How Kaiser Permanente Puts the Consumer First

By Scott Kirsner |  January 20, 2016

About Kaiser

We’re a triad of three units — the health insurance plan, the hospitals, and the medical groups. All three of these sit under one umbrella, but are financially independent of each other.

In fact, the seven different medical groups negotiate yearly with the health plan to provide care for their members. There are over 38 hospitals, over 600 medical office buildings. We have about 18,000 physicians, about 50,000 nurses and over 180,000 employees in our system now. Our annual revenue is over $56 billion.

[There are] tons of innovations going on in [healthcare] and billions of dollars are being spent.

Our role is to try to figure out which of these innovations are effective for our members and our patients. We’re not in the area of innovating devices. We’re not in the area of innovating in pharmaceutical agents. Although, we do work with pharmaceutical companies to [run trials] to see if they work.

Our job in this space is to check, try to figure out what works best. There was an interesting study done in Australia [on] new orthopedic implants. In Australia, they have a registry that tracks all of these implants. It turns out in this area, there’s so much cutting-edge innovation. [But] some of the latest implants actually under-perform those that are standard. 

Consumerism in Other Fields

I’m going to take you out of healthcare for one second and say, “What’s happening in consumerism in other fields?” How many of you have ever gone to Blockbuster, or know what Blockbuster is? Or Tower Records? Or Borders bookstore? Great experience, top of their field.

At Blockbuster, you could figure out what the latest releases were, or your favorite genre of movies, or the classics. You could do the same at a bookstore and get that visceral, physical feeling of the shopping experience, and it was great.

What has happened to all of them? It wasn’t as convenient as sitting on your lounge chair or in your bed, getting the movie delivered to wherever you were. In music, having it in your pocket, on your iPhone.

Consumerism has changed. You never need to leave your home, never need to leave your couch, to get all of the modern conveniences that you need.

That’s the level of convenience our consumers are looking for. Let me compare that for a moment with your healthcare experience. How many of you have gone to see a doctor in the last couple of years? What do you need to do? You have to take a half day off of your work. Make an appointment ahead of time, and then you come to my office.

There’s an area in my office called the waiting room. What other business has a waiting room? Then you sit there with other angry patients that are sick and coughing on you. You’re like, “I hope I don’t get sick.”

Then we bring you into my exam room. We undress you, so you can sit on that paper sheet. You’re cold and uncomfortable in there. You wait for me to come in, so I can give you this 15 to 20 minutes of miraculous cure that I have for you.

You think about that, and you go, “Would that work in any other business?” Would it? Imagine if that was your bank. There was a waiting room in your bank. You’re holding your check, and you’re waiting to deposit it. You don’t know when the teller is going to call you up. Would you stay with that bank? No.

The banking industry [lets you] deposit a check on your smartphone device. If you can do that with a bank, [why can’t you] have similar experiences in health care? We at Kaiser Permanente question that…

Why Change is Difficult for Docs

Is it because consumers don’t want it at health care? If it’s not the consumer, what’s the main roadblock? Why has healthcare…not changed at all over the course of the last hundred years? It’s actually similar to higher education. Professors don’t really want to change. Engineers don’t really want to change and frankly, doctors…don’t really want to change.

Partly it has to do with our comfort level. It has to do with the regulations that we’re under. Also, it has to do with the policy and the fee structures that we’re under.

If the only way that I get paid is for you to come and see me in my office, that’s the only way I can see you in my office. They say if you ever make a mistake [as a doctor], it’s actually called a never-event. An infection, a [deep-vein thrombosis], anything that isn’t exactly perfect is called a never-event.

[As a doctor,] you are going to want to do the same thing that you’re very comfortable [with,] where you know your outcomes… This whole culture is extremely difficult to break.

If you think about what’s happening in the market, the healthcare market has dramatically shifted. The Accountable Care Act has clearly been a factor in that. There is an aging population in the United States. There are decreasing resources. [Healthcare spending is] at almost 20 percent of our gross domestic product.

We have to begin at the top. Our executive sponsorship says we’re going to need to change. They see what’s going on in the market forces. [But] nothing in healthcare will move without physicians moving. How do you get physicians to move, in addition to executive sponsorship?

