[Congressional Record (Bound Edition), Volume 150 (2004), Part 18]
[Extensions of Remarks]
[Pages 24105-24107]
[From the U.S. Government Publishing Office, www.gpo.gov]




STEVE LOHR'S NEW YORK TIMES ARTICLE: ``IS KAISER THE FUTURE OF AMERICAN 
                             HEALTH CARE?''

                                 ______
                                 

                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                      Thursday, November 18, 2004

  Mr. STARK. Mr. Speaker, I rise today to recognize an excellent 
article recently published in the New York Times. For years I have 
talked about the benefits of real managed care, not the managed cost 
model Republicans in Congress and the Bush Administration blindly push 
at the expense of patients.
  In his article, Steve Lohr presents the facts about Kaiser Permanente 
and its non-profit staff model health maintenance organization. For 
thousands of people in my district and millions across the country 
Kaiser provides quality, cost effective care, while still finding the 
resources necessary to be a leader in the development of health 
information technology. At the same time, Kaiser keeps costs down by 
effectively managing chronic conditions and educating healthy members 
to avoid chronic conditions down the road.
  Tax credits and personal responsibility will do little or nothing to 
ameliorate the crisis of 45 million uninsured Americans. The Kaiser 
model is the most reasonable approach to creating a single-payer 
universal health care system. Obstacles to reaching the goal of 
universal coverage are many, but this article presents the hard fact 
that Kaiser is the future of American health care.
  It is with pleasure that I submit the attached article, ``Is Kaiser 
the Future of American Health Care?'' for inclusion in the 
Congressional Record. The article originally appeared in the October 
31, 2004 edition of The New York Times.

                [From the New York Times, Oct. 31, 2004]

             Is Kaiser the Future of American Health Care?

                            (By Steve Lohr)

       Oakland, CA--After 18 years in private practice, Dr. Victor 
     Silvestre was exhausted from his lonely battle, day after 
     day, with a health care system that seemed to be working 
     against him. A general practitioner, Dr. Silvestre found it 
     increasingly difficult to get his patients appointments with 
     specialists, who tended to focus on lucrative procedures 
     instead of routine care. Paperwork and haggling with 
     insurance companies, he said, took more and more time. 
     ``There just had to be a better way,'' he recalled.
       For Dr. Silvestre, the better way was not across the border 
     in Canada, or in some affluent nearby suburb, but in his own 
     backyard, in Oakland. Two years ago, he joined Kaiser 
     Permanente, the huge health maintenance organization based 
     here. ``So many of the solutions, the ingredients of a more 
     rational system for delivering health care, were there,'' he 
     said.
       It may seem unlikely, given Kaiser's past image as a ham-
     handed H.M.O., but plenty of others are reaching the same 
     conclusion. High-level visitors from across the political 
     spectrum--the Bush administration and National Health Service 
     of Britain, for example--are coming to California these days 
     to look at Kaiser as an institution that is actually doing 
     some of the things needed to improve health care.

[[Page 24106]]

