Kaiser Permanente
Kaiser Permanente is an American integrated managed care consortium headquartered in Oakland, California. Founded in 1945 by industrialist Henry J. Kaiser and physician Sidney R. Garfield, the organization was initially established to provide medical services at Kaiser's shipyards, steel mills and other facilities, before being opened to the general public. Kaiser Permanente operates as a consortium comprising three distinct but interdependent entities: the Kaiser Foundation Health Plan and its regional subsidiaries, Kaiser Foundation Hospitals, and the regional Permanente Medical Groups. As of 2024, Kaiser Permanente serves eight states as well as the District of Columbia and is the largest managed care organization in the United States.
Each Permanente Medical Group functions as a separate for-profit partnership or professional corporation within its specific territory. While these groups do not publicly disclose their financial results, they are primarily funded by reimbursements from the Kaiser Foundation Health Plan, one of the largest not-for-profit organizations in the United States. Kaiser employs over 300,000 individuals, including more than 98,000 physicians and nurses. The mixed-profit Kaiser Foundation Hospitals operate 40 hospitals and more than 614 medical offices, similarly funded by reimbursements from the Kaiser Foundation Health Plan.
Kaiser Permanente's quality of care is often highly rated, attributed to its focus on preventive care, salaried physicians, and efforts to reduce hospital stays by optimizing patient care planning. It has had disputes with employees' unions, faced charges for falsification of records and patient dumping, been under regulatory scrutiny for the quality of its mental health services, and seen criticism over the size of its financial reserves.
Structure and governance
Kaiser Permanente provides care throughout eight regions in the United States. Two or three distinct but interdependent legal entities form the Kaiser system within each region. This structure was adopted by Kaiser Permanente physicians and leaders in 1955.Governance
Each entity of Kaiser Permanente has its own management and governance structure, although all of the structures are interdependent and cooperative to a great extent. There are multiple affiliated mixed profits registered with the U.S. Internal Revenue Service. According to Form 990 governance questions, Kaiser Foundation Hospitals and Kaiser Foundation Health Plan do not have members with the power to appoint or elect board members, meaning that the board itself nominates and appoints new members.James A. Vohs was appointed CEO in 1978 and chairman in 1980, and he would serve until his retirement in 1992. He was the first chairman to not be a member of the Kaiser family.
David M. Lawrence served as chairman and CEO until his retirement in 2002.
George Halvorson became the chairman and CEO until his retirement in December 2013.
On November 5, 2012, the board of directors announced that Bernard J. Tyson, Kaiser's president and chief operating officer for the last two years, would replace Halvorson, marking the first time an African American was appointed as chairman. Tyson died in November 2019.
Greg A. Adams assumed the role of chairman and CEO in December 2019.
Operations
As of 2024, Kaiser Permanente had 12.5 million health plan members, 223,883 employees, 73,618 nurses and 24,605 physicians, 40 hospitals, and 614 medical offices. As of December 31, 2023, the Mixed profit Kaiser Foundation Health Plan and Kaiser Foundation Hospitals entities reported an operating income of $329 million on $100.8 billion in operating revenues.The two types of organizations which make up each regional entity are:
- Kaiser Foundation Health Plans work with employers, employees, and individual members to offer prepaid health plans and insurance. The health plans are not-for-profit and provide infrastructure for and invest in Kaiser Foundation Hospitals and provide a tax-exempt shelter for the for-profit medical groups.
- Permanente Medical Groups are physician-owned organizations, which provide and arrange for medical care for Kaiser Foundation Health Plan members in each respective region. The medical groups are for-profit partnerships or professional corporations and receive nearly all of their funding from Kaiser Foundation Health Plans. The first medical group, The Permanente Medical Group, formed in 1948 in Northern California, is one of the largest doctors groups in the United States with 11,225 medical professionals and 186 locations at the beginning of 2023. Permanente physicians become stockholders in TPMG after three years at the company.
Regional entities
Kaiser Permanente is administered through eight regions, including one parent and six subordinate health plan entities, one hospital entity, and nine separate, affiliated medical groups:- Northern California, 3,351,449 members
- * Kaiser Foundation Health Plan, Inc.
- * Kaiser Foundation Hospitals
- * The Permanente Medical Group, Inc.
