Kaiser Permanente
USD (2023)[1] | |
Number of employees | 235,785 employees (including 73,618 nurses and 24,605 physicians as of 2023)[1] |
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Website | kaiserpermanente.org kp.org |
Kaiser Permanente (/ˈkaɪzər pɜːrməˈnɛnteɪ/; KP) is an American integrated managed care consortium, based in Oakland, California, United States, founded in 1945 by industrialist Henry J. Kaiser and physician Sidney Garfield. Kaiser Permanente is made up of three distinct but interdependent groups of entities: the Kaiser Foundation Health Plan, Inc. (KFHP) and its regional operating subsidiaries; Kaiser Foundation Hospitals; and the regional Permanente Medical Groups. As of 2023,[2] Kaiser Permanente operates in eight states (Hawaii, Washington, Oregon, California, Colorado, Maryland, Virginia, Georgia) and the District of Columbia, and is the largest managed care organization in the United States.[3]
Kaiser Permanente operates 39 hospitals and more than 700 medical offices, with over 300,000 personnel, including more than 87,000 physicians and nurses.
Each Permanente Medical Group operates as a separate
KP's quality of care has been highly rated[4] and attributed to an emphasis on preventive care, its doctors being salaried rather than paid on a fee-for-service basis, and an attempt to minimize the time patients spend in high-cost hospitals by carefully planning their stay. However, Kaiser has had disputes with its employees' unions; repeatedly faced civil and criminal charges for falsification of records and patient dumping; faced action by regulators over the quality of care it provided, especially to patients with mental health issues; and faced criticism from activists and action from regulators over the size of its cash reserves.
Structure and governance
Kaiser Permanente provides care throughout eight regions in the United States. Two or three (four, in the case of California) distinct but interdependent legal entities form the Kaiser system within each region. This structure was adopted by Kaiser Permanente physicians and leaders in 1955.
Governance
Each entity of Kaiser Permanente has its own management and governance structure, although all of the structures are interdependent and cooperative to a great extent. There are multiple affiliated nonprofits registered with the U.S. Internal Revenue Service. According to Form 990 governance questions, Kaiser Foundation Hospitals and Kaiser Foundation Health Plan do not have members with the power to appoint or elect board members, meaning that the board itself nominates and appoints new members.[5]
James A. Vohs was appointed CEO in 1978 and chairman in 1980, and he would serve until his retirement in 1992. He was the first chairman to not be a member of the Kaiser family.[6]
David M. Lawrence served as chairman and CEO until his retirement in 2002.[7]
George Halvorson became the chairman and CEO until his retirement in December 2013.[8]
On November 5, 2012, the board of directors announced that
Greg A. Adams assumed the role of chairman and CEO in December 2019.[12]Operations
As of 2022, Kaiser Permanente had 12.6 million
The two types of organizations which make up each regional entity are:
- Kaiser Foundation Health Plans (KFHP) work with employers, employees, and individual members to offer prepaid health plans and insurance. The health plansare not-for-profit and provide infrastructure for and invest in Kaiser Foundation Hospitals and provide a tax-exempt shelter for the for-profit medical groups.
- Permanente Medical Groups are physician-owned organizations, which provide and arrange for medical care for Kaiser Foundation Health Plan members in each respective region. The medical groups are for-profit partnerships or professional corporations and receive nearly all of their funding from Kaiser Foundation Health Plans. The first medical group, The Permanente Medical Group (TPMG), formed in 1948 in Northern California, is one of the largest doctors groups in the United States with 11,225 medical professionals and 186 locations at the beginning of 2023.[16] Permanente physicians become stockholders in TPMG after three years at the company.[17]
In addition, Kaiser Foundation Hospitals (despite the plural name, a single legal entity) operates medical centers in California, Oregon,
Regional entities
Kaiser Permanente is administered through eight regions, including one parent and six subordinate
Various legal entities serve the areas of the US where Kaiser operates: California (the largest two), Colorado, Georgia, Hawaii, mid-Atlantic, Pacific Northwest, and Washington.
