Kaiser Permanente is an integrated managed care organization, based in Oakland, California, United States, founded in 1945 by industrialist Henry Kaiser and physician Sidney Garfield. Kaiser Permanente is a consortium of three distinct groups of entities: the Kaiser Foundation Health Plan and its regional operating subsidiaries, Kaiser Foundation Hospitals, and the autonomous regional Permanente Medical Groups. As of 2006, Kaiser Permanente operates in nine states and the District of Columbia, and is the largest managed care organization in the United States.
Kaiser Permanente has 8.6 million health plan members, 167,300 employees, 14,600 physicians, 35 medical centers, 431 medical offices, and $1.3 billion in net income on $34.4 billion in operating revenues. The Health Plan and Hospitals operate under state and federal non-profit tax status, while the Medical Groups operate as for-profit partnerships or professional corporations in their respective regions.
Structure and governance
Kaiser Permanente provides care throughout eight regions in the United States. Each of these regions purports that it is comprised of two or three (and, in one case, four) separate but interdependent legal entities. This structure was adopted by Kaiser Permanente physicians and leaders in 1955.
National structure
The two types of organizations which are purported to 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 purported to be 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.
In addition, Kaiser Foundation Hospitals operates medical centers in California, Oregon and Hawaii, and outpatient facilities in the remaining Kaiser Permanente regions. The hospital foundations are purportedly not-for-profit and rely on the Kaiser Foundation Health Plans for funding. They also provide infrastructure and facilities that benefit the for-profit medical groups.
Regional entities
Kaiser Permanente is administered through eight regions, including one parent and five subordinate health plan entities, one hospital entity, and nine purportedly separate, affiliated medical groups:
- Northern California
- Kaiser Foundation Health Plan, Inc. (KFHP)
- Kaiser Foundation Hospitals (KFH)
- The Permanente Medical Group, Inc. (TPMG)
- Southern California
- Kaiser Foundation Health Plan, Inc. (KFHP)
- Kaiser Foundation Hospitals (KFH)
- Southern California Permanente Medical Group (SCPMG)
- Colorado
- Kaiser Foundation Health Plan of Colorado (KFHPCO)
- Colorado Permanente Medical Group, P.C. (CPMG)
- Georgia
- Kaiser Foundation Health Plan of Georgia, Inc. (KFHPGA)
- The Southeast Permanente Medical Group, Inc. (TSPMG)
- Hawaii
- Kaiser Foundation Health Plan, Inc. (KFHP)
- Kaiser Foundation Hospitals (KFH)
- Hawaii Permanente Medical Group, Inc. (HPMG)
- Mid-Atlantic (vicinity of Washington, D.C., including Maryland and Virginia)
- Kaiser Foundation Health Plan of the Mid-Atlantic States Inc. (KFHPMA)
- Mid-Atlantic Permanente Medical Group, P.C. (MAPMG)
- Northwest (Northwest Oregon and Southwest Washington)
- Kaiser Foundation Health Plan of the Northwest (KFHPNW)
- Northwest Permanente, P.C. Physicians and Surgeons (NWP)
- Ohio
- Kaiser Foundation Health Plan of Ohio (KFHPOH)
- Ohio Permanente Medical Group, Inc. (OPMG)
In addition to the regional entities, in 1996, the then-twelve Permanente Medical Groups created The Permanente Federation, a separate entity, which focuses on standardizing patient care and performance under one name and system of policies. Around the same time, The Permanente Company was also chartered as a vehicle to provide investment opportunities for the for-profit Permanente Medical Groups. One of the most dubious ventures of the Permanente Company is Kaiser Permanente Ventures, a venture capital firm that invests in emerging medical technologies.
Governance
Each entity of Kaiser Permanente purports that it has its own management and governance structure, although all of the structures are interdependent and cooperative to a great extent.
Kaiser Foundation Health Plan and Hospitals
Kaiser Foundation Health Plan and Hospitals has a single Board of Directors which is the ultimate governing body. George C. Halvorson is the chairman of the Board and the chief executive officer of Kaiser Foundation Health Plan and Hospitals. In this capacity, Mr. Halvorson is sometimes referred to as the chairman and CEO of Kaiser Permanente, although he is not a director for any of the Permanente Medical Group boards or an officer of any of those organizations. Halvorson leads a cross-regional management team that directs health plan and hospital operations across the Kaiser Permanente regions. Each region is headed by a regional president, each of whom report to a member of the national leadership team. The Kaiser Foundation Health Plan and Hospital Board of Directors consists of fourteen members including Mr. Halvorson. The other thirteen members of the Kaiser Foundation Health Plan and Hospital board are Christine K. Cassel, MD, Thomas W. Chapman, EdD, Daniel P. Garcia, William R. Graber, J. Eugene Grigsby III, PhD, Judith A. Johansen, Kim J. Kaiser, Philip A. Marineau, Jenny J. Ming, Edward Pei, J. Neal Purcell, Cynthia A. Telles, PhD, and Sandra P. Thompkins.
Permanente Medical Groups
The Permanente Medical Groups all have varying organizational structures, but all are headed by a physician executive (called the executive director or executive medical director) who reports to a board of directors made up of the physician-owners of the medical group. The executive director or executive medical director in each region partners with the health plan and hospitals regional president to provide direction to operations in that region. On a national level there is a subordinate entity representing the regional Permanente Medical Groups called the Permanente Federation. Its executive director is John H. Cochran, MD. The Federation is accountable to an Executive Committee, and is made up of four of the nine regional Permanente Medical Group chiefs, along with the executive director of the Permanente Federation. The current Executive Committee is made up of Permanente Federation executive director John H. Cochran, MD, TPMG executive director and CEO Robert Pearl, MD, SCPMG medical director and chairman Jeffrey A. Weisz, MD, TSPMG medical director and chairman Rob Schreiner, MD, and OPMG president and medical director Ronald Copeland, MD. Dr. Copeland also serves as chairman of the Permanente Federation Executive Committee.
History
Early years
Though it has since become the largest organization of its kind, Kaiser was not the first HMO. In its modern form, the HMO combines a large group practice, contracts with employers to care for a group of workers, and a prepayment plan for both hospitals and group practices. The first "contract doctor" system in the West was orchestrated by Dr. Raymond G. Taylor, who created a temporary healthcare system from 1908 to 1912 on behalf of the Los Angeles Board of Public Works to care for the 10,000 workers on the Los Angeles Aqueduct project. The first group prepayment plans appeared in 1929 in response to the onset of the Great Depression. That year, Baylor University started a hospital prepayment plan, the first of several which would ultimately join together to become the Blue Cross insurance network. In Oklahoma, Dr. Michael Shadid recruited local farmers around Elk City, Oklahoma into a small consumer healthcare cooperative. And in Los Angeles, Dr. Donald Ross and Dr. H. Clifford Loos founded the Ross-Loos Clinic to care for City of Los Angeles public utilities workers.
As for Kaiser Permanente, its history dates back to the year 1933 and a tiny hospital in a little town called Desert Center, California. At that time, Kaiser and several other large construction contractors had formed an insurance consortium called Industrial Indemnity to meet their workers' compensation obligations. Garfield had just finished his residency at Los Angeles County-USC Medical Center at a time when jobs were scarce; fortunately, he was able to secure a contract with Industrial Indemnity to care for 5,000 construction workers building the Colorado River Aqueduct in the Mojav
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