Kaiser: California's big kid on the block
Area physicians applaud the HMO's technology, lifestyle and team approach
From the April ACP Observer, copyright © 2005 by the American College of Physicians.
By Janet Colwell
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In the late 1980s, Victor Silvestre, ACP Member, was looking forward to launching his own private practice in Oakland, Calif. He and a partner, who was nearing retirement, already had established patients from the multispecialty group where they'd both worked. Their plan was to build the practice for a few years and hire one or two new physicians who would take over from Dr. Silvestre's partner when he retired.
Finding patients was no problem; in fact, "we had to turn people away," recalled Dr. Silvestre, a general internist. But making money and attracting physicians were another story. Overhead in the Bay Area cut into earnings, with Dr. Silvestre remortgaging his house three times to keep the practice afloat. Administrative hassles took the partners away from patient care, while the new staff physicians complained about long hours and low salaries, especially given their high medical school debt.
From its Depression-era beginnings, Kaiser Permanente has grown to cover more than 8 million patients.
With the stress level of running a practice rising, Dr. Silvestre said he jumped at the job offer that came from Kaiser Permanente in 2002. He now works with the Northern California region of Permanente Medical Group, the for-profit physician arm of the nonprofit Oakland-based group model, HMO behemoth, Kaiser Foundation Health Plans.
"Kaiser is making care more convenient for doctors and patients," Dr. Silvestre said, "and I am freed from the business pressures, which used to cause the majority of my stress. The nice thing about Kaiser is that you can offload the administrative work and spend that time with patients."
Dr. Silvestre is one of many successful Kaiser recruits in recent years. In Northern California this year alone, Kaiser officials say, the Permanente group has hired more than 500 full- and part-time physicians, with the number of physician applicants rising more than 20% in the last three years. The current ratio of physician applicants to openings is about 8-to-1, with about 40% of Permanente's new hires coming from community medicine.
What's the lure? Like Dr. Silvestre, many Kaiser physicians say that working within the HMO frees them from the hassles of contracting with different health plans, which allows them to focus on patient care instead of on practice management.
Victor Silvestre, ACP Member, shown here, says that Kaiser's culture includes 10-hour days, 'no economic pressure to see a certain number of patients' and the ability to harness information technology for chronic care.
They also point to Kaiser's massive information technology investment, its extensive quality data and its deep resources for managing chronic illnesses—factors that have helped push pay-for-performance and technology investment initiatives further in California than in most other parts of the country. All this, plus a "9-to-5" schedule, add up to a very appealing package, especially for younger physicians.
"Today's residents are looking for a different experience than doctors might have been a generation ago," said Lucinda Ehnes, JD, director of the California Department of Managed Health Care, the only stand-alone HMO regulatory state agency in the nation. "They want a more predictable experience in terms of practice environment, hours and compensation—and Kaiser's model works in that recruiting environment."
Bringing high-tech data to desktops
Now the country's largest HMO, Kaiser was launched during the Depression by a surgeon and an insurance agent who pioneered the notion of fixed, prepaid preventive care. Its first members were steel, shipyard and construction workers—strong union support that allowed the HMO to enroll 300,000 members in Northern California during the first 10 years.
As Annual Session 2005 convenes in San Francisco, here's a look at the Bay Area's health care powerhouse.
Kaiser has since grown into a group-model HMO with 8.2 million members in nine states, 6.2 million of them in California. (See "Kaiser facts
."). The nonprofit Kaiser health plans contract with Kaiser Foundation Hospitals, which are also nonprofit, as well as with 30 medical centers and more than 430 medical offices. Each Kaiser region has its own for-profit Permanente Medical Group, while the Northern California physician group—which includes 5,000 doctors—is the country's largest.
That type of critical mass allows Kaiser to offer competitive compensation. The average starting salary in Northern California for a general internist just out of residency is $150,000, with perks—such as retirement benefits—boosting that salary figure by 30%, said Robert Pearl, MD, executive director and CEO of the Permanente Medical Group. According to Dr. Pearl, Permanente draws on the state's prestigious medical schools, while also targeting "about 20 institutions nationally that we believe have the premier training programs," he said. Physicians recruited from outside the state receive a moving allowance as well as interest-free home loans—a tremendous draw, given Northern California's notoriously pricey real estate.
