg15020361.000] who ascribed it to an administrative oversight.
In California the
Department of Managed Healthcare of the state government is the regulatory organisation. Other states have similar organisations.
In 2005 the DMHC reported Kaiser as being as good as any of the HMOs,
[http://www.opa.ca.gov/report_card/ Califonia regulatory body report card for 2005 on HMOs operating in the state] and superior on preventive care.
;Kaiser and federal regulation of HMOsThe organization is mentioned in an
Oval Office discussion about the initiation
of the
Health Maintenance Organization Act of 1973. By 1977, all six of Kaiser's regions had become federally-qualified HMOs.
Kaiser has settled three cases for alleged patient dumping since 2002. During that same period, the
Office of the Inspector General settled 102 cases against US Hospitals which resulted in a monetary payment to the agency
[[2] List of Office of Inspector General fines for patient dumping][[3]Federal Patient Dumping act applied in these fines.][http://www.abcnews.go.com/GMA/story?id=1761873&page=1 ABC news coverages of patient dumping allegations]In order to contain costs, Kaiser requires agreement by planholders to submit patient
malpractice claims to arbitration rather than litigating through the court system. This has triggered some discussion and dissent.
[Chris Rauber. "Kaiser fires back in arbitration suit." San Francisco Business Times. February 20, 1998.] Some cases proceed to court and one argument is over whether the requirement to go through dispute resolution is enforceable.
Kaiser established an Office of Independent Administrators (OIA) in 1999 to oversee the arbitration process. The degree to which this is independent has been questioned.
[The Foundation for Taxpayer & Consumer Rights. "'Independent' Administrator Of Kaiser Arbitration System Is Rep For Corporate Lobby" News Release. January 8, 2003.] Wilfredo Engalla is a notable case. In 1991, Engalla died of
lung cancer nearly five months after submitting a written demand for arbitration. The
California Supreme Court found
[Full opinion of the California Supreme Court in the case of Engalla v. Permanente Medical Group, Inc.] that Kaiser had a financial incentive to wait until after Engalla died; his spouse could recover $500,000 from Kaiser if the case was arbitrated while he was alive, but only $250,000 after he died.
The Foundation for Taxpayer & Consumer Rights contends that Kaiser continues to oppose HMO arbitration reform
[The Foundation for Taxpayer & Consumer Rights. "A Placebo Kaiser Arbitration Bill Killed In Senate Committee: Kaiser's 'Independent' Arbitration System Administrator Lobbies For Kaiser." News Release. April 26, 2000.]Patients and consumer interest groups sporadically attempt to bring lawsuits against Kaiser. Recent lawsuits include
Gary Rushford's attempt to use proof of a physician lie to overturn an Arbitration decision.
In 2004 Kaiser initiated an in-house program for kidney
transplantation. Prior to opening the transplant center, Kaiser patients would generally receive transplants at medical centers associated with the University of California (UCSF and UCDavis). Upon opening the transplant center, Kaiser transplant candidates in Northern California were now required to obtain services through Kaiser's own transplant center. On
May 3 2006, the LA Times published an investigative report which accused the transplant program of mismanagement which resulted in delays for patients awaiting kidneys.
[http://www.latimes.com/news/local/la-me-kaiser3may03,0,7436765,full.story?coll=la-home-headlines] According to the report, Kaiser performed 56 transplants in 2005 and twice that many patients died waiting for a kidney. At other California transplant centers, more than twice as many people received kidneys than died during the same period.
On
May 13 2006 and after less than two years of operation, Kaiser announced that it would discontinue the kidney transplant program. As before, Kaiser would pay for pre-transplant care and transplants at outside hospitals. This had an effect on approximately 2000 patients.
[SF Gate account of closure of kidney transplant program (2006 May 13 viewed May 19)][http://msnbc.msn.com/id/12911669/dysfunctional MSNBC account of closure of kidney transplant program (2006 May 21 viewed May 29)]In the wake of the LA Times story, two patients have filed personal injury lawsuits against Kaiser and the widow of a patient who died has filed a wrongful death claim. According to the lawyer representing the three plaintiffs, more lawsuits are planned.
[http://www.orovillemr.com/news/bayarea/ci_3816717]
*
Kaiser Permanente - Official website
*
Regulatory department of California government - reports on HMOs including Kaiser*
MSNBC - "Kaiser Permanente bucks the HMO trend"
*
Health Administration Responsibility Project - anti-HMO organization. Critical of Kaiser.
