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Kaiser Permanente

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Kaiser Permanente
Kaiser Permanente logo
Type not-for-profit health plan and
hospitals, for-profit medical groups
Founded 1945
Location Oakland, California
Industry Healthcare
Revenue Increase $31.1 billion USD (2005)
Employees 145,000
Website kaiserpermanente.org

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, but a significant portion of Kaiser's excess income is distributed to for-profit medical groups.

Structure

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:

The 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.

The not-for-profit status of Kaiser Foundation Health Plans and Kaiser Foundation Hospitals is challenged by critics of the organization. These critics allege that the organization distributes profit to other organizational entities, half to medical groups and half to hospitals.

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.

History

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. 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.

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. Nine years later, in 1976, membership reached three million.

By 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. 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.

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 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; in response Kaiser closed health plans in Charlotte and Raleigh-Durham in North Carolina four years later. Kaiser also sold its unprofitable Northeast division in 2000.

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 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.

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.

International Reputation

In 2005 the British National Health Service launched a study that compared Kaiser to the British National Health Service. The outcome of the study was controversial. An editorial in the BMJ initially indicated that KP managed similar costs to the NHS, but this generated argument, and it was generally accepted that the NHS was cheaper and more efficient whereas Kaiser may be more rapid.

Quality of care

Kaiser, more than any other HMO, has come under fire from advocacy groups such as HARP and Kaiser Papers who claim Kaiser withholds information about costly medical services to control costs. These critics argue that Kaiser reduces service obligations by 'managing' the information provided to patients regarding available services and how to access them. Alleged strategies include promoting less-costly preventive procedures while suppressing information about other elective and/or expensive services; deploying services to make them easy (e.g., primary care) or difficult (e.g., specialists) to utilize; and using delays for cost containment strategy. Kaiser doctors allegedly accomplish delays through engaging in an elaborate referral process, limiting the number of contracted specialists, restricting appointment availability (or making appointments inconvenient), and by increasing office visit waiting periods.

Critics have also objected to overcrowded emergency rooms and long wait times, that have resulted in a number of deaths. In the year 2000, the state of California imposed a record fine of $1 million dollars on Kaiser for repeated delays in care that resulted in the death of Margaret Utterback.. The elderly may be especially vulnerable to the issues surrounding quality of care. In 2004, a patient sued Kaiser under California law for "elder abuse" and was awarded $100,000 in arbitration.

Kaiser behavioral medicine practices have also been questioned since they favor drug-based symptom control over one-on-one therapy in order to save costs. Adolescent care for depressed patients consists of prescription drugs and group therapy, even though, with the exception of Prozac, no antidepressant has been approved for children by the FDA, and they all carry "black box" warnings. Critics complaint that Kaiser has been lax in upholding the FDA requirement that when antidepressants are prescribed, they must be accompanied by full disclosure to the patient and parents, including the FDA medical guide. Critics also charge that complaints against Kaiser and questioning drug therapy have resulted in pressure on patients, including reporting parents to Child Protective Services for "medical negligence" and preventing parents who might complain Kaiser's group therapy, from attending those sessions, thus denying children part of their prescribed care.

Kaiser's critics have also raised concerns that doctors get bonuses for providing inferior care. In 2002, Kaiser call center representatives were given bonuses for limiting doctor visits. The critics have also alleged bias in the organization's quality claims, since the main quality measurement organization, the National Committee for Quality Assurance (NCQA) is funded and overseen by a coalition of HMOs .

While critics have exposed significant problems in patient care, enrollee satisfaction with assorted Kaiser plans varies significantly by region. A 2004 Consumer Reports study of planholders showed below average ratings in the Colorado and DC/MD/VA regions for two measures of patient care: patient care and the quality of their primary care physician. The same survey gave a top rating to Kaiser's Northern California region for customer service, while giving average ratings for patient care measures. .

Critics of Kaiser's Thrive advertising campaign have also raised concerns about advertising fraud and racial profiling.

U.S. News and World Report's annual ranking of U.S. commercial health plans list Kaiser Hawaii at No. 45 (out of over 250 health plans), Kaiser Northern California at No. 58, and Kaiser Southern California at No. 88 in 2005.

Dispute handling

In order to contain costs Kaiser requires agreement by those enrolling in the schemes that disputes including patient malpractice claims to submit to arbitration rather than litigating through the court system.

This has triggered some discussion and dissent. Some cases proceed to court and one argument is over whether the requirement to go through dispute resolution is enforceable.

Kaiser implemented an Office of Independent Administrators (OIA) to oversee the arbitration process. The degree to whcih this is independent has been questioned .