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In addition to the regional entities, in 1997, the then-twelve Permanente Medical Groups created The Permanente Federation
Lobbying entity
A mutual benefit corporation named "Kaiser Foundation for the Advancement of Integrated Health Care" was established on December 27, 2017. The specific purpose of the corporation is "to advocate for and promote the integrated models of health care".[23] The corporation's founder, Maryann Bodayle, has served as the "Governance Administrator" of Kaiser Foundation Health Plan, Inc. since 2013.
History
Early years
The history of Kaiser Permanente dates to 1933 and a tiny hospital in the town of
However, Garfield won over two Industrial Indemnity executives, Harold Hatch and Alonzo B. Ordway. It was Hatch who proposed to Garfield the specific solution that would lead to the creation of Kaiser Permanente: Industrial Indemnity would prepay 17.5% of premiums, or $1.50 per worker per month, to cover work-related injuries, while the workers would each contribute five cents per day to cover non-work-related injuries. Later, Garfield also credited Ordway with coming up with the general idea of prepayment for industrial health care and explained that he did not know much at the time about other similar
Hatch's solution enabled Garfield to bring his budget back into the positive, and to experiment with providing a broader range of services to the workers besides pure emergency care. By the time work on the aqueduct concluded and the project was wrapped up, Garfield had paid off all of his debts, was supervising ten physicians at three hospitals, and controlled a financial reserve of $150,000.[26]
Garfield returned to Los Angeles for further study at County-USC with the intent of entering private practice. However, in March 1938, Consolidated Industries (a consortium led by the Kaiser Company) initiated work on a contract for the upper half of the Grand Coulee Dam in Washington state, and took over responsibility for the thousands of workers who had worked for a different construction consortium on the first half of the dam. Edgar Kaiser, Henry's son, was in charge of the project. To smooth over relations with the workers (who had been treated poorly by their earlier employer), Hatch and Ordway persuaded Edgar to meet with Garfield, and in turn Edgar persuaded Garfield to tour the Grand Coulee site. Garfield subsequently agreed to reproduce at Grand Coulee Dam what he had done on the Colorado River Aqueduct project. He immediately spent $100,000 on renovating the decrepit Mason City Hospital and hired seven physicians.[27]
Unlike the workers on Garfield's first project, many workers at Grand Coulee Dam had brought dependents with them. The unions soon forced the Kaiser Company to expand its plan to cover dependents, which resulted in a dramatic shift from industrial medicine into family practice and enabled Garfield to formulate some of the basic principles of Kaiser Permanente. It was also during this time that Henry Kaiser personally became acquainted with Garfield and forged a friendship which lasted until Kaiser's death.[28]
World War II
In 1939, the Kaiser Company began work on several huge shipbuilding contracts in Oakland, and by the end of 1941 would control four major shipyards on the West Coast. During 1940, the expansion of the American defense-industrial complex in preparation for entrance into World War II resulted in a massive increase in the number of employees at the Richmond shipyard.[29] In January 1941, Henry Kaiser asked Garfield to set up an insurance plan for the Richmond workers (this was merely contract negotiation with insurance companies), and a year later Kaiser asked Garfield to duplicate at Richmond what he had done at Desert Center and Mason City.[30] Unlike the two other projects, the resulting entity lived on after the construction project that gave birth to it, and it is the direct ancestor of today's Kaiser Permanente.[31]
On March 1, 1942, Sidney R. Garfield & Associates opened its offices in Oakland to provide care to 20,000 workers, followed by the opening of the Permanente Health Plan on June 1.
In July, the Permanente Foundation formed to operate Northern California hospitals that would be linked to the outpatient
Meanwhile, during the war years, the American Medical Association (AMA) (which opposed managed care organizations from their very beginning) tried to defuse demand for managed care by promoting the rapid expansion of the Blue Cross and Blue Shield preferred provider organization networks.[36]
Courage to Heal, a novel by KP Historical Society President Paul Bernstein, MD, is based on the story of Garfield's life, his struggles with the AMA, and the origins of Kaiser Permanente.
Postwar growth
In 1943, Henry J. Kaiser and Dr. Sidney R. Garfield opened a 50-bed hospital, housing six physicians for the 3000 employees and their families at the new Kaiser Steel Mill in Fontana, California, offering a pre-paid health care plan for $0.60/week for adults, and $0.30/week for children. In 1945, the Kaiser Permanente health plan was opened to the public.
