THCB

A Response to Steven Brill

Robert PearlAs CEO and Executive Director of The Permanente Medical Group at Kaiser Permanente, I have been following with interest the exchange between Malcolm Gladwell and Steven Brill, prompted by Gladwell’s critique of Brill’s book (America’s Bitter Pill).  Gladwell accurately points out that the solution to the problems of the American health care system that Brill puts forth in the book are very close to the structure of Kaiser Permanente.  We provide world class hospital and ambulatory care to millions of Americans through our dedicated, physician-led Permanente medical groups, and pay for it through the not-for-profit Kaiser Foundation Health Plan.

Brill dismisses Gladwell’s criticism explaining that “Kaiser Permanente is not the same because it doesn’t have a monopoly, or oligopoly power, in any of its communities. It’s not a teaching hospital. It doesn’t have the network of high-quality doctors, or isn’t perceived to, like New York Presbyterian has in New York or the Cleveland Clinic has in Cleveland.”

Brill’s comments are not accurate. In our Northern California region, as an example, we sponsor 13 different residency programs, and train 500 residents a year.  In addition, our teaching hospitals serve as training sites for all the major academic medical centers in the region for both medical students and residents. We have partnerships with several East Coast medical schools to provide medical school clerkship opportunities. And, on any given day, there are more medical students on our campuses than at the sponsoring medical schools.

Our quality and health outcomes have been pace-setting: a 30% lower risk-adjusted mortality rate from cardiovascular disease than the communities in which we operate; nation leading performance in stroke prevention and sepsis treatment, and a 50% reduction in death rate compared to the rest of the nation for patients with HIV/AIDS. And when the Centers for Disease Control chose California hospitals to care for the sickest patients with Ebola, two of the four destination sites were Kaiser Permanente hospitals.

Our Division of Research is the largest clinical and epidemiologic research facility in the U.S. outside of a university or federal institution with over a hundred million dollars a year in research grants.

And contrary to Brill’s assertion, over 1,000 of our physicians have academic appointments in university hospitals.  We are the preferred practice option for many of the best trained physicians in the nation today, and have more than 10 highly qualified physician applicants for every new opening.

With nation leading quality, advanced information technology and our pick of the best physicians, it’s no surprise that over 40% of the insured population in Northern California choose us as their health care provider. It’s true that we do not exercise monopoly power – nor has that ever been our goal – and we think the fact that consumers and patients can choose to join us or select another provider, is a great catalyst of improvement and creative innovation, not a failure.

Rather than challenge Mr. Brill, or continue the debate, I invite him to visit us in Northern California, as experts like Malcolm Gladwell, Clay Christensen, and Atul Gawande have done. He can judge for himself whether this 70 year-long, continuously operating partnership between an integrated delivery system and a not-for-profit health plan isn’t in fact what he envisions as the model for health care in this country.

If he does, he will see that what he proposes is actually alive and well — a proven solution to the health care challenges the country faces.

Robert Pearl, MD is CEO and Executive Director of the Permanente Medical Group.

 

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bill nguyenWilliam Palmer MDallanallanallan Recent comment authors
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allan
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allan

Personal preferences don’t count. You have a personal preference towards the ACA and perhaps that affects how you perceive things. You also don’t seem to be fond of classical insurance where risk is a major determinant of the premium. Instead you prefer to place one person’s risk onto another’s premium. You don’t like underwriting, but that is what real insurers need to do if one expects them to sell real insurance which classically is based upon risk. Your basic point is that underwriting leaves some people uninsured. I would prefer if you would say leaves some people with less care… Read more »

Barry Carol
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Barry Carol

My personal preference, as I’ve said before, would be to get rid of the tax deduction in a revenue neutral way, probably as part of a broad based tax reform effort. I hate to be a naysayer but I just don’t see any political support for it either among unions or very many of the remaining 150 million plus people who get their health insurance through an employer. Of course, it doesn’t affect me directly because I have Medicare. Subsidies for lower income people would presumably have to come after they spend some defined maximum percentage of their adjusted gross… Read more »

William Palmer MD
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William Palmer MD

You hit the nail, Nguyen,…having other people pay your bills is the root cause of our health care dysfunction. [ I think] I just wonder if vouchers or Medibucks would bring us part way back to a situation wher patients can say to themselves “my marginal cost for this health care intervention is equal to its marginal benefit to me.” This is called shopping. If this would work, then we can have some insurance function along with some shopping function and we can maintain some altruism and subsidies. People who buy health care services have to be aware of prices,… Read more »

Peter1
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Peter1

Doctor Palmer, care to bargain your price? What parameters would you apply to giving a lower price?