       Obviously, there is no single model for revamping the 
     nation's costly, disjointed health care system, and Kaiser 
     certainly has its share of problems. But according to 
     economists and medical experts, Kaiser is a leader in the 
     drive both to increase the quality of care and to spend 
     health dollars more wisely, using technology and incentives 
     tailored to those goals. ``Quality health care in America 
     will never be cheap, but Kaiser probably does it better than 
     anywhere else,'' said Uwe E. Reinhardt, an economist at 
     Princeton who specializes in health issues.
       HEALTH care systems in most industrialized countries are in 
     crises of one form or another. But the American system is 
     characterized by both feast and famine: it leads the world in 
     delivering high-tech medical miracles but leaves 45 million 
     people uninsured. The United States spends more on health 
     care than any other country--$6,167 a person a year--yet it 
     is a laggard among wealthy nations under basic health 
     measures like life expectancy. In a nutshell, America's 
     health care system, according to many experts, is a 
     nonsystem. ``It's like the worst market system you could 
     devise, just a mess,'' said Neelam Sekhri, a health policy 
     specialist at the World Health Organization in Geneva.
       In this political season, the health care debate has been 
     mostly about who will pay the bill. President Bush talks 
     about tax credits and health savings accounts that are 
     intended to give people more control over their care but 
     would also mean that they would pay more out of their own 
     pockets. Senator John Kerry wants the government to pay more, 
     and he has proposed a major, and costly, program to cover the 
     uninsured.
       The favored solution of many liberals--and of no small 
     number of health care experts--is a single-payer system of 
     health insurance, covering the entire population and 
     underwritten by the government. For the foreseeable future, 
     that is considered politically off-limits, which was the 
     message Washington absorbed from the abandoned effort to 
     fashion a national health program in the Clinton 
     administration.
       How to finance health care is only one side of the problem. 
     The other is how to deliver the care more intelligently, and 
     that is where the Kaiser experience holds lessons. Given the 
     demands of an aging population and steady advances in medical 
     technology, national health spending will continue to climb. 
     Yet by all accounts, there is plenty of waste--estimates 
     range up to 30 percent or more of total spending--from 
     unnecessary clinical tests, hospital stays and prescriptions, 
     and the bedeviling sea of paper used to handle bills, claims 
     and patient records.
       ``We're not going to spend less, but figuring out how to 
     get the most value out of our health spending is going to be 
     the big issue of the future,'' said David Cutler, a health 
     care economist at Harvard.
       But Kaiser as a model? Wasn't Kaiser, an H.M.O., part of 
     the ``managed care'' movement that faltered in the 1990's 
     amid protests from doctors and patients? In fact, Kaiser, 
     with its origins in the 1930's and 1940's, when the 
     industrialist Henry J. Kaiser provided health care for his 
     construction and shipyard workers, has always been a hybrid. 
     The managed care concept of the 1990's was about having an 
     outside bean counter, usually an insurance company, looking 
     over the shoulder of the doctor--managing costs instead of 
     managing care.
       Kaiser has a different setup with different incentives. It 
     emphasizes preventive care and managing chronic diseases like 
     heart disease and diabetes to keep people healthier. And that 
     saves money because healthier people require less costly care 
     like hospitalization.
       The country's largest private-sector provider of health 
     care, Kaiser employs more than 11,000 physicians and 135,000 
     other workers, owns 30 hospitals and hundreds of clinics and 
     serves more than eight million members in nine states and the 
     District of Columbia. Seventy percent are in California. 
     Kaiser is both insurer and provider; employers typically pay 
     fixed yearly fees for each member, no matter how much care is 
     provided.
       Clearly, Kaiser has its limits as a model for others. It is 
     unlike many mainstream health plans in that it is a not-for-
     profit company--though one with annual revenue of more than 
     $25 billion and operating margins of 5 percent. Its 
     facilities tend to be large, and it has a lingering 
     reputation for practicing an impersonal, regimented style of 
     medicine that limits patient choice, despite recent efforts 
     like the creation of physicians' personal Web pages and e-
     mail communication with patients.
       Still, most health care experts who have studied Kaiser are 
     impressed. ``Kaiser has a model that consciously manages both 
     quality and costs in a way that has been very effective,'' 
     said Margaret O'Kane, president of the National Committee for 
     Quality Assurance, an independent group that monitors health 
     plans.
       Kaiser's approach is best illustrated in two ways: its 
     management of chronic illnesses like heart disease and 
     diabetes, and its $3 billion initiative to use information 
     technology to improve clinical care and streamline 
     operations.
       Across the country, health costs are skewed. In any given 
     year, 90 percent of spending provides care for 30 percent of 
     the population, and more than half of total spending goes to 
     5 percent of the population. Much of it is spent on people 
     with chronic illnesses like heart disease and diabetes. So 
     helping people with those ailments stay as healthy as 
     possible offers much opportunity for cutting costs--and for 
     improving lives.
       In Northern California, Kaiser has sharply reduced the 
     death rate for its three million members there in recent 
     years by monitoring and controlling blood pressure and 
     cholesterol levels and by promoting the use of aspirin and 
     beta blockers (to reduce the risk of heart attacks) and 
     statins (to lower cholesterol). The death rate from heart 
     disease among the Kaiser members is 30 percent lower than it 
     is in the rest of the Northern California population, 
     adjusted for age and gender.
       Four months ago, Jose Flores, 44, a postal worker in San 
     Francisco, had double-bypass heart surgery. While still in 
     the hospital, he was enrolled in a program of education and 
     treatment, which is run by nurses and lasts a year. Patients 
     receive instruction on diet, exercise and cholesterol 
     management; smokers are placed in a course to help them quit.
       Mr. Flores says he is on a drug regimen that includes beta 
     blockers and Lovastatin, a generic cholesterol-lowering 
     statin. He takes large doses of niacin, a vitamin that raises 
     the level of high-density lipoprotein, the ``good'' 
     cholesterol that protects against heart attacks. He walks for 
     an hour, five days a week. His eating habits have been 
     transformed, too: fried foods were once a staple of his diet, 
     but no more. Blacklisted, too, are sour cream, cheese and 
     corn chips. ``Now, I try to avoid all that,'' Mr. Flores 
     said.
       In Northern California alone, Kaiser spends $55 million a 
     year on chronic-care management programs. ``But what's really 
     expensive is if we don't take care of these people and manage 
     their chronic conditions,'' said Dr. Robert Mithun, chief of 
     internal medicine at Kaiser's medical center in San 
     Francisco.
       Dr. Mithun's comment may seem like no more than common 
     sense, but it does not reflect the typical logic of the 
     dominant fee-for-service model of health care. Most doctors 
     and hospitals get a fee from insurers for each patient visit, 
     clinical test, surgical procedure or day a patient spends in 
     a hospital. In practice, the fee-for-service system is often 
     an invitation to do more of everything--more visits, more 
     tests, more surgery. What gets done is what gets paid for, 
     and insurers usually do not pay for preventive care or 
     chronic care management provided by nurses or in group 
     classes, like the ones at Kaiser.
       In the fee-for-service medical economy, doctors and 
     hospitals routinely strike different deals at different fees 
     with many different insurers. The results are complexity, 
     inefficiency and a constant bureaucratic tug-of-war between 
     health care providers and insurers over claims.
       The Kaiser economy seems a world apart. ``What works at 
     Kaiser is the integration of the financing and delivery of 
     care, and the aligned incentives that allow you to make more 
     rational decisions about health care for members,'' said Ms. 
     Sekhri, the policy expert at the World Health Organization, 
     who has studied Kaiser.
       Ms. Sekhri was a co-author of a 2002 report that compared 
     Kaiser in California with the National Health Service of 
     Britain. The report found that for comparable spending, the 
     Kaiser system in California did a better job of keeping 
     people with chronic conditions out of hospitals. And when 
     Kaiser patients were admitted to hospitals, their stays were 
     generally shorter. Recently, Britain sent groups of primary 
     care physicians and hospital administrators to California to 
     learn from Kaiser.
       The Labor government in Britain may look to Kaiser as an 
     efficient model for its health service, which is run by the 
     government. But the Bush administration is more interested in 
     Kaiser as a model for the efficiencies and integration that 
     can be achieved through information technology.
       In May, the Bush administration appointed Dr. David J. 
     Brailer to the new post of national coordinator of health 
     information technology. His mandate is to prod the nation's 
     health care system into the computer age. Bringing patient 
     records and prescriptions out of the pen-and-ink era promises 
     to save both dollars and lives. The automation of an 
     electronic system could sharply reduce medical errors, which 
     are estimated to be responsible for 45,000 to 98,000 deaths a 
     year, according to the Institute of Medicine of the National 
     Academy of Sciences.
       Kaiser has been investing heavily in information technology 
     for years. Its clinical information system includes 
     electronic records with a patient's history, prescriptions 
     and preventive health recommendations. A doctor can call up a 
     patient's X-ray or magnetic resonance image on a desktop 
     personal computer. Electronic prescribing--a goal in the 
     government plan--is routine at Kaiser.
       Yet Kaiser is in the midst of a several-year, $3 billion 
     program, called KP HealthConnect, to drastically improve and 
     integrate its clinical and administrative systems and Web-
     based services for members. Once it is in place, Kaiser 
     clinicians will be able to tap into a vast but flexible 
     storehouse of data that uses intelligent software to 
     automatically flag potentially harmful

