link to preview press ready book cover

Paperback book $12.36

Download for $3.00

For Reporters and Scholars interested in this topic the purchase of this book is a convenient method of having quick access to the material and you will be able to highlight important points for future reference.  Index and  all chapters are available below for review though the online version is not completely edited and linked yet.  Your purchase of this book  helps to keep this website online

KAISER PERMANENTE

THE UNAUTHORIZED TOUR

AND

DOCUMENT SUMMARY

© C. Phillips and V. Travis 2006

© C. Phillips and V. Travis 2006

SECOND EDITION June 2007

(Permission Granted to Copy if -C. Phillips – contact information:

Cphil49401@aol.com
is notified and told of probable distribution and this front page is used each time to protect the copyright)

Published by LULU.COM

Printed version published in the United States.

Second Edition

Dedication -

    This book is dedicated to Adam Wesley Arnold who died on September 11, 2000. He was a typical senior and he was painfully sacrificed on the altar of HMO greed.

    It is our deepest desire that all that read the contents of this book will gain knowledge,insight and perhaps avoid the experience that Mr. Arnold had to endure. It is unlikely that the public will ever be able to out fox the fox. There are too many checks, balances and retaliatory acts in place for that to be allowed. By seeing the HMO for what it actually is the public can best avoid becoming another intentionally mislabeled statistic whose sacrificial experience will only be remembered as data presented before Congress for the purpose of an HMO to either obtain grant money or another sizable health related contract.

    Our reward for this effort is to make HMOs transparent so that their ability to hurt people is brought to the attention of the public. Whether the solution will come from the voters, the journalists, the politicians, the lawyers, the judges, or somewhere else, HMOs will someday be viewed as a huge step backward in health care. And those who spent decades coming up with hidden methods of withholding care from the elderly will be properly viewed as some of the most evil people ever to have lived on this earth.

Table of Contents

Section 1 - Introduction

Section 2 - SHORT SUMMARY

Section 3 - DELVING DEEPER

Section 4 -The History of Kaiser Permanente;

Section 5 - The Permanente physicians – the real power at KP – Sidney through Robbie, and now Jay;

Section 6 - Kaiser CEOs – Henry through David, and now George

Section 7 - The Kaiser Plan and Hospitals using the same Board, CEO, President, Chair man of the Board, top executive committee, tax accountant,                       audit firm, legal team, ad advertising, etc.;

Section 8 -  Advertising Promises;

Section 9 -  KP First Tag line – Permanente Medicine (rather than HMO);

Section 10 - Second Tag line – Not-for-Profit;

Section 11 - Third Tag line – Physicians Know Patients "You can do it, Dana."

Section 12 - The Permanente Map – Blueprint of Permanente (thus Kaiser also as the Enabler);

Section 13 - The Genetic Code – Permanente as a Fragile Being (competing with the patient for resource allo cation/restriction);

Section 14 - Overextending Everyone’s Training – Janitors through Physicians;

Section 15 - "Team Care" – Physician as Coach; Nurses and Pharmacists Give Primary Care;

Section 16 - Physician Recruiting – Rags to Riches;

Section 17 - Medical Malpractice Covered By the Plan;

Section 18 - Government as Kaiser’s Rich Uncle;

Section 19 - California Helps Kaiser Float $3 Billion in Bonds;

Section 20 - Beltway Relationships – White House, Congress, and Supreme Court;

Section 21 - Agencies Help Kaiser – HHS, NAS, AHRC (the "arc"), CDC;

Section 22 - Shadow Government Agencies Help – The Forum, G-7, the Robert Johnson Foundation, EPCs in Oregon and North Carolina, etc.;

Section 23 - Bankruptcy Case of Dr. Moses – Protecting Retirement Riches;

Section 24 - Kaiser Physician Sues Kaiser as KP Leaves Kansas City – Physician Insider’s Point of View;

Section 25 - Kaiser Permanente Ventures – Hospital and Permanente Partners;

Section 26 - Analyzing Kaiser’s 990 Form "Charity" Activity vs. IRS Intent;

