Project Themes—Business Model and the Economics of Health Care
All of the issues that have concerned KP have had to synthesize into a medical economic model that can support the full range of activities required by contract, law, and public expectation. KP has been unique among nonprofit medical organizations in its reliance on self-funding for new facilities and equipment. The challenges of maintaining a viable economic model flexible enough to adapt to a fast-changing environment is an important factor in internal debates over priorities and decision-making processes. A contrast of business practices as they developed across the regions would provide insight into how decentralization helped KP resolve its internal disagreements.
The mutual trust developed between the medical groups and the health plan at the regional level helped lead to the National Partnership Agreement of 1997 and the Path to Recovery Agreement of 2002 after disagreements at the national level had escalated. The trajectory underscores that the history of KP’s economic model needs to include regional perspectives as well as those from the national office. In an organization as complex and large as KP among the questions all administrators have to address are how much can any of the individual organizations with KP be “at risk”? How much can they count on each other for financial assistance if needed and under what terms? The joint decision of the Permanente Federation and the Health Plan to save the Mid-Atlantic region may be a good case study of how collaboration and shared responsibility have come increasingly to underpin KP’s economic model.
Francis Jay Crosson
Bob Erickson (interview I)
Bob Erickson (interview II)
Al Weiland (interview I)
Al Weiland (interview II)