Those of you who work with engineers, how do you get engineers to move? You don’t [put] an administrator in front of a bunch of engineers… No, you get engineers to talk to engineers, and likewise, we need to get doctors to talk to doctors about how the practice may have to change.

We have a doctor from every medical center who’s an innovation champion. They have a group at each of their medical centers. This group gets together once a month to talk about innovation.

What if we got rid of waiting rooms? I don’t think patients really like waiting rooms. Our future medical office building design eliminates waiting rooms and changes them into interactive areas where patients can get engaged with their care immediately. There could be other forms of examination, be it by telephone, or by another tool.

We support innovation funds. We now have three innovation studios in Washington, D.C., another one in northern California, and another one in southern California where we can demonstrate, foster, and nurture innovations.

Using the Smartphone as a Diagnostic Device

As an example of some of the work that we’re doing, let me go over some of the projects that are beginning to change the way we practice. Why not begin to leverage the smartphone for your health a little bit more? If you have a rash, do you have to physically take yourself to go have somebody look at it? They don’t usually touch it.

That’s the way you learn how to [diagnose rashes, from textbooks]. Why now that once you’re in practice, you have a patient come and see you? In part, because that’s the only way we get reimbursed.

What if that wasn’t an issue? Could we provide that service for you over the smartphone? We’re testing that in San Diego currently, where a smartphone app instructs you how to take a picture of that body part, the lighting. Once done, it asks you some questions about your rash. All the same questions that the doctor would ask you if you were face-to-face.

It sends the picture and a synopsis to the doctor. We’re checking to see how many times the doctor can make an accurate diagnosis. You can still come in if you need to have them come in. But wouldn’t it be much more convenient to have that taken care of without ever coming in, with a smartphone?

Video Visits

[At Kaiser, we] developed this tool called integrated video visits. These video visits are delivered through that electronic medical record system that I just talked about. It’s available on the flagship app, on

You can now get ahold of doctors and have a video appointment. More convenient for patients? We think so. Is it a complete replacement for face-to-face? Probably not, but it gets us a little bit closer to delivering care where you are, at your convenience as opposed to our convenience.

A Wellness Dashboard

When you start your car every morning, what happens? It starts, but in addition to that, a bunch of lights go off on your dashboard. If one light stays on, like the engine light or the oil light, that tells you that your car is not in perfect health. You should go see the car doctor. Banks…give you a statement of how your accounts are doing. Investment firms do the same thing.

Where do you go to see how you’re doing in terms of your health? Do you have a dashboard, where … [it] says, “You’re in good health,” or, “You’re forgetting some of your preventative care things”?

We think that’s a mistake. Patients should also be as actively involved in their care, by having something like a dashboard. Again, both on the flagship app and on, there’s something called the Online Personal Action Plan.

When you log into that, it tells you if you need a mammogram, a pap smear, or a PSA. It tells you, “You should go get that done.” If you have a chronic illness, it tells you about your drugs and what your labs should look like or when you need to get labs.

If you’re completely healthy, if you put in your weight, your height, it tells you if you’re overweight and it tells you how to go about losing weight. [It’s] a dashboard for health that’s available for you wherever you are.

Where are we trying to get to? Ultimately it’s about providing care, anytime, anywhere, in the manner that you want it. Much like Amazon has been able to do with many products.

Doing More with Less

[If we improve the health of our members, we] don’t have to build as many buildings and have [as much] infrastructure to deliver care. Look at Target — Target has a retail operation that makes about $75 billion in revenue a year. They do that with what? 1,800 stores, about 60 warehouses. Amazon does about $80 billion worth of business out of about 80 warehouses [and no stores.] A huge difference in infrastructure costs. Can we apply some of that to healthcare and improve the cost of healthcare, and the quality of healthcare at the same time?

How are we going to do this? We are a healthcare institution. …We are seeking opportunities [by] meeting [with] digital [companies] and other efficient companies. We’re also working with other companies, from artificial intelligence, to big data analytics, to data visualization. All areas that will begin to transform healthcare…

I’ve been in practice now for almost 30 years. I’ll tell you, you look forward to the next five years. The transformation that we could do in healthcare, the way we look at health delivery — that could be as revolutionary as the digital transformation, as revolutionary as a smartphone. Everybody has a smartphone. What a change that’s been to our lives…Shouldn’t we have that degree of change in healthcare, to deliver healthier communities?