What will Kaiser Permanente do with Surplus income?

Posted: May 23, 2016

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.

1. Reduce Premiums

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 difficult process of network expansion.

2. Expand the Kaiser Network

It will be slow, but Kaiser Permanente California is expected to use surplus income to expand their network. They believe that they offer the best option for health care in the state, and they want to make this option available to more and more Californians.

Kaiser Permanente is a sophisticated and integrated system, so growing the network is neither easy nor fast. The health plan, the medical staff and the hospitals are all one entity. This allows Kaiser to be extremely efficient, but it also limits the carrier as far as speed of growth.

For Kaiser Permanente to grow, they have to purchase, build or expand facilities. They have to hire new medical staff. They have to train the staff. And they have to update systems to incorporate new facilities and medical personnel into their integrated system.

3. Improve Systems and Quality of Care

Kaiser Permanente has streamlined systems and a strong commitment to medical advancement. These have enabled the carrier to offer the highest quality of care in the state of California. Kaiser is expected to continue to use funds to advance in these areas.

Kaiser Permanente’s electronic medical record system is one of the most sophisticated in the world, and yet it can always be improved. Faster speeds. Better reminders. Additional alerts for doctors and patients. Ease of use. And more!

Training of medical staff, integration of systems and personnel, member education, and member outreach can all be improved. As Kaiser Permanente pours funds into these areas, they will continue to advance toward that goal of being the leading health care provider in California.