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Kaiser Foundation Health Plan One Kaiser Plaza, Oakland, CA 94612
www.kaiserpermanente.org (510) 271-5910    Fax: (510) 271-6493  

The Scoop  

What's with the healthy workers?

Henry Kaiser, owner of the first steel plant on the West Coast, was manufacturing Liberty Ships for World War II when he noticed that healthy workers performed more efficiently and had less absences. The crafty Kaiser convinced the government to build medical clinics on his workplaces for the employees working towards the war effort. When WWII ended, Kaiser picked up the Government's surplus clinics at a 99 percent discount, enabling Kaiser to continue to offer medical care at a low prepaid price, and create what would become the largest not-for-profit managed care service in the world. Today, as America's top HMO, Kaiser cares for about 8.6 million members and employs over 90,000 technical and administrative workers, as well as 10,000 doctors.

Red scare

The Kaiser health care system attracted controversy in postwar America. Criticized by some as a socialist medical system, the plan was outlawed in several states. Physicians threatened by the cost-cutting services lobbied against the company, but the cold shoulder from the medical community would not linger. As the need for low-cost health care rose in the 1980s, the federal government legalized HMO?s in all states, and thus opened the door for the well-established Kaiser. Kaiser began to expand, and seemed poised to grow into a Goliath of health care. However, the sudden influx of new HMOs led to a scramble for market share and a price war that Kaiser was ill-equipped to handle. Like many HMOs, Kaiser is still struggling to resolve the dilemma of supplying high-quality care at cut-rate prices.

Stack 'em right there

In 1993, Kaiser barely escaped a strike by its unionized employees after it cut back on their health benefits, and the tensions have not dissipated. The company was sued by disgruntled customers for "patient stacking"(booking three to four patients for one 15-minute appointment slot), and was castigated by the California Nurses Association for the low quality of its facilities. A survey of Kaiser patients in the Mid-Atlantic region revealed that less than two-thirds had a personal physician, and less than half of those with regular physicians were satisfied with the availability of their doctor. In August 1997, a California Supreme Court investigation found Kaiser's complaint procedure unfair, ruling that patients could bypass Kaiser's mandatory arbitration process to sue the firm. As a result, Kaiser became fair game for malpractice suits. The judgment was a response to the case of patient Wilfredo Engalla, a Kaiser customer who died while waiting for the tangled arbitration process to be completed.

Financial pressure

In the mid-'90s, Kaiser was struck with financial challenges. Between 1994 and 1997, Kaiser reduced its premiums 15 percent, with the hope of increasing its market share. However, the company only gained a 5 percent increase in membership, and was criticized for cutting the quality of health care in order to increase its profit margin. The decrease in revenues was compounded by rising pharmaceutical costs and an increased demand for medical services, which led the company to announce its first annual loss ever in 1997 - a formidable $266 million. Kaiser responded by increasing its rates, selling off troubled operations, and requesting that one eighth of its workforce take early retirement, in the hopes of finding cheaper replacements. Unfortunately for the company, 1998 yielded losses for the second year in a row, at a total of $288 million nationwide.

Staying proactive

Kaiser has launched several new initiatives to ameliorate their situation. The company set up a network of outside physicians operating in tandem with its traditionally self-contained operations. This move complements Kaiser's policy of allowing patients to seek care outside its HMO at a reduced level of coverage. In 1997, in an effort to focus on small businesses, Kaiser offered a guaranteed two-year rate to companies with 25 to 99 employees. Kaiser has also vowed to get organized: the company has initiated a $1 billion, five-year project to create a national information database with centralized medical records.

Healthy profits

CEO David Lawrence was determined to make 1999 a better year for Kaiser - and he partially succeeded. The company was still $6 million short of making a profit in 1999, but that debt is significantly less than the previous year. Kaiser has hired more than 1,700 nurses in California, its largest region, after the hospitals found themselves short-staffed during the bad flu season of 1997-98. The company attributed part of its financial losses to understaffing, since the HMO had to send over 2,000 patients to non-Kaiser hospitals. By withdrawing from money-losing regions such as New England and the Carolinas, Kaiser expects to return to profitability in 2000.

Getting Hired  

Kaiser interviews tend to be intense, "especially with the panel interviews," which is most of them. When asked to describe the interviews, one insider wryly noted: "Crucible comes to mind in some situations." Kaiser does "most of its recruitment through advertising," often accomplished in local newspapers and job fairs. Kaiser typically has positions open for LPNs, RNs, and health care case managers. An MBA-level employee warns that "Kaiser is facing intense competition, and opportunities for permanent positions at my level are limited."

The company also lists job openings on the home web site under the careers listing. Searches are available by location and catergory, and resumes can be submitted online.

Kaiser Permanente nurses and pharmacists work under a collective bargaining agreement, which has "both advantages and disadvantages for both the employer and the worker. There is a lack of trust on both sides." During the nursing shortage in the early 1980s, "Kaiser nurses were the best paid around." But the recent glut of RNs on the market has brought trouble. "You must come to a personal understanding," says one RN, "with the possibility of a strike, and whether you would be willing to cross picket lines manned by your coworkers."

Our Survey Says  

Getting off their laurels

"The granddaddy of the HMO business" is now struggling to keep up with the youngsters it helped spawn. "Our corporate structure dates back to the 1940s," says a source. In recent years the competition with other HMOs has shown Kaiser employees "that we were resting on our laurels - and our market share." Many Kaiser employees feel that "it is one of the best organizations you could choose," although it is tough to escape "all the headaches that all of health care is experiencing." Kaiser's strengths stem from its "high-quality staff from top to bottom." Because Kaiser is a "very decentralized organization with a lot of autonomy at each location," employees say "you are given a lot of responsibility early in your career." Insiders find the situation intense, but note "if you can survive here you can survive anywhere."

Will you be having excellent, or less excellent?

Kaiser's "Agenda for Change," a program "largely about improving our cost structure," succeeded in "having a significant effect on corporate culture." Insiders complain that though "the health care benefits used to be excellent," cutbacks in the industry have led to "'cafeteria-style' benefits, where you can choose between excellent or less excellent, depending on how you want to allocate your 'benefit bucks.'" Many of Kaiser's offices are currently being renovated.

Strength in diversity

Kaiser sports a visibly diverse working body, with so many women in the middle and upper management that it leaves one male employee feeling that "the shoe may be on the other foot in my profession." "Diversity is a key factor to Kaiser's strength" because the corporation realizes that "its staff must reflect the population of its membership." One employee proudly points out that Kaiser's Hawaiian office is run by a native Hawaiian woman.

Moving out of the bargain basement

For many years Kaiser had a reputation as a "bargain basement" medical service where "you didn't pay very much for coverage, you couldn't choose which M.D. took care of you, appointments were difficult to get and often you waited hours in a waiting room to see a provider, but if you were really sick you'd get taken care of." And though Kaiser was "slow reacting to changes in the health care market," that situation has been changed. "First, it's no longer cheap," and secondly "the quality is greatly improved and continues to improve."

Pay: luke-warm reviews

Pay is considered "not great. Most people in health care consider it their calling, so they don't feel the need to pay a lot." Kaiser does pay bonuses, which are "based on company performance, using several measurements like membership growth, cash generation, customer satisfaction, and market share. Under the acronym TEAM, these are used to pay out a bonus based on the employee's gross income."

Employment Contact  

James B. Williams
Human Resources

Products and Services  

Integrated health delivery system: Preventive care;Hospital and medical services;Pharmacy services

Key Competitors  

Prudential;Sierra Health;United HealthCare;WellPoint Health Networks

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