Kaiser Permanente aims for quality, efficient health care

One on one

November 11, 1991

One on One is a weekly feature offering excerpts of interviews conducted by The Evening Sunwith newsworthy business leaders. Alan J. Silverstone is a senior vice president and regional manager for Kaiser Permanente, a health maintenance organization operating nation-wide. Q. Kaiser Permanente is a well-known Health Maintenance Organization across the country. What is your operation like in the Baltimore region and what are your future plans?

A. We currently have five medical centers in the Baltimore area and we have 11 in Washington area. We are a prepaid, group-practice plan offered generally through employers, and we intend to market to employers as well as individuals. We provide comprehensive benefits at one price. The key to our system is the efficiency that we believe the prepaid system allows us to offer while insuring high quality.

Q. How many members do you have in the Baltimore area?

A. We have approximately 25,000 members in the Baltimore area.

Q. When did you start in the Baltimore area?

A. We came up to Baltimore to begin initial activities in the latter part of 1985.

Q. What type of HMO model is the Kaiser Permanente operation?

A. We are a group model, which means that there is an independent medical group that we contract with. It is similar to the staff model -- the difference is the relationship between the entities and the health-plan medical group. In a staff model the physicians report to the health plan, and it's sort of a subservient kind of relationship. Our organization is a group model, which means that Kaiser and Permanente do business together in delivering care. So the medical group is a co-equal partner with the health plan in this endeavor. They are not at all subservient, and we believe that this relationship is unique. . It is the balance between the business aspects of of medicine -- through the health plan -- and the clinical aspects of the delivery of medicine -- through the medical group -- coming together and organizing services that provides for an optimum situation.

Q. What is the name of the group that you contract with?

A. It is called the Capitol Area Permanente Medical Group. It is a professional corporation of approximately 450 physicians. They have a board of directors, they elect a medical director, who is, in effect, my counterpart here, and they are a professional corporation of every type of physician. The key element is that they work solely through the medical group to provide care for Kaiser foundation health-plan patients. They do not have any outside practices. They work solely in providing care for health-plan members.

Q. A number of insurance companies recently have been moving into the HMO market in the Baltimore region. Why are these insurance companies getting into the market and how is that going to affect your operation?

A. Well, I think the insurers are getting into the HMO market in order to round out their product line, if you will. I don't believe that there is a cultural commitment to prepaid medicine or to managed care or to HMOs, but I believe the insurers feel they need to have this system as part of their product line. And I believe they are attempting to market it along with the other products that they offer.

Q. So you think that if the going gets tough, they'll just cut out of the HMO market?

A. No, I don't think they will because I think things are going in that direction. I think employers and other forces out there are forcing them to give it a lot more consideration, the managed-care options. But I don't believe that, in an organizational manner, they are prepared to address this. You have to understand that Kaiser Permanente is not only a deliverer of care, we are an insurer. We are a unique animal. The indemnity insurance people who are now actively getting involved in the HMO business are financiers of medical care, they are insurers of medical care. They really have generally not concerned themselves with the delivery systems in medical care, and that's where I think you have some real differences. Kaiser Permanente does not use administrative overlays, if you will, in order to insure the practice of appropriate medicine. We believe through appropriate incentives and through the appropriate structuring of our organization, we will get the impacts and the effects of the outcomes that we need and require. Whereas the indemnity insurer is generally used to using administrative overlays in getting the results that they want because they are generally financiers of care -- they are not in the delivery business. In effect, when they get into the business now, they go out and contract with a delivery system in order to organize their systems. We, in effect, build the delivery system.

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