Do you post your prices? Run weekly specials? Advertise, “lowest prices in town”?

When you need hospital care who do you bargain with; the hospital, the surgeon, the anesthesiologist, the lab, the x-ray tech, all of them?

Barry Carol
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Barry Carol

Following up on what Peter1 said, it’s impossible for patients to shop for care when insurer contract reimbursement rates, which can differ materially among providers, are hidden from patients by confidentiality agreements prohibiting disclosure? Beyond that, how is the patient to tell whether the tests the doctor ordered are really necessary or just defensive medicine? Also as I’ve said many times, care that must be delivered under emergency conditions is, by definition, not shopable. There needs to be special rules governing how much can be charged under those circumstances. For price transparency to become a reality would probably require legislation.… Read more »

allan
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allan

Barry, there is no secret as to why we don’t have transparency today and you know full well that we could have it relatively quickly by providing the tax break to the employee instead of the employer, ending third party payer. That would also reduce fraud, marginal care, and other costs while providing more patient specific care making sure the patient gets what the patient wants. Today none of that happens because the end user, the insured, has little control. Instead the insured is treated like a child and is told when and how his diapers will be changed. This… Read more »

Barry Carol
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Barry Carol

Allan, Giving the employee control over the tax preference is a fine idea that I would gladly support. There are several challenges aside from the political aspect though. The biggest one has to do with how to translate the value of the employer contribution to the individual employee level. Employers generally require employees to contribute either the same amount in dollars or as a percentage of the premium depending on whether they need single or family coverage. Some employers will vary the contribution based on income with the lowest paid employees contributing nothing or very little. In the insurance market,… Read more »

allan
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allan

“There are several challenges…” The only challenge is to isolate the socialist leftists that believe in coercion and let the public know how costly and unfair the present set up is. Once that is done the spineless one’s will fall into line and do what should have been done years ago. It will not be a perfect transfer and one shouldn’t kill themselves or the idea just to make sure that perfection exists. I really don’t care about these age bands which are nothing more than transferring one person’s costs to another. Get rid of coercive community rating. It isn’t… Read more »

bill nguyen
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bill nguyen

I have just read the “what I learned from my $190,000 surgery” on the Time and I think the US will go to bankruptcy court one day if we cannot control the health care costs. What I learned when I came to live in Minnesota in 2005 was the cost for prenatal ultrasound which I paid only $10 (colorful image with a CD) at International Women Hospital in Saigon Vietnam compare to $500 for a black and while image at Hennepin Medical Center. The high tech machines are very similar, because these machines are developed by a few companies like… Read more »

William Palmer MD
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William Palmer MD

Just as FFS has an incentive for doing something, FFnonS (fee for non service) has an incentive for not doing something. And there is no reason these incentives should be more or less powerful. Capitation has an incentive for not doing something. Bundling has an incentive for not wanting to find or intervene in extraneous diseases outside the bundle. And it has an incentive to discover additional bundles. It is mixed. The incentives in “value” have got to be a mix of capitation and bundling. Kaiser must have an FFnonS because it is a large capitation scheme. Commercial insurance has… Read more »

allan
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allan

Thank you Joe for limiting your comments to Kaiser. I am sure they are better than some of the early Medicare HMO’s that were sued into providing better care or went out of business. Anecdotal knowledge of the type you provide is insufficient and shouldn’t be used in this type of discussion. I hope you are right about Kaiser’s improvement, but that means all the earlier defenders of Kaiser were wrong so in the future some might be saying the same about your defense today. Ware is not ancient history. When we do a study on a specific subject those… Read more »

Joe Flower
Guest

Good theory, Allan. It is not my observation that it is happening that way (intentionally under diagnosing people to avoid costs). Of course, one would have to be a Kaiser doc to know for sure. And yes, there have been lawsuits and complaints. But any large medical system generates lawsuits and complaints. If one wanted to really study the question, one would have to ask 1) how many are there, and have the numbed changed over time, 2) how old are they, and have the numbers or types of complaints changed as Kaiser has refocused on quality in this century,… Read more »

allan
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allan

Not just theory. The data backs up what I am saying. Go to the Ware outcome study that compares FFS and capitated care. “Conclusions.–During the study period, elderly and poor chronically ill patients had worse physical health outcomes in HMOs than in FFS systems” The numbers of complaints and the rulings tell us even more. Unless you have a good unbiased study proving your position the incentives created by capitation lead to one conclusion and that is the conclusion I have written about over and over and over again. Denial of care is a great risk where capitation exists.. Understand… Read more »