An even bigger enticement, analysts say, is Kaiser's investment in information technology. The HMO is spending $3 billion over 10 years on an information system that will integrate patient records with appointment, registration and billing functions across the Kaiser network.
Kaiser physicians can already pull up local lab results and X-rays at their desktops and access pharmacy and hospitalization information. By the time the system is fully operational in 2006, physicians will input all of their chart notes and all other patient information online, eliminating paper files altogether. Patients will be able to get some of their own medical information from a secure Web site.
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'The time it takes to gather information, which is becoming more and more critical, is remarkably efficient.' —Stephen Follansbee, MD |
That system-wide capacity is already paying big dividends in daily practice, according to Stephen Follansbee, MD, an infectious disease specialist for Kaiser in San Francisco. "If patients of mine are on their way to Lake Tahoe and stop off in Sacramento and are hospitalized, I know immediately because that shows up on my computer—not only that they've been hospitalized, but where they are, their phone number and the lab results," said Dr. Follansbee, who treats AIDS patients. "I can look at their X-rays and other imaging studies at my desk. The time it takes to gather information, which is becoming more and more critical, is remarkably efficient."
Another big plus is having access to patient records for safety concerns, he added. He was able to immediately notify patients taking COX-2 inhibitors of potential cardiovascular concerns last fall.
In fact, Kaiser's extensive clinical database is now being mined to provide evidence for national health care safety issues. Kaiser data were used in a study published in the Jan. 29, 2005, online issue of The Lancet that found rofecoxib more than tripled the risk of heart problems. Earlier this year, Kaiser also relied on crunching its own clinical data to decide to no longer prescribe valdecoxib.
Those benefits are not only appreciated by the group's physicians but by purchasers as well. "It's not just the fact that Kaiser has made IT investments, but that its investments bring together the patient's entire experience," said Peter V. Lee, JD, president and chief executive officer of the Pacific Business Group on Health, a nonprofit business coalition. "As health care becomes increasingly disjointed—with the move toward more PPOs [preferred provider organizations], for example—I think we are seeing the strengths of an integrated delivery system like Kaiser's being appreciated by purchasers and policy-makers."
Ms. Ehnes, of the California Department of Managed Health Care, pointed to another major advantage of Kaiser's information system: It allows care comparisons among individual practitioners. While purchasers around the country are increasingly demanding that capability, such comparisons aren't possible with most physicians—and are deeply suspect to many of them.
"I can't overstate how important I think Kaiser's IT network is to their success as a practice model," Ms. Ehnes said. "I am now trying to advance that idea everywhere else in the California system." To a large extent, Kaiser's investment is now contributing to the rapid acceleration of other pay-for-performance programs, quality data reporting and information technology investment initiatives in the state.
The most ambitious is one organized by Integrated Healthcare Association (IHA), a nonprofit consortium of Kaiser competitors—medical groups, health plans and health systems—that just facilitated distributing a total of $50 million in pay-for-performance bonuses to participating medical groups. (For more information, see "Pay-for-performance takes off in California" in the January-February ACP Observer.
Physician control and chronic care
While she now praises Kaiser's latest innovations, Ms. Ehnes was once an outspoken critic of the HMO. In the 1980s, when she was overseeing patient rights initiatives as enforcement director for the consumer affairs section of the Colorado Division of Insurance, she helped get a state bill passed that ensured specialty care for the chronically ill. Kaiser, with its reputation at the time for focusing on population rather than individual health and its tight specialist referral system, was a major target of the legislation.
"It was a pretty common feeling among people who had disabilities or chronic conditions that Kaiser was in that category where if you really needed a specialist to provide a higher level of care you couldn't get it," she said. "But I think that has changed. Based on the lessons learned in Colorado, I believe Kaiser got the message that it is crucial for special populations to receive direct access to specialty care."
According to Dr. Pearl, Kaiser physicians have never faced restrictions on referring patients to specialists, and the system continues to access and service patients with chronic conditions. "What has changed," he said, "is the inefficiency of the for-profit managed care system around us," which has placed, he added, authorization requirements and other restrictions on physicians.
