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December 23, 2009 > The Health Care Debate - a continuing TCV series

The Health Care Debate - a continuing TCV series

In order to better understand the current health care debate raging throughout the country and in the halls of the United States Congress, TCV is asking local medical institutions to comment on the current health delivery system and the efforts to improve it. This week Calvin Wheeler, M.D., Physician-in-Chief of Kaiser Permanente Southern Alameda County responds.

TCV: How does KP differ from other health insurance/PPO/EPO/HMO organizations?

Dr. Wheeler: Founded in 1945, Kaiser Permanente is an integrated health care system that is recognized as one of America's leading health care providers and not-for-profit health plans.

Care for members and patients is focused on their total health and guided by their personal physicians, specialists and team of caregivers. Our expert and caring medical teams are empowered and supported by industry-leading technology advances and tools for health promotion, disease prevention, state-of-the art care delivery and world-class chronic disease management. Kaiser Permanente is dedicated to care innovations, clinical research, health education and the support of community health.

TCV: How are Kaiser Hospitals and Permanente Medical groups affiliated?

Dr. Wheeler: As an integrated health care system, Kaiser Permanente is comprised of the Kaiser Foundation Health Plan, Kaiser Foundation Hospitals and The Permanente Medical Groups (physicians).

At Kaiser Permanente, we are the caregiver, the hospital, the laboratory, and the pharmacy. In fact, what makes us unique is that we play every position across the health care continuum. We provide both the health care and the health care coverage.

TCV: How has the KP model changed since inception?

Dr. Wheeler: Kaiser Permanente has evolved over the past 60 years, and we have continued our commitment to helping shape the future of health care. We have remained a leader in health care innovation and health care information technology.

Our integrated approach makes our goals all point in the same direction: toward finding the optimum balance of high quality, efficiency, and greater affordability. Everything we do is driven by our passion for prevention. Not only does this increase the health and well-being of our members, customers, and communities-it helps us save millions of dollars by managing disease more effectively.

TCV: Are KP facilities located in all states? Any affiliated groups outside KP?

Dr. Wheeler: We currently serve 8.6 million members in nine states and the District of Columbia. The nine states are: California, Colorado, Georgia, Hawaii, Maryland, Ohio, Oregon, Virginia and Washington.

TCV: How are physicians and hospital personnel compensated? Salary, bonus, capitation fees?

Dr. Wheeler: Kaiser Permanente doctors are compensated as a result of a two-step process:

Health Plan pays the Medical Group
Each year at Kaiser Permanente, the Health Plan and the Medical Group in each region negotiate and agree on the total amount of money that is estimated will enable our physicians and other clinicians to provide the amount of professional medical care that our members are expected to need in the upcoming year. This estimate is based on the previous year's performance (and the years prior to that), and also includes administrative and other expenses associated with operating the Medical Group.

Medical Group pays the doctor
After the Health Plan pays the Medical Group, the Medical Group uses that money to pay its doctors and other personnel, and to meet its other expenses.

The primary compensation method used by all of the Medical Groups is salary. Salary generally varies with medical specialty and tenure. Smaller amounts of additional compensation may be paid for other things including board certification, achievement of specified clinical quality measures and achievement of member satisfaction levels.

TCV: Who controls the quality of patient care?

Dr. Wheeler: At Kaiser Permanente, one of our top priorities is to continually improve the quality of health care we provide. By coordinating patient care and working closely with their fellow physicians, the Permanente Medical Group physicians lead the way in improving clinical practice, conducting medical research, and improving overall health care quality for our members and our communities.

TCV: How will passage of a universal health care bill affect KP?

Dr. Wheeler: Health reform, done right, will mean two important things for Kaiser Permanente. First, more people will have the opportunity to choose us. Every American would have access to health care coverage. With 46 million Americans without coverage also not getting necessary preventive care, we see reform as a significant opportunity to improve the lives of those who are currently outside the system. Second, health care organizations will be competing increasingly on quality. We believe the investments we have made in our health care delivery system, especially our people and the electronic health record systems now in place to support them, have us well positioned in an environment where plans and providers will compete primarily on clinical excellence, rather than managing risk and avoiding patients with the greatest needs.

TCV: Which provisions of Universal Healthcare will impact KP most heavily?

Dr. Wheeler: On the positive side, Medicare quality bonuses in the House and Senate bills will encourage health plans to focus on improving the quality of care delivered to Medicare beneficiaries, which will mean better health for seniors and fewer costly health crises. As a health care organization that has been recognized by US News & World Report, J.D. Power & Associates, and others for the quality of our care, we think these provisions can be helpful to our ongoing efforts.

On the more problematic side, a $6.7 billion annual tax on health plans proposed by the Senate has raised serious concerns among innovative integrated health care delivery systems like ours. The tax applies to fully insured health plans like Kaiser Permanente at a five to one ratio when compared with self-funded plans used by large corporations. We have been reinforcing the need for shared responsibility in order to achieve universal coverage. The Senate insurer tax should be fixed to treat individuals and small businesses fairly.

We are also closely monitoring the potential impact of health reform legislation on the federal Medicare program and Kaiser Permanente's Medicare plans. Some proposals currently under consideration would reduce payments to plans and therefore could result in increased premiums and/or cost sharing for Medicare beneficiaries. We hope that any changes will be moderate and phased in over time.

TCV: Will KP change its operations if any provisions of present proposals become law?

Dr. Wheeler: Yes, though it is unclear exactly how at this point. Once the legislation is finalized and the federal government begins work on its implementation in 2010, we will have a better sense of what operational changes may be necessary. With Medicare payment reductions and new insurer taxes, it seems clear that we will have to do more with less. The influx of new - currently uninsured - members for Kaiser Permanente will initially be limited because universal coverage in the current bills won't begin until at least 2013. In addition, as a care provider, our growth is constrained by our ability to fund and build care sites and hire health professionals. While other insurers can write an unlimited number of policies and contract with new providers, our growth is directly connected to our ability to provide high quality care to our current members.

TCV: Is KP in favor of a "public option?"

Dr. Wheeler: Kaiser Permanente does not have a position on a government-run health insurance option. Conceptually, some elements under discussion could be problematic, like extending volume-based fee-for-service coverage and exacerbating the cost shift from publicly to privately insured Americans. If the goal of a "public option" is cost control, we believe that proposed insurance exchanges and payment reforms to encourage high quality, coordinated care are far more likely to provide the access and affordability that Americans want.

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