Barry Carol
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Barry Carol

Allan, So, if employees had a defined contribution / voucher from their employer to select a plan among multiple choices from multiple carriers, and they chose Kaiser or some other HMO plan, that would be fine by you? Or, if someone were asking your opinion before they made their choice, would you tell them to avoid HMO’s at all costs as long as there is a decent fee for service plan available at an affordable premium? I suspect most people have never heard of the Ware study. I know I hadn’t until you made me aware of it. Since it… Read more »

allan
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allan

Barry, I believe in choice. I can render an opinion, but I wouldn’t use force to make a person do what I think is best. Thus if the patient had free choice I might suggest a FFS plan, but believe the ultimate decision is his. As far as Ware, anything is possible, but the incentives haven’t changed since Ware was published in the 90’s and the study was of high quality. Why would you think things are different today then they were before. If you remember they said things were fine with HMO’s in the 90’s.. You focus on the… Read more »

Barry Carol
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Barry Carol

Allan, I can think of several ways the healthcare market and HMO’s could evolve, especially over the 25+ years since the Ware study was done. Suppose, for example, back in the 1980’s and 1990’s, the primary strategy of HMO’s was to offer the lowest insurance premium in the market and to incentivize their doctors to skimp on care if necessary to make the numbers work as you suggest. Now, over 25 years later the combination of social media, patient satisfaction surveys, changes in perceived patient expectations and the advent of electronic records could easily change the HMO operating mentality and… Read more »

allan
Guest
allan

Barry I quote you occasionally below, Unfortunately you demonstrate a bit of naiveté and too much desire to move us away from FFS. The principle means of gaining patients is and was to appeal to the healthy, not to the sick. That is why so many Medicare HMO’s gave out free eyeglasses and free hearing aids (poor quality). There were more delays for the sick than the healthy and the healthy obtained an abundance of care since they didn’t need any. Today there may be payments for risk, but those payments can be easily gamed. Suddenly you have a new… Read more »

Joe Flower
Guest

First of all, Allan, I am not arguing here for all HMOs over all time. I have only made comments about Kaiser. My anecdotal knowledge of people with serious cases going to Kaiser and getting good results is all based on Kaiser of Northern California (though the family experience with Kaiser includes Southern California and Hawaii as well). And I have noted improvements in quality since the 1990s — which are documented in a series of studies that Pearl mentioned. Ware’s data is from 1986 to 1990, which is really ancient history on this question. And many structures called “HMOs”… Read more »

allan
Guest
allan

“We provide world class hospital and ambulatory care to millions of Americans through our dedicated, physician-led Permanente medical groups, and pay for it through the not-for-profit Kaiser Foundation Health Plan.” I should have also commented on this. Kaiser is often called a non profit organization. As mentioned above the split on profits is 50:50 where 50% goes to physician partners. But, noting it is non profit doesn’t mean big profits aren’t being made. For 2012 listed on IRS form 990 we see the President and CEO George Halvorson being paid 9,800,351. There are a bunch of others being paid greater… Read more »

Joe Flower
Guest

There is not a direct path between “denying care” and “making more money.” There might well be if Kaiser had captive patients. But Kaiser is in highly competitive markets everywhere. As I mentioned before, because of their unified structure they don’t scale as easily as other organizations. They need a good chunk of market share to even stay in a given market. And because of their structure, they also cannot expect to be the low-cost leader anywhere. This means that to make more money, they have to both cut their actual costs of providing care (so that they can hit… Read more »

Barry Carol
Guest
Barry Carol

Those are very interesting comments, Joe, especially about the heavy infrastructure costs and the need to sustain a positive reputation. Do you have any data on the number of Kaiser insured members who chose Kaiser themselves as opposed to having a union or employer choose it for them and how that mix has changed over the last 10-20 years? From a patient’s perspective, I can understand at an intellectual level that expensive care could be denied to try to save money if the health system is being paid on a capitated as opposed to a fee for service basis. However,… Read more »

Joe Flower
Guest

No I don’t have data, Barry. My remarks are based on working with a wide variety of clients over the years, including Kaiser and other large insurers and large providers and IDNs, and hearing what their concerns are — and with Kaiser, experience that goes way back beyond the 35 years I have been a Kaiser member. My kids were born at Kaiser, and so was their mother. Her parents we’re members back in the 40s when Kaiser docs were being called Communists. It is clear that Kaiser’s clientele over the years was municipal and other government employees, unions, and… Read more »

allan
Guest
allan

Funny, we hear so many anecdotes while the data is always missing.

allan
Guest
allan

One need not ‘screw’ too many to save a huge amount of money. One only has to ‘screw’ the expensive one’s where there is no paper trail. Doing it correctly means one’s reputation is not in jeopardy even if the patient’s life is. Take a patient symptom that has more than one diagnosis. Pick something like dehydration for a syncopal episode where the diagnosis is Aortic Stenosis that requires cardiac surgery to prevent sudden death. Aortic Stenosis is my favorite example so it should be well known to you. A diagnosis of dehydration avoids all the work-up and most expensive… Read more »

allan
Guest
allan

@Joe: “You need physicians who think differently, in more naturally collaborative ways, and are willing to work with the efficiencies inherent in not getting paid fee-for-service. ”

In Kaiser’s case what the physician gets is a 50:50 split of the profits.