In 1948, Kaiser established the Henry J. Kaiser Family Foundation (also known as
The end of World War II brought about a huge plunge in Kaiser Permanente membership; for example, 50,000 workers had left the Northern California yards by July 1945. Membership bottomed out at 17,000 for the entire system but then surged back to 26,000 within six months as Garfield aggressively marketed his plan to the public.[38] Sidney Garfield & Associates had been a sole proprietorship, but in 1948, it was reorganized into a partnership, Permanente Medical Group.[39]
During this period, a substantial amount of growth came from union members; the unions saw Kaiser Permanente care as more affordable and comprehensive than what was available at the time from private physicians under the fee-for-service system. For example, Fortune magazine had reported in 1944 that 90% of the U.S. population could not afford fee-for-service health care. Kaiser Permanente membership soared to 154,000 in 1950, 283,000 in 1952, 470,000 in 1954, 556,000 in 1956, and 618,000 in 1958.[40]
From 1944 onward, both Kaiser Permanente and Garfield fought numerous attacks from the AMA and various state and local medical societies. Henry Kaiser came to the defense of both Garfield and the
In 1951, the organization acquired its current name when Henry Kaiser unilaterally directed the trustees of the health plans, hospital foundations, and medical groups to add his name before Permanente.[42] However, the physicians in the Permanente Medical Group deeply resented the implication that they were directly controlled by Kaiser, and successfully forced him to back off with respect to their part of the organization. That same year, Kaiser Permanente also began experiments with large-scale multiphasic screening to identify unknown conditions and to facilitate treatment of known ones.[43] Simultaneously, although no one questioned his medical competence, Garfield's deficiencies as an executive were becoming apparent as the organization expanded far beyond his ability to manage it properly.[44]
Henry Kaiser became fascinated with the health care system created for him by Garfield and began to directly manage Kaiser Permanente and Garfield. This resulted in a financial disaster when Kaiser splurged on the new Walnut Creek hospital; his constant intermeddling led to significant friction at every level of the organization. The situation was not helped by Kaiser's marriage to Garfield's head administrative nurse (who had helped care for Kaiser's first wife on her deathbed), convincing Garfield to marry the sister of that nurse, and then having Garfield move in next door to him. Clifford Keene (who would eventually serve as president of Kaiser Permanente) later recalled that this arrangement resulted in a rather dysfunctional and combative family in charge of Kaiser Permanente.[45]
Keene was an experienced Permanente physician whom Garfield had personally hired in 1946. During 1953 he had been trying to get a job at
However, even with Garfield relieved of day-to-day management duties, the underlying problem of Henry Kaiser's authoritarian management style continued to persist. After several tense confrontations between Kaiser and Permanente Medical Group physicians, the doctors met with Kaiser's top adviser, Eugene Trefethen, at Kaiser's personal estate near Lake Tahoe on July 12, 1955. Trefethen came up with the idea of a contract between the medical groups and the
While Keene and Trefethen struggled to fix the damage from Kaiser's micromanagement and Garfield's ineffectual management, Henry Kaiser moved to Oahu in 1956 and insisted on expanding Kaiser Permanente into Hawaii in 1958. He quickly ruined what should have been a simple project, and only a last-minute intervention by Keene and Trefethen in August 1960 prevented the total disintegration of the Hawaii organization.[48] By that year, Kaiser membership had grown to 808,000.[49]
Managed care era
Having overseen Kaiser Permanente's successful transformation from Henry Kaiser's health care experiment into a large-scale self-sustaining enterprise, Keene retired in 1975.