- Southern California, 3,499,035 members
- * Kaiser Foundation Health Plan, Inc.
- * Kaiser Foundation Hospitals
- * Southern California Permanente Medical Group
- Colorado, 531,908 members
- * Kaiser Foundation Health Plan of Colorado
- * Colorado Permanente Medical Group, P.C.
- Georgia, 222,074 members
- * Kaiser Foundation Health Plan of Georgia, Inc.
- * The Southeast Permanente Medical Group, Inc.
- Hawaii, 226,900 members
- * Kaiser Foundation Health Plan, Inc.
- * Kaiser Foundation Hospitals
- * Hawaii Permanente Medical Group, Inc.
- Mid-Atlantic, 581,000 members
- * Kaiser Foundation Health Plan of the Mid-Atlantic States Inc.
- * Mid-Atlantic Permanente Medical Group, P.C.
- Northwest, 480,386 members
- * Kaiser Foundation Health Plan of the Northwest
- * Kaiser Foundation Hospitals
- * Northwest Permanente, P.C. Physicians and Surgeons
- Washington, 681,386 members
- *Kaiser Foundation Health Plan of Washington
- *Washington Permanente Medical Group
Lobbying entity
A mutual benefit corporation named "Kaiser Foundation for the Advancement of Integrated Health Care" was established on December 27, 2017. The specific purpose of the corporation is "to advocate for and promote the integrated models of health care". The corporation's founder, Maryann Bodayle, has served as the "Governance Administrator" of Kaiser Foundation Health Plan, Inc. since 2013.History
Early years
The history of Kaiser Permanente dates to 1933 and a tiny hospital in the town of Desert Center, California. At that time, Henry J. Kaiser and several other large construction contractors had formed an insurance consortium called Industrial Indemnity to meet their workers' compensation obligations. Sidney Garfield had just finished his residency at Los Angeles County-USC Medical Center at a time when jobs were scarce; he was able to secure a contract with Industrial Indemnity to care for 5,000 construction workers building the Colorado River Aqueduct in the Mojave Desert. Soon, Garfield's new hospital was in a precarious financial state, due in part to Garfield's desire to treat all patients regardless of ability to pay, as well as his insistence on equipping the hospital adequately so that critically injured patients could be stabilized for the long journey to full-service hospitals in Los Angeles.Garfield found willing allies in two Industrial Indemnity executives, Harold Hatch and Alonzo B. Ordway. It was Hatch who proposed to Garfield the specific solution that would lead to the creation of Kaiser Permanente: Industrial Indemnity would prepay 17.5% of premiums, or $1.50 per worker per month, to cover work-related injuries, while the workers would each contribute five cents per day to cover non-work-related injuries. Later, Garfield also credited Ordway with coming up with the general idea of prepayment for industrial health care and explained that he did not know much at the time about other similar health plans except for the Ross-Loos Medical Group.
Hatch's solution enabled Garfield to bring his budget back into the positive, and to experiment with providing a broader range of services to the workers besides pure emergency care. By the time work on the aqueduct concluded and the project was wrapped up, Garfield had paid off all of his debts, was supervising ten physicians at three hospitals, and controlled a financial reserve of $150,000.
Garfield returned to Los Angeles for further study at County-USC with the intent of entering private practice. In March 1938, Consolidated Industries initiated work on a contract for the upper half of the Grand Coulee Dam in Washington state, and took over responsibility for the thousands of workers who had worked for a different construction consortium on the first half of the dam. Edgar Kaiser, Henry's son, was in charge of the project. To smooth over relations with the workers, Hatch and Ordway persuaded Edgar to meet with Garfield, and in turn Edgar persuaded Garfield to tour the Grand Coulee site. Garfield subsequently agreed to reproduce at Grand Coulee Dam what he had done on the Colorado River Aqueduct project. He immediately spent $100,000 on renovating the decrepit Mason City Hospital and hired seven physicians.
Unlike the workers on Garfield's first project, many workers at Grand Coulee Dam had brought dependents with them. The unions soon forced the Kaiser Company to expand its plan to cover dependents, which resulted in a dramatic shift from industrial medicine into family practice and enabled Garfield to formulate some of the basic principles of Kaiser Permanente. It was also during this time that Henry Kaiser personally became acquainted with Garfield and forged a friendship which lasted until Kaiser's death.