Kaiser Permanente - the HMO solution to the health care problem

Two aspects of our health care system need serious improvement, and candidate Obama promised to address them both. First, some forty-plus million Americans lack any form of health insurance. Second, health care is far more expensive in the USA than in most of Western Europe and people in those other countries get care enough to live healthier lives than us and to live longer.

In this article I will tell you of my experience in forty some years of using Kaiser Permanente as the Health Maintenance Organization (HMO) for our family and why I believe the low costs of Kaiser and the quality of their service indicate how both of these problems can and are being effectively addressed.

But first, a few general comments about the current situation. Proposed legislation partially addresses the first problem (the numerous uninsured) but not the second (cost effectiveness). And, to my disappointment, it fails to remove health insurance from employers, which is doubly bad: First, it inflates the wage costs of American companies, thus weakening their ability to compete internationally, and secondly, it exacerbates the hardships of those who are unlucky enough to be laid off. There is political infighting about important details of the proposed improved insurance, mainly concerned with the extent of the government’s future role. Shall the government itself offer insurance products? Those who dislike “big government” tremble at the thought. But supporters argue that Medicare (which is a very large government health insurance program with a long track record) operates with few complaints, much general approval and a far lower overhead percentage than any for-profit insurance company can manage. They also point to the effectiveness and efficiency of the government-managed health insurance provided to members of Congress.

And whatever the details of the final form of the legislation, it seems safe to predict that it will reduce the costly and inefficient use of the ER as a first-line general practitioner. Unfortunately, however, it does not look as if most other costs will be significantly reduced nor will there be much improvement in the emphasis on prevention rather than cure. The problem, as you will see when you consider Kaiser Permanente, is that the incentives in the current health care system are all wrong and the proposed legislation fails to address this issue. Physicians and hospitals get paid for each procedure they perform and not by results. The more they do to you the better off they are, whereas, in a well-designed system, rewards are earned by doing things for you.  

So why am I a fan of Kaiser? Our family first enrolled in Kaiser in 1964, when we first came to the States and I was a visiting professor at UC Berkeley. We enjoyed excellent treatment and were impressed by the programs they offered to help improve health. We next spent five years in India and Boston MA, places that are not served by Kaiser. But when I moved from MIT to Case Western Reserve University about forty years ago, we were delighted to find that Kaiser was one of three health care options offered by Case. As an extra blessing, it was also the cheapest of the offerings. 

What’s so special about Kaiser? We have been impressed by the skill and concern of most of the Kaiser doctors and nurses we have encountered. And when we were not completely satisfied, we had no difficulty switching to another of the 180 Kaiser Cleveland doctors whom we preferred. Kaiser pays their doctors very decent salaries and therefore have no difficulty in attracting talent – especially as their staff are spared the hours of paperwork that other practitioners have to endure in dealing with scores of different insurers. I feel comfortable having the professionals at Kaiser select doctors rather than picking through the yellow pages myself and I am more comfortable having my Kaiser General Practitioner (GP) recommend needed specialists. On one occasion Kaiser sent me to a Cleveland Clinic specialist who was one of the three thousand affiliates available in special cases via their network.

Kaiser, at a cost of some six plus billion dollars (yes that began with the big B, not just M) has what is probably the best information system in the business. The big pharmaceutical companies often turn to Kaiser to find out how well their various drugs are actually doing. For me this has meant that each of my five doctors can turn up my record to see what the other doctors are doing and prescribing so that they dovetail their treatment into a coordinated whole. I also can see online when I have appointments coming up, what notes my doctors are writing at the end of each visit and what are the results of each of my numerous periodic blood tests.

When everything that is done is recorded and when outcomes are also recorded, you can imagine how Kaiser can help all its people (doctors, nurses and technicians) adjust and improve their procedures. System-wide Kaiser has extensive information on a little over fourteen thousand doctors and nearly nine million patients and they spend multi-millions each year on R & D to ensure that this huge database is put to good use.

Are there long waits in getting the treatment I have just discussed? Yes and no. Kaiser doctors are like airlines, they tend to run behind schedule as the day wears on. So, if you’ve a three o’clock appointment you may well not see your doc much before four. But the answer is simple: make early morning appointments! Also, if you want to see one of your specialists it may be a matter of a few weeks before you get an appointment. But if it’s urgent I have found that they manage to fit me in same day or tomorrow. Also, since I see my specialists on a regular basis, I simply schedule my next appointment while I’m there. Also they have a team of doctors and nurses who will see you that very day if you have an emergency. And I have found these teams highly effective on the rare occasions I have had to use their services.   

What’s so good about Kaiser is the professional management and information system. But above all, it is that all their people are paid to keep you as well as can be and are not paid by the number of procedures and tests they prescribe. In my opinion, that’s what you need if you want a cost-effective health care system. But I’m not alone in this thinking. In the July 29, 2009 issue of Time magazine, President Obama is quoted as saying: “Unlike my mother, who had a difficult time with her cancer, in part because her insurance was a little bit unreliable and she had just taken a new job, my grandmother had been signed up under Kaiser Permanente for years. And it’s actually one of the models of high-quality, cost-efficient care that’s out there right now, partly because they maintain such a stable base of patients and they construct a whole team approach that has proven to be very effective. So my grandmother was generally very happy with her care, and if we could actually get our health care system across the board to hit the efficiency levels of a Kaiser Permanente or a Cleveland Clinic or a Mayo or a Geisinger, we actually would have solved our problems.”

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Volume 2, Issue 1, Posted 3:58 PM, 01.14.2010