In 1980, Kaiser acquired a nonprofit group practice to create its Mid-Atlantic region, encompassing the District of Columbia, Maryland, and Virginia. In 1985, Kaiser Permanente expanded to Georgia.[51]
Regional evolution
By 1990, Kaiser Permanente provided coverage for about a third of the population of the cities of San Francisco and Oakland; total Northern California membership was over 2.4 million.[52]
Elsewhere, Kaiser Permanente did not do as well, and its geographic footprint changed significantly in the 1990s. The organization
In 1995, Kaiser Permanente celebrated its fiftieth anniversary as a public
In 2017, Kaiser acquired Group Health Cooperative, which serves clients in the state of Washington outside of Southwest Washington. Group Health was started in part from funds from longshoremen in Washington state, who were left out when Kaiser chose not to expand north of the Portland area.[56]
On April 26, 2023, Kaiser announced it would acquire Geisinger Health System. As part of the deal, Geisinger would operate as an independent subsidiary, folded into a new non-profit group called Risant Health.[57][58]
KP HealthConnect
In 2002, Kaiser Permanente abandoned its attempt to build its own clinical information system with
International reputation
Early in the 21st century, the
In 2002, a controversial study by California-based academics published in the
2023 strike
From October 4 to 7, 2023, more than 75,000 Kaiser Permanente workers
Quality of care
In the California Healthcare Quality Report Card 2013 Edition, Kaiser Permanente's Northern California and Southern California regions, KP received four out of four possible stars in Meeting National Standards of Care. KP North and South also received three out of four stars in Members Rate Their HMO.[68] KP's performance has been attributed to three practices: First, KP places a strong emphasis on preventive care, reducing costs later on. Second, its doctors are salaried rather than paid per service, which removes the main incentive for doctors to perform unnecessary procedures. Thirdly, KP attempts to minimize the time patients spend in high-cost hospitals by carefully planning their stay and by shifting care to outpatient clinics. This practice results in lower costs per member, cost savings for KP and greater doctor attention to patients. A comparison to the UK's National Health Service found that patients spend 2–5 times as much time in NHS hospitals as compared to KP hospitals.[69][70]
In June 2013, the California Department of Managed Health Care (DMHC) levied a $4 million fine, the second largest in the agency's history, against Kaiser for not providing adequate mental health care to its patients. Alleged violations of California's timely access laws included failures to accurately track wait times and track doctor availability amid evidence of inconsistent electronic and paper records. It was also found by the DMHC that patients received written materials circulated by Kaiser dissuading them from seeking care, a violation of state and federal laws. DMHC also issued a cease and desist order for Kaiser to end the practices.[71][72] DMHC conducted a follow-up investigation which published in April 2015. The report found Kaiser had put systems in place to better track how patients were being cared for but still had not addressed problems with actually providing mental health care that complied with state and federal laws.[72] Kaiser's challenges on this front were exacerbated by a long, unresolved labor dispute with the union representing therapists.[72]
Kaiser appealed the findings, the order, and the fine, and sought to keep the proceedings closed, but in September 2014, in the face of the administrative judge's order to keep the proceedings open, and facing the beginning of public testimony, Kaiser withdrew the appeal and paid the $4 million. It also issued a statement which denied much of the wrongdoing. Kaiser faces ongoing inspections by DMHC and three class-action lawsuits related to the issues identified by the DMHC.[73]
Research and publishing
Kaiser operates a Division of Research, which annually conducts between 200 and 300 studies, and the Center for Health Research, which in 2009 had more than 300 active studies. Kaiser's bias toward prevention is reflected in the areas of interest—vaccine and genetic studies are prominent. The work is funded primarily by federal, state, and other outside (non-Kaiser) institutions.[74]
Kaiser has created and operates a voluntary biobank of donated blood samples from members along with their medical record and the responses to a lifestyle and health survey.[75] As of November 2018, the Kaiser Permanente Research Bank had over 300,000 samples, with a goal of 500,000. De-identified data is shared with both Kaiser researchers and researchers from other institutions.[76][77]
Kaiser Permanente Bernard J. Tyson School of Medicine
Kaiser Permanente announced its plan to start a medical school in December, 2015, and the school welcomed its inaugural class in June, 2020.[78] The vision for the school is to redesign physician education around the pillars of patient-centered care, population health, quality improvement, team-based care, and health equity.[79]