[[Page 24107]]

     drug combinations for a patient or to suggest what treatments 
     have been most effective for other people who are of the same 
     sex, age group and--eventually--genetic profile.
       Dr. Brailer, for one, checks in regularly on the progress 
     of HealthConnect. George Halvorson, Kaiser's chief executive, 
     said, ``Policy makers are looking to us as the cutting edge 
     of how health care can be supported electronically.''
       Kaiser has had setbacks in the program. Last year, it 
     abandoned I.B.M. as its main partner on the project and chose 
     to go with specialized health care software provided by Epic 
     Systems, a private company in Madison, Wis. Despite the 
     switch, HealthConnect is scheduled to be rolled out during 
     the next couple of years across Kaiser's operations.
       The conversion of inefficient paperwork to a digital 
     network also opens the door to fostering more efficient 
     markets in health care. Markets rely on information, yet the 
     health care economy is one in which information on patients, 
     treatments and outcomes is trapped on paper and isolated in 
     clinics, hospitals and insurance offices--instead of being 
     shared, analyzed and compared, while still insuring privacy.
       The fee-for-service model exists because patient visits, 
     clinical tests and surgical procedures can be measured. They 
     are inputs, in economic terms. Whether those inputs are 
     effective is another matter.
       In recent years, there have been efforts to focus on the 
     quality of health care. The National Committee for Quality 
     Assurance conducts annual reports based on a health plan's 
     use of practices shown to improve patients' health, from 
     timely prenatal care to cholesterol management. Kaiser plans 
     consistently earn excellent ratings in the group's reports, 
     and, this year, it had four of the five top-rated plans in 
     the Pacific region, its stronghold.
       Dr. Francis J. Crosson, the executive director of the 
     physicians' side of Kaiser, said, ``Our future has to be to 
     compete on quality, offering people demonstrably better care 
     and better value.''
       And the Kaiser system delivers quality while controlling 
     total costs. A recent survey of health care costs in 15 
     metropolitan areas by Hewitt Associates, the human resources 
     consulting firm, found that the cost for care per employee 
     last year was lowest in the San Francisco area, where Kaiser 
     members were about 35 percent of the insured population, at 
     $5,515, and was highest in regions where Kaiser did not 
     operate--led by New York, at $6,818 a worker.
       Quality yardsticks are helpful, but they still measure 
     inputs--ones associated with better health--instead of 
     tracking how patients fare. The longer-term goal is for 
     health plans to use technology more, as leading companies in 
     the rest of the economy do. For the health plans, that may 
     mean constantly tracking patients, treatments and results. 
     ``To have a real market for quality in health care, you need 
     a product,'' Mr. Halvorson said. ``And that means reliable, 
     timely information about outcomes, clinical-trial sorts of 
     databases that show things like, for example, 50-year-olds in 
     our system have fewer heart attacks.
       ``With the right information and the right incentives,'' he 
     added, ``capitalism creates very good solutions.''

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