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Kaiser Is Not Cutting Costs Very Much

March 31, 2013

Kaiser Permanente has been a leader in integrated healthcare for decades. It started as a plan to cover workers building the Hoover Dam, and has spread to become a dominant force primarily on the west coast. It has over six million members in California alone.

Kaiser does a lot of things right. It has somewhat of a primary care emphasis (though I personally think some of its efforts are misguided — screenings, over-aggressive prevention, etc.). And a lot of people like the fact is mostly pays its doctors a salary. Because of these factors and other administrative efficiencies, it provides marginally less expensive health insurance than its competitors.

A recent interview in the New York Times with Kaiser’s CEO, George Halvorson, was noteworthy in that he confessed that even innovative Kaiser was not delivering care at a low enough cost. Even though the article stated that Kaiser’s plans are about 10% below market in places where it owns most of the delivery system (hospitals primarily), but is about average in other markets.

I think Dr. Halvorson let us in on one clue as to why Kaiser doesn’t do better. He stated that “[P]roviders will have financial incentives to encourage them to keep people healthy.” I suspect this is tied in to the usual screenings and prevention song and dance. There was also the usual hype about Information Technology saving us from excessive costs.

To Mr. Halvorson’s credit, he said, “We think the future of health care isĀ  going to be rationing or re-engineering of care.” I appreciate it when prominent in healthcare give the American people a small dose of reality, especially when they use the R word (not re-engineering).

I’m sure many Kaiser innovations deserve more widespread adoption. However, the fact is they haven’t solved the problem of excessive U.S. healthcare. They haven’t dug deep enough.

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3 Responses to Kaiser Is Not Cutting Costs Very Much

  1. Tracie Updike MD on March 31, 2013 at 9:55 pm

    To change the cost of healthcare will involve changing not only the doctors mind set but the patients.

    • Richard Young MD on April 1, 2013 at 6:38 pm

      I absolutely agree. The lack of patient accountability is one of the reasons I predict ACOs will not amount to much.

  2. Darlene A. Vincent on May 2, 2013 at 5:51 am

    SEIU-UHW has represented healthcare workers at Kaiser for more than 65 years and that means something to us. SEIU-UHW has been here long before Sal Rosselli ever came along and will be here long after. Our union does not belong to him. It belongs to us, the members who’ve built it and make it strong. Let me make it clear, we’re sticking with our union, SEIU-UHW.

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