Mark Schuster was named the medical school's Founding Dean and CEO in 2017. The Kaiser Permanente Bernard J. Tyson School of Medicine was renamed from the Kaiser Permanente School of Medicine in November 2019 in honor of late Kaiser Permanente Chairman and CEO Bernard J. Tyson.[80] The medical school received preliminary LCME accreditation in February 2019 and is expected to receive full LCME accreditation by 2023. The school will waive all tuition for the full four years of medical school for its first five classes.[81]
Controversies
Patient dumping
In 2006 Kaiser settled five cases for alleged
Organ transplant program
In 2004, Northern California Kaiser Permanente initiated an in-house program for kidney
While it was in operation, the Kaiser program had a 100% survival rate, which is better than other transplant centers. However, patients who needed a kidney were less likely to be offered one.[86] Northern California Kaiser performed 56 transplants in 2005, and twice that many patients died while waiting for a kidney. At other California transplant centers, more than twice as many people received kidneys than died during the same period. Unlike other centers, the Kaiser program did not perform riskier transplants or use donated organs from elderly or other higher-risk people, which have worse outcomes. Northern California Kaiser closed the kidney transplant program in May 2006. As before, Northern California Kaiser now pays for pre-transplant care and transplants at other hospitals. This change affected approximately 2,000 patients.[87][88]
Mandatory arbitration
In order to contain costs, Kaiser requires an agreement by planholders to submit patient malpractice claims to arbitration rather than litigating through the court system. This has triggered some opposition.[89]
Wilfredo Engalla is a notable case. In 1991, Engalla died of
Watchdogs have accused Kaiser of abusing the power imbalance inherent in the arbitration system. Kaiser engages in many cases whereas a customer will usually engage in just one and Kaiser can reject any arbitrator unilaterally, thus they can select company-friendly arbitrators over those that rule in favor of customers. As a large organization, Kaiser can also afford to spend much more on lawyers and orators than the customer, giving them more advantages. In response to criticisms, Kaiser established an Office of Independent Administrators (OIA) in 1999 to oversee the arbitration process. The degree to which this office is actually independent has been questioned.[92][third-party source needed]
Patients and consumer interest groups sporadically attempt to bring lawsuits against Kaiser Permanente. Recent lawsuits include Gary Rushford's 1999 attempt to use proof of a physician lie to overturn an arbitration decision.[93]
In one case, Kaiser attempted to significantly expand the scope of its arbitration agreements by arguing it should be able to force nonsignatories to its member contracts into arbitration, merely because those third parties had allegedly caused an injury to a Kaiser member which Kaiser had then allegedly exacerbated through its medical malpractice. The California Court of Appeal for the First District did not accept that argument: "Absent a written agreement—or a preexisting relationship or authority to contract for another that might substitute for an arbitration agreement—courts sitting in equity may not compel third party nonsignatories to arbitrate their disputes."[94]
Labor unions
While Doctors of Medicine (M.D.) and Doctors of Osteopathic Medicine (D.O.) are partners within the for-profit physician groups, many employees are members of various unions and guilds, depending on their role and service area.
KP's California operations were the target of four labor strikes in 2011 and 2012 — two (September 2011, January 2012) involved more than 20,000 nurses, mental health providers, and other professionals.[95] The National Union of Healthcare Workers (NUHW) has accused Kaiser of deliberately stalling negotiations while profiting $2.1 billion in 2011 and paying its CEO George Halvorson $9 million annually. The workers were dissatisfied with proposed changes to pensions and other benefits.[96]
On November 11, 2014, up to 18,000 nurses went on strike at KP hospitals in Northern California over Ebola safeguards and patient-care standards during union contract talks. 21 hospitals and 35 clinics in the San Francisco Bay Area were affected.[97]
On October 4, 2023, up-to 75,000 health workers went on a 3-day strike at KP hospitals predominately in California over higher pay demands and considerations over amount of patients the workers are expected to care for at any one-time.
Cash reserves
Jamie Court, president of the
State insurance regulations require that insurers maintain certain minimum amounts of cash reserves to ensure that they are able to meet their obligations; the amount varies by insurer, based on its risk factors, such as its investments, how many people it insures, and other factors; a few states also have caps on how large the reserves can be.[99]
Kaiser has been criticized by activists and state regulators for the size of its cash reserves. As of 2015, it had $21.7 billion in cash reserves, which was about 1,600% the amount required by California state regulations.
COVID-19
Kaiser has been fined nearly $500,000, more than any other health care employer in California, by the
See also
References
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- ^ a b Jaffe, Melissa; Block (November 16, 2006). "Kaiser Faces Charges for Dumping Homeless Patient". All Things Considered. NPR. Retrieved January 23, 2014.