One might say that is not exactly a fee for every service, but it is a division of profits that can incentivize denying care that should otherwise be provided.

Perhaps Dr. Pearl would like to talk about the division of profits and what Kaiser has done to prevent the denial of care?

Dr. John Grohol
Guest

Strangely, I believe Dr. Pearl is insinuating I have some sort of connection with the union of mental health workers on strike against Kaiser. I’m a healthcare journalist, so no, I have no connection to said union (and would declare a competing interest if I did). I have never been a member of a union, nor has any member of my family. My only point was that this advertorial by Dr. Pearl was all gloss and shine about Kaiser’s achievements, while offering little of the kind of balanced picture that paints the true reality of Kaiser — complicated, messy, still… Read more »

Eric
Guest
Eric

A question about Kaiser mental health services:

Is part of the current controversy the result of philosophical differences between Kaiser’s medical leadership and its union about the efficacy of alternative types of mental health treatment? For example, does Kaiser emphasize “cognitive” (i.e., short-term) therapeutic approaches, while the union rank and file prefer a more classical Freudian style of treatment?

Matthew Holt
Guest

Yes, it’s a bit weird that Robbie Pearl thinks John Grohol who is a great pioneer in online mental health based in Boston is some kind of California union rep. And indeed while Kaiser has been making strides in mental health, the $4m fine suggests that indeed there was a problem–beyond union posturing.

So it would be great to hear more from Kaiser on the reality of the mental health issue…

Jennifer Bollen, MD
Guest
Jennifer Bollen, MD

Actually there are very very few health care organizations that integrate mental health as most people have health insurance but aren’t part of an integrated system like Kaiser offers.

So the vast majority of people are forced to forage for their own mental health care outside of any coordination with primary care and increasingly psychiatrists and psychologists are opting out of private insurance coverage.

Can you give us an example of any other organization in the California market that does better or that even offers integrated mental and clinical care?

Robert Pearl, MD
Guest
Robert Pearl, MD

At present we are in protracted bargaining with the union representing some of our mental health workers. It is unfortunate that this blog is being used by the union. The facts are that Kaiser Permanente’s mental health services have received the highest ratings from the State of California for several years as publically reported on the Office of the Patient Advocate website (http://www.opa.ca.gov/Pages/ReportCard.aspx). That said, we are always looking for ways to improve. Over the past few years we have expanded our mental health access, hired new staff and built additional facilities. Across this nation there is a crisis in… Read more »

Peter1
Guest
Peter1

“It is unfortunate that this blog is being used by the union.”

Care to be more specific Mr. Pearl?

Ken Grullon, MD
Guest
Ken Grullon, MD

Dr. Pearl make many excellent points about Northern California in his rebuttal of Mr. Brill’s dismissal of Kaiser Permanente. I would also like to point out that Kaiser Permanente in the nation’s capital has been recognized as a nation wide leader in quality and service. JD Powers has named KP in the Mid Atlantic as top in customer satisfaction 6 years in a row. KP Mid Atlantic outanks all local competitors in the quality of medical outcomes as ranked by respected national organizations. With over 500,000 members in Maryland, Virginia and the DIstrict of Columbia, KP has a firm footing… Read more »

Joe Flower
Guest

I have been a Kaiser patient for nearly 40 years. I am mostly a fan. A few thoughts: Quality: Kaiser went through an internal shake-up in the late 1990s which put an overarching executive committee in place. This gave the doctors more power in the overall group. Since then their medical quality has consistently improved. Those quality numbers Pearl cites are real, and they are all from this century. This is due to concerted efforts on the part of Kaiser clinicians. Mental health: Fail. Yes, in this area, Kaiser has not done what it needs to do to provide parity… Read more »

Barry Carol
Guest
Barry Carol

Joe,

Thanks very much. Your comments make perfect sense to me.

While I think getting away from fee for service is necessary if we hope to save money, my main question is how does the organization respond in treating patients with serious conditions and expensive fixes especially if they are older, say, 75+, when it would appear that there is a financial incentive to withhold necessary but expensive care whereas under a fee for service model, there wouldn’t be? Second, what role, if any, does utilization of services play in determining physicians’ bonus compensation at Kaiser?