He conceded that the longstanding relationship between the Permanente group, on the one hand, and the hospitals and health plan, on the other, hasn't always run smoothly. But he maintained that physicians have always had the final word on individual care.
Kaiser physicians back up that claim, saying they do not need to get authorizations or prior approvals to hospitalize a patient, schedule surgery, refer to specialists, or order tests or medications. "I don't have to justify my decisions to someone at a remote site who may not really be trained to evaluate my subspecialty," said Dr. Follansbee, the infectious disease specialist. "There are certain high-cost or high-risk interventions that require my reviewing them with a group, but that's a rare event and it's done by peers."
And according to Dr. Silvestre, having ready access to a large network of specialists who work as a team is one of the major advantages of working within the system.
When he sees a diabetic patient, for example, he enters the patient's condition into a desktop computer and receives an instant report on Web resources, handouts, current scientific evidence and suggestions on making referrals to Kaiser specialists or programs, such as nutritional counseling. He can pull up any of the patient's lab results and X-rays and make appointments with specialists. A free text area already allows him to enter his own notes and communicate with specialists, who can access the same chart notes and clinical information from their desktops when they see patients.
"You don't have to fill out any forms and the patient doesn't have to go home and try to get through to other offices to make appointments—we do it for them," said Dr. Silvestre. "The system saves a tremendous amount of time and many of the barriers to people getting care are eliminated."
To steer its physicians to the latest medical information, Kaiser has its own center—the Care Management Institute—that offers comprehensive risk assessment and care management programs for five of the most common chronic diseases: diabetes, asthma, heart failure, coronary artery disease and depression.
According to Care Management Institute officials, Kaiser saw a 119% improvement in the cholesterol level of diabetes patients between 1998 and 2003, which could prevent 4,900 heart attacks or strokes if maintained over the next five to six years. At the same time, Kaiser estimates that its disease management programs in Northern California saved $200 million in the most recent study year in care costs for those with four chronic diseases.
In the 2004 quality report by the California Cooperative Healthcare Reporting Initiative, produced by the Pacific Business Group on Health, Kaiser Permanente North scored significantly above the national mean in comprehensive diabetes care, for example, and on antidepressant medication management. And 70% of members in Kaiser's Northern region rated their overall health care at eight, nine or 10 on a scale of 1-to-10, a percentage that has inched up from 65% since 2002.
Kaiser culture
According to Dr. Silvestre, "Our current culture is such that the clinic doctors typically work 10-hour days, seven of which are devoted to scheduled office visits." His typical day includes a one-hour lunch, frequently a lecture and the rest devoted to what he called "desktop medicine." When physicians' schedules fill up, they have the option of sending patients, who must be seen that day, to urgent care.
At the same time, he said, he is under no economic pressure to see a certain number of patients. Instead, "your responsibility is to manage your panel of patients in a way that produces the highest member satisfaction scores and the best quality outcomes," he said. Physician outcomes are measured according to a number of different parameters, with results provided periodically to each physician, along with local and regional norms and targets.
"It doesn't matter whether you accomplish [targets] by using the telephone, secure e-mail, house calls or office visits," he said.
From the point of view of purchasers, said the Pacific Business Group's Mr. Lee, Kaiser has traditionally led the California market on price. In recent years, however, "there has been concern among purchasers that its price advantage is narrowing," although the HMO has now become the state leader on quality measures as well, largely due to its investment in technology. That leaves purchasers waiting, Mr. Lee said, with "guarded optimism" to see how Kaiser's substantial information technology investment pays off in the long term.
At the same time, "Kaiser is not so much a model for a national system as it is one that has lessons that any delivery system needs to embrace," Mr. Lee said. "Those lessons include being driven by medical evidence and supporting team-based care. That model is one that really holds some of the best hopes for our health care system." The model also makes Kaiser an attractive place to work, said Kenneth E. Grullon, MD, an ob/gyn who came to Kaiser in 1998 from an academic practice at the University of California, San Francisco.
"I think one of the reasons we're seeing a change in the public perception of Kaiser is the great quality of doctors we're hiring now," he said. "My colleagues are coming out of the Bay Area's top programs—the overall quality of doctors here is very high."
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