Kaiser Permanente California

by John Hansen

Kaiser Permanente’s integrated model requires not only the building of new facilities, but also a steady influx of qualified medical personnel. Toward that goal of acquiring the most qualified staff, Kaiser Permanente has gotten into the business of hiring medical groups.

Also, Kaiser Permanente, a leading California health plan, has contracted with medical students who have not even graduated yet. Kaiser has agreed to pay to put top students through school when these future physicians commit to working for Kaiser Permanente upon graduating.

By doing this, Kaiser Permanente is able to grab sharp medical students right away before they ever enter the job market. This guarantees the influx of doctors and medical staff that they need in order to keep building their HMO network. Also, this helps Kaiser Permanente snatch up the brightest and best future doctors going into the medical field before other providers even have a chance to compete.

This way future physicians do not...

by John Hansen

Efficiency is what Kaiser Permanente is great at, and it’s paying off financially. Likely, California’s leading HMO will use this surplus to streamline more, give members a better experience and improve health outcomes. However, due to its inability to take on too many new members, Kaiser Permanente is not expected to lower its rates.

Systems can be updated. Facilities can be improved. Medical staff can receive additional training. New advancements in medicine can be implemented. Kaiser Permanente has led the way in California in all these areas, and they will continue to do so.

Also, Kaiser Permanente will continue to expand their network. Gradually over time, new KP facilities will pop around California.  Kaiser is expected to expand in two main ways:

Will Kaiser be growing into more rural, less populated areas? Maybe, but definitely not right away. The Kaiser system does best in areas with larger populations. However, rural areas that border more populated areas in t...

by John Hansen

If Kaiser Permanente has a surplus of income, then why not just give the money back to the members? Why not just lower prices for everyone?

Blue Shield of California has their 2% commitment, where they give refunds back to their members if they make over 2%. Why doesn’t Kaiser Permanente just follow suite?

Kaiser Permanente is the most efficiently run health plan in California. It consistently outranks its competitors due to its integrated system and streamlined processes. Efficiency lowers costs that can be passed on to consumers.

Kaiser Permanente couldn’t handle the amount of new enrollments that lower prices would bring in. Its network just isn’t big enough.

Already, Kaiser Permanente is struggling to deal with the huge amounts of increases in enrollment since the implementation of Health Care Reform in California. Due to Kaiser’s integrated system, they are unable to expand as fast as their chief competitors, Anthem Blue Cross and Blue Shield of California.

KP is...

by John Hansen

The reinsurance stipulation of the Affordable Care Act comes to an end in 2016. This could prove advantageous for Kaiser Permanente, who tends to only be hurt by reinsurance.

Reinsurance was designed to decrease the risk of carriers getting too many high cost enrollees. In reality, it decreases the risk not only of adverse selection, but also the risk of poor management of a health plan.

Reinsurance required health insurance carriers with lower risk enrollees to give funds to other carriers who had higher risk enrollees. The assumption was that this stipulation would decrease the carrier’s fears of Health Care Reform causing them to get an adverse selection of new members, which would increase their risk and their costs.

Kaiser Permanente argued the obvious from the beginning: Higher risk pool is not only created by adverse selection, but it is also created by poor health plan management. The better you service your clients and get them to do their checkups and maintain t...

by John Hansen

Due to the efficiency of the Kaiser model, the end of reinsurance, top ratings in the state and growing popularity, Kaiser Permanente also has to deal with the problem of what to do with surplus income. They have three main options.

This option sounds the most appealing to consumers as well as to the Obama Administration and Covered California. However, it is likely the least appealing to Kaiser Permanente at this point in time.

Kaiser Permanente, who prides itself in offering affordable health care (including their Covered California Kaiser plans) just can’t afford to lower prices too much more than they already have. Why? Lower prices could bring too many new members. California’s monster HMO is limited in how many new members it can take on.

Anthem Blue Cross and Blue Shield of California can grow their reach quickly simply by contracting with more doctors, hospitals and physician networks. But for Kaiser to add many more members, they would need to take on a more dif...