Kaiser Permanente shone in the recently announced 2012 Medicare star quality ratings published by the Centers for Medicare & Medicaid Services (CMS). The California, Northwest, Hawaii and Colorado Medicare plans received the highest overall rating of five stars; and the Ohio, Georgia and Mid-Atlantic States Medicare plans each received 4.5 stars.

KP was among just nine health plans in the country that earned five stars overall. Of those nine plans, the vast majority—over 900,000 KP members out of just over a million Medicare beneficiaries nationwide—are enrolled in five KP regions. It should come as no surprise that the efforts unit-based teams dedicated to improving quality are making a difference, along with KP’s integrated delivery system and electronic medical records.

Credit to the front line

When he announced the spectacular news, Senior Vice President,  Jed Weissberg, MD, acknowledged just that:

We want to thank all of the physicians, nurses, care teams, administrative staff, and the more than 3,400 unit-based teams, established through our Labor Management Partnership, who are dedicated to serving KP’s one million Medicare members and who helped us achieve these outstanding results. The star ratings demonstrate how the people of Kaiser Permanente – supported by our integrated delivery system and electronic health record – apply our unique approach to frontline engagement, problem solving, and performance improvement to make the lives of our members better.

Dr. Weissberg’s giving credit for Kaiser Permanente’s success to frontline employees and our unique approach to engaging their creativity speaks volumes about the opportunities and challenges we face in health care.

The challenges ahead

The New England Journal of Medicine reported on October 13 that labor costs are by far the largest expense in health care—56 percent of the $2.6 trillion spend on health care in the U.S. last year went to wages. As the authors note, health care deliver is very labor intensive:

Yet unlike virtually all other sectors of the U.S. economy, health care has experienced no gains over the past 20 years in labor productivity, defined as output per worker (in health care, the “output” is the volume of activity — including all encounters, tests, treatments, and surgeries — per unit of cost). Although it is possible that some gains in quality have been achieved that are not reflected in productivity gains, it's striking that health care is not experiencing anything near the gains achieved in other sectors. At the same time, health care labor is becoming more expensive more quickly than other types of labor. Even through the recession, when wages fell in other sectors, health care wages grew at a compounded annual rate of 3.4% from 2005 to 2010.

The article goes onto say that the industry has three choices to make about how to improve labor productivity:

1.) Cut wages and benefits

 2.) Cut staff, or

3):

We will need to redesign the care delivery model much more fundamentally to use a different quantity and mix of workers engaging in a much higher value set of activities. …This solution implies eliminating myriad time-wasting, low-value activities; increasing our use of technology, data, evidence, and teams; increasing standardization to avoid rework; and relying on evidence-based personalized care to avert complications.

 

The lessons from these two reports are prescient and profound. As we congratulate ourselves for achieving the highest standards through frontline engagement, we must also recognize that truly transforming health care delivery at frontline is a huge challenge! While unit-based teams and the LMP are making great strides and progress, we also know that this progress has wide variation in terms of implementation, support, and sponsorship. 

Our challenge as organizations—the Coalition of Kaiser Permanente Unions, the Kaiser Foundation Health Plan and Hospitals, the Permanente Medical Groups, all of us—is to truly commit to the promise and the solution to our leadership in the industry. We are on the right path; it must become wider and deeper.