Section 27 - The Kaiser Family Foundation – Not Independent of KP;

Section 28 - Controlling Universities with Money and Endowed Positions;

Section 29 - The Pill Splitting Case – "After Market" Medication Tampering;

Section 30 - Changing Lab Values Report to Congress and HARP;

Section 31 - Clinical Practice Guidelines – Cheapest Care Possible;

Section 32 – Kaiser Hospice and Nurse "Closers" – Double Morphine Syringes;

Section 33 - Patient Loses Leg at Kaiser – Poor Differential Diagnosis and Tampered Lab Testing;

Section 34 - Huge Potassium Doses and Un sterile Home Care by a "Closer" – the Vickie Travis Story about Her Dad and his death;

Section 35 - Wrong Care for Prolapsed Cord – Baby death in Oakland;

Section 36 - Wrong Care of Pre-eclampsia – Baby death in San Diego;

Section 37 - Jamie Court’s Book – Making a Killing - Too Many Infants with Paralyzed Arms (Erb’s Palsy

                     Babies) due to Midwife Use for Difficult Deliveries;

Section 38 - Kaiser and Employees – Missing Endometriosis and other Diagnoses;

Section 39 - Kaiser and Employees – Forcing Employees to Stay with Kaiser’s Work Comp for One Year;

Section 40 - Kaiser and Employees – Benefits (losing years of records to pay a nurse less in retirement);

Section 41 - Kaiser and Employees – Safety vs. Asbestos;

Section 42 - Kaiser and the Medical Board of California;

Section 43 - Kaiser and the California Medical Association;

Section 44 - Kaiser and the Department of Managed Health Care in California;

Section 45 - Henry Mead Kaiser - $2 million fraud – had to quit Kaiser Plan/Hospitals Board in 2004;

Section 46 - Kaiser and Dirty Endoscopy – the Hepatitis C Story.

Section 47 – Kaiser's Industrial Clinics Share Diagnoses with Employers - (e.g., Saying that one patient had al coholic hepatitis – which was                                     actually delayed Hepatitis C for which the patient never got help and died.)

Section 48 -  Conclusion

Sources

Section 1. INTRODUCTION:

    Perhaps the best introduction to the Kaiser HMO and Kaiser Permanente Medical Care Plan is the summary by Mr. Edgar Kaiser that the less Kaiser does for patients the more money it makes.

    To get the full context one can go to the University of Virginia and review the presentation Mr. Edgar Kaiser (then Kaiser CEO) made to President Nixon through Mr. Ehrlichman – the less we do the more we earn. This convinced President Nixon to go forward with the HMO Act of 1973 with Kaiser as the template. The conversation is recorded below within the Nixon White House Tapes.

John D. Ehrlichman: “On the … on the health business …”
President Nixon: "Yeah."

Ehrlichman: “… we have now narrowed down the vice president's problems on this thing to one issue and that is whether we should include these health maintenance organizations like Edgar Kaiser's Permanente thing. The vice president just cannot see it. We tried 15 ways from Friday to explain it to him and then help him to understand it.”He finally says, “Well, I don't think they'll work, but if the President thinks it's a good idea, I'll support him a hundred percent.’”

President Nixon: "Well, what's … what's the judgment?"

Ehrlichman: "Well, everybody else's judgment very strongly is that we go with it."

President Nixon: "All right."

Ehrlichman: "And, uh, uh, he's the one holdout that we have in the whole office."

President Nixon: "Say that I … I … I'd tell him I have doubts about it, but I think
that it's, uh, now let me ask you, now you give me your judgment. You know I'm not to
keen on any of these damn medical programs."

Ehrlichman: "This, uh, let me, let me tell you how I am …"

President Nixon: [Unclear.]

Ehrlichman: "This … this is a …"

President Nixon: "I don't [unclear] …"

Ehrlichman: "… private enterprise one."

President Nixon: "Well, that appeals to me."