Joe Flower
Guest

> withhold necessary but expensive care In my experience and that of a number of close friends, they do their best by you as doctors. I have had friends go through Kaiser with difficult cancers, brain tumors, seriously big stuff, and they are uniformly happy with their medical care. Other aspects of service and quality have varied over tie, but th fear that they will write you off if you are too expensive and/or too old, that has not appeared in my experience. >What role does utilization play in determining bonuses? Others can speak to this more authoritatively than I… Read more »

Barry Carol
Guest
Barry Carol

Thanks Joe. That’s very helpful. It will be interesting to see how the larger hospital systems elsewhere in the country will evolve as insurers move toward value based contracts and away from pure fee for service. Maybe we will see more of these systems get into the insurance business and shift their emphasis to population management while they try to keep as much of the utilization as possible within their own system so they can better control it. Population management has conceptual appeal from an efficiency and cost perspective for the economy and the society but I wonder how it… Read more »

Joe Flower
Guest

A strong, well-supported relationship with a primary care doctor is the most powerful tool in populate health management. The two are not opposed at all.

allan
Guest
allan

” But it does sound like there is a personal incentive for the doctors as a group to practice in highly efficient ways. And note that simply denying care at any particular point is often not efficient from the whole-case or while-life point of view.” Why? If just occasional expensive cases are denied then a lot of profit is made without the vast population knowing what is happening. Even the individual patient might not be in the know. Who is to find out if something was denied when a denial can mean no paper record? Changing a guideline can influence… Read more »

Joe Flower
Guest

If Kaiser were really run entirely by the bean-counters, maybe you would see that sort of thing happen. The reality is considerably more subtle. First, these are doctors making the care decisions. What you are picturing is actively hurting patients by denying them care that the doctors really feel would help. In my experience, it’s very hard to get doctors to do that, especially doctors working together in a group, especially doctors working together in a group to guidelines that they have agreed on. The scenario you are imagining is not realistic and as far as I can tell is… Read more »

allan
Guest
allan

Though I hate to say doctors are influenced by money, they are. They have families, expensive homes and cars, and expensive college bills. There is a point where the doctor can justify his actions and not even recognize what he is doing. After all, the rationalization goes,’ the patient picked the insurance company and knew that medical care had to be restricted.’ The rationalization continues: ‘the patient saved some bucks in exchange for this type of risk’. All the HMO has to do is move the physician just a tad and large amounts of money are saved. In the early… Read more »

J. Kirschman, MD
Guest
J. Kirschman, MD

This is an East Coast vs. West Coast fight. Mr. Brill is East Coast, grew up in Queens NY in the 1950s, graduated from Yale, while the vast bulk of Kaiser Permanente exists on the West Coast, so I do not believe that Mr. Brill was fully inoculated in KP culture. I live in Cleveland Ohio and thanks to all the advertising by the Cleveland Clinic, you would think the Cleveland Clinic is the best of all places. It’s not. In the San Francisco/Oakland area, 4 out of every 10 lives have Kaiser insurance and medical care provided by The… Read more »

Sherry Reynolds
Guest
Sherry Reynolds

You nailed it – Spread is the real challenge Here in the PNW for example we have the 50 year old Group Health Cooperative (integrated payer provider system that is literally owned by its members) with some of the highest rated quality metrics and patient satisfaction scores in the state. They have already implemented both an EHR as well as medical homes and have closed (outsourced) all of their in-patient care over the last few years (although they have their own floors in some hospitals). They were the first to develop a mobile app for Epics EHR and they have… Read more »

Barry Carol
Guest
Barry Carol

Those were interesting comments about the less than stellar mental health care. Also, if I were a Kaiser member and needed sophisticated and expensive treatment for a serious disease or condition, I would be afraid that their payment model would give them too much incentive to deny necessary care. What I really wonder about, though, is that for all Kaiser’s success in Northern CA and, I think, Southern CA, why hasn’t it been able to replicate its model anywhere near as successfully outside of California? Is patient acceptance of HMO’s the issue? Is it the need for huge infrastructure, critical… Read more »

Eric
Guest
Eric

Kaiser does many things very well, but they have a serious knowledge transfer problem: one part of the organization will figure out a way to solve a clinical or business problem but often there are difficulties transfering the knowledge to other parts of the organization. It is partly a cultural issue: Kaiser takes pride in giving its local physician groups and hospitals a high degree of autonomy, but the flip side of the coin is that one local group may resist making changes that another group made because of the “not invented here” mindset. Don’t get me wrong—over the past… Read more »