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ignored (help) - ^ Bob Herman for Modern Healthcare. August 28, 2014 Los Angeles goes after patient-dumping for a third time
- ^ "Archives — Patient Dumping 2002-2007". HHS Office of Inspector General. Retrieved January 23, 2014.
- ^ Marquez, Miguel (March 24, 2006). "Trend: 'Dumping' Homeless on L.A.'s Skid Row". ABC News. Retrieved January 23, 2014.
- ^ Ornstein, Charles; Weber, Tracy (May 3, 2006). "Kaiser Put Kidney Patients at Risk". Los Angeles Times. Archived from the original on October 24, 2007. Retrieved January 23, 2014.
- ^ Colliver, Victoria (August 10, 2006). "Record Kaiser fine expected". San Francisco Chronicle. SFgate.com. Retrieved January 23, 2014.
- ^ "Agency ignored organ transplant problems". NBC News. Associated Press. October 22, 2006. Retrieved January 23, 2014.
- ^ Rauber, Chris (February 20, 1998). "Kaiser fires back in arbitration suit". San Francisco Business Times. Retrieved January 22, 2014.
- ^ Engalla v. Permanente Medical Group, Inc., 15 Cal 951 (Cal 4th June 30, 1997).
- ^ "Placebo Kaiser Arbitration Bill Killed In Senate Committee" (Press release). The Foundation for Taxpayer & Consumer Rights. April 26, 2000. Retrieved January 22, 2014.
- ^ ""Independent" Administrator Of Kaiser Arbitration System Is Rep For Corporate Lobby" (Press release). The Foundation for Taxpayer & Consumer Rights. January 8, 2003. Retrieved January 22, 2014.
- ^ Gary Rushford v. Kaiser Foundation Hospitals, A104598 (Cal Appeal May 31, 2005).
- ^ County of Contra Costa v. Kaiser Foundation Health Plan, Inc., 47 Cal. App. 4th 237, 245 (1996).
- ^ Hay, Jeremy (January 31, 2012). "Two Kaiser unions strike in Santa Rosa, Northern California". The Press Democrat. pressdemocrat.com. Retrieved January 23, 2014.
- ^ "Kaiser workers on strike". Roseville Press-Tribune. thepresstribune.com. January 31, 2012. Retrieved January 23, 2014.
- ^ "Kaiser Nurses Holding 2-Day Strike Over Staffing Levels, Ebola Protections". NBC Bay Area. November 11, 2014.
- ^ "Kaiser reports income boost". August 4, 2007.
- ^ a b c d Michael Booth for The Denver Post. March 13, 2011. Insurers' enormous cash surpluses prompt calls for rebates or community spending
- ^ a b Tracy Seipel for Mercury News. March 19, 2015 California drops hammer on Blue Shield tax-exempt status
- ^ Cal Matters - State fines Kaiser $499K for COVID worker safety violations
- ^ KTVU - San Leandro Kaiser hit with fresh fines; KP comprises 10% of California COVID citations
- ^ "15 Kaiser San Jose patients test positive for coronavirus after Christmas Day outbreak". Los Angeles Times. January 14, 2021. Archived from the original on April 19, 2023.
- ^ San Jose Inside - Even Before Recent Outbreak, San Jose Kaiser Faced Steep Fines for Covid Safety Violations
- ^ KQED - California Fines Kaiser $499K for COVID-19 Worker Safety Violations
External links
- Media related to Kaiser Permanente at Wikimedia Commons
- Official website
- The Permanente Federation, which represents the Permanente Medical Groups
- Search all Kaiser hospitals in the CA Healthcare Atlas A project by OSHPD
- Nightly News with Brian Williams Report on successful Kaiser Permanente initiatives including declaration by Louise Liang falsely attributing Vioxx discovery to KP HealthConnect even though it was not yet in production use in Northern California
- Health Administration Responsibility Project Home page of a group scrutinizing managed care and its failures, contains links to several pages about issues involving Kaiser Permanente
- Kaiser Permanente Oral Histories Transcripts of oral history interviews conducted by UC Berkeley's Regional Oral History Office with KP executives, attorneys, and clinicians, including Keene and Trefethen.