The Kaiser Permanente experience - Part Two

Posted by Health Entrepreneur 02/10/2016

Being a pioneer in implementing a new model of healthcare, Kaiser had their own share of challenges. Here we examine and learn from their experience as they successfully implement a functional Electronic Health Record system and bring in George Halvorson as the CEO who had the Vision to 'transform' how healthcare was delivered. We also cast light on the growth of High-Deductible Health Plans and how physician engagement was key to this viability of this model.

Issues the Kaiser Permanente model was experiencing at the time

  • ·         Model was struggling to implement a functional electronic health record and carried a reputation for inconsistent and poor customer service.

  • ·         There were seen deep divisions within the powerful Permanente Federation which represented Kaiser’s 17,000 physicians and there was a struggle about operations and strategic direction.

  • ·         The surprise element came in March of 2002, when Kaiser federation brought in a new non-physician CEO, George Halvorson.

  • ·         George had spent most of his work years as CEO of Health Partners which was a successful mixed model health plan.

  • ·         He had the reputation of being a product innovator and had developed the prototype in the mid 1990’s for the consumer-directed health plan.

Things we could learn from George Halvorson’s initiatives and the many changes he brought about in the Kaiser System.

  • ·         Halvorson brought in population health improvement objectives for its members along with the prototype developed, both of which were firsts in the industry.

  • ·         During his tenure Halvorson led the Kaiser plan to stable and solid profitability while adding several members in California in spite of a devastating recession and the membership base reducing.

  • ·         Investments made - $6 million in computerized patient care systems and population health management infrastructure

  • ·         Other accomplishments – helped healing the breach in trust with Kaiser Physicians and improved the customer satisfaction score to an extent that the model earned a 5 star rating under the Medicare Advantage system.

  • ·         Achievements by Year 2013 – over $53 billion in revenue and over $ 19 billion in reserves and investments!

Halvorson’s time at Kaiser, his views on health reform, his public health crusading and unfinished agenda with reforms at Kaiser

·    He touches upon the evolution of Managed Care and he believed that Kaiser was not a HMO in the classical sense of the word. He maintains that while it was strange that the HMO membership count went down from 29 percent of the total employed populace in the country to 13 percent, it was an achievement of sorts that Kaiser managed to add a million lives in California alone! Halvorson maintained that Kaiser was a vertically integrated care system using a health plan as its financing model. The Kaiser model was one that enabled them to do things that they could not do under other settings.


·  The major achievements through the incorporation of this model were:

o   Focus on the patient, prevention, population health, changing care delivery, information flow on the patient – while many other care systems focussed on information creation to generate bills! Kaiser Permanente distinguished itself on creating information in support of care.

o   The secondary function of that information flow is creating cash flow. This is the primary reason that distinguished the Kaiser model from others and created a path very different from other HMOs.


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