Wilfredo Engalla is a lead case. In 1991, Engalla died of lung cancer nearly five months after submitting a written demand for arbitration. The California Supreme Court found 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

Patients and consumer interest groups continue to fight for the right to file lawsuits against Kaiser. Recent lawsuits include Gary Rushford's attempt to use proof of a physician lie to overturn an Arbitration decision.

Criticism

Privacy concerns

Kaiser is among a handful of HMOs evaluating patient records compiled for the Vaccine Safety Datalink, a federal program under the auspices of the US Center for Disease Control, designed to gather epidemiological data on millions of American citizens regarding vaccine injury and health outcomes related to mass vaccination programs.

Critics have also questioned Kaiser's heavy investment in developing an electronic medical record. Some critics take issue with Kaiser's decisions to put revenue-generating aspects of the technology before benefit to patients. A string of technology leaks and blunders have also spawned privacy concerns. For example, in 2000 Kaiser sent 858 emails to the wrong recipients , in 2005 Kaiser printed patient medical record numbers (MRNs) on mailed magazines , and in 2006 two temps used information gained from Kaiser medical records to commit ID theft.

Medical experimentation

Critics are also investigating Kaiser's use of patients for vaccine testing without obtaining consent. Between June 1990 and October 1991, Kaiser, along with the Los Angeles County Department of Health and the CDC, injected 900 mostly black and latino babies with an experimental measles vaccine. Although the vaccine was licensed in other countries, parents were not informed that the vaccine was unlicensed in the U.S.

In 2002, Barbara Loe Fisher, president of the National Vaccine Information Center testified before the California Senate Committee on Health and Human Services that the pharmaceutical giant Wyeth had paid Kaiser to compare the effects of two experimental vaccines on children in a way that manipulated test results.

Patient Dumping

Kaiser and other hospitals as well as prisons and police in Los Angeles area has been accused of discharging indigent patients to Skid Row. Kaiser has paid a series of fines for patient dumping.

Kidney Transplantation

Kaiser Northern California has been criticized for its mishandling of patients and organs available for transplantation. On May 13, 2006, Kaiser announced that it will discontinue its start-up kidney transplant program after less than two years of operation, due to administrative problems and failure to communicate with regulatory agencies that removed patients from the organ list. These administrative failures created undue delays for those awaiting kidney transplantation. During the transplant program's first year, 56 transplants were performed (with around 2000 people on the wait list) and twice that number of people died waiting for a kidney. At other California transplant centers more than twice as many people received kidneys than died during the same period. Kaiser suspended the program after being hit with a series of lawsuits.

Labor Management Partnership (LMP)

Some Kaiser union members criticize Kaiser's Labor-Management Partnership (LMP) as an arrangement that's disadvantageous for workers. For instance, some members complain that union leaders bargain with management, and then present the outcome to workers as a non-negotiable fait accompli.

Nonprofit Status

Critics have argued Kaiser should not have this legal status, because a significant portion of Kaiser's excess income is distributed to for-profit medical groups.

References

  1. http://www.bizjournals.com/portland/stories/2006/02/13/daily42.html?from_rss=1
  2. http://xnet.kp.org/permanentejournal/fall97pj/history.html
  3. Transcript of taped conversation between President Richard Nixon and John D. Ehrlichman
  4. Feachem RG, Sekhri NK, White KL (2002). "Getting more for their dollar: a comparison of the NHS with California's Kaiser Permanente". BMJ. 324: 135–41. PMID 11799029.{{cite journal}}: CS1 maint: multiple names: authors list (link)
  5. Demarketing of Health Services PubMed, 1994
  6. http://www.usnews.com/usnews/health/best-health-insurance/rankings/commercial.htm
  7. Chris Rauber. "Kaiser fires back in arbitration suit." San Francisco Business Times. February 20, 1998.
  8. The Foundation for Taxpayer & Consumer Rights. "'Independent' Administrator Of Kaiser Arbitration System Is Rep For Corporate Lobby" News Release. January 8, 2003.
  9. Full opinion of the California Supreme Court in the case of Engalla v. Permanente Medical Group, Inc.
  10. 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.
  11. Glenn, Beth (1996-07-21). "Bad Blood Once Again". St. Petersburg Times. p. 5D. {{cite news}}: |access-date= requires |url= (help); Check date values in: |date= (help)
  12. http://www.abcnews.go.com/GMA/story?id=1761873&page=1
  13. http://www.latimes.com/news/printedition/la-me-kaiser4may04,1,156658.story?ctrack=1&cset=true

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