Ehrlichman: "Edgar Kaiser is running his Permanente deal for profit. And the reason that he can … the reason he can do it … I had Edgar Kaiser come in … talk to me about this and I went into it in some depth. All the incentives are toward less medical care, because …"

President Nixon: [Unclear.]

Ehrlichman: "… the less care they give them, the more money they make."

President Nixon: "Fine." [Unclear.]

Ehrlichman: [Unclear] "… and the incentives run the right way."

President Nixon: "Not bad."

The preceding transcription is from the University
of Virginia:

whitehousetapes.org/pages/listen_tapes_rmn.htm for the clearest possible presentation.
Check:
February 17, 1971, 5:26 pm - 5:53 pm, Oval Office
Conversation 450-23. Look for: tape rmn_e450c. It is 12 MGS if using Windows Media Player

Section 2. SHORT SUMMARY:

    So Kaiser has to spend $40,000,000 a year in its ad Thrive campaign hiding the business agenda just to keep its membership flat. Kaiser cannot seem to get to 9 million members goal they once had, and the public is moving away from HMOs anyway. Patient autonomy of health care decision and HMOs secrecy and gatekeeper control don’t mix.

The two parts of KP are:

1) The FOR PROFIT “Permanente” physicians “Federation,”Inc. headed by Dr. Francis “Jay” Crosson, who is really in charge with       Kaiser family control weakening (See Section 45), and

2) The classic "Kaiser" which includes both the Kaiser Foundation Plan and the Kaiser Hospitals - using the same CEO, President,       and Chairman of the Board – Mr. George Halvorson - and the same Board members (always with a Kaiser family representative     as part of the board). Might as well be the Crosson-Halvorson business plan. Huge profits are planned and achieved each year -     $1.8 billion for 2004 - half to Crosson's partner shareholder physicians and the other half to Halvorson's hospitals.

    Dr. Crosson – for consumption in England - describes KP as a "partnership" in the article
“Kaiser Permanente: a propensity for partnership” at http:bmj.bmjjournals.com/cgi/content/full/326/7390/6547.

In his description each physician knows the “bedside and the boardroom” [read as the patient’s wishes vs. the more important business goals]. 

    Yet, to the United States IRS, Kaiser declares the KP relationship as one of contracting agent (the Kaiser Plan) and contracting business (Permanente) at an “arm’s length separation” with real negotiating going on and NOT a partnership. This inconsistent duality is allowed by the IRS as part of government’s total refusal at every level to regulate this HMO. The IRS could always choose to revisit this relationship and confiscate $5 billion in past taxes. This is a real risk as mentioned in the prospectus for Kaiser’s bond offering.

    Business principles ("the group ethic") prevail in every setting from the boardrooms in Oakland overlooking Lake Merritt to the physician offices from Maryland to Hawaii. And as all of the budgets for the various Kaiser locations across the country are prepared in and later reported back to Oakland for national budget tax presentations, the various urban expressions of Kaiser Permanente - like the Denver area - are simply "portals" of the organization, a term used by Kaiser. [The particular reference for the surprise, overnight movement of Denver mainframe IT to Oakland is found in the article “Kaiser – Shock Therapy” article on Dr. Lawrence; Denver had previously tried to be somewhat independent since they made the most profit per enrollee.] Kaiser delays its 990 year end tax form an extra six months each year – thus coming out in October –because of the complexity of handling in Oakland the tax issues for each area of Kaiser around the country. Kaiser’s representation in states is really in areas where they can achieve profit – thus cities.

    In urban settings Kaiser can achieve the re quired 50,000 patient base allows the Kaiser physicians to refer internally to other Kaiser physicians for specialty care – the double gatekeeper system.

    Kaiser does not really offer near to statewide service, except in much of California where 75+% of all Kaiser patients live. Kaiser buys into metropolitan areas when they expand to a new state – e.g. New York City and Washington, D.C., the latter was a buy out of a Humana plan leaving the city, and http://xnet.kp.org/permanentejournal/fal98pj/fall98pjword.html

    Dr. Jay Crosson and Mr. George Halvorson work several doors away from each other on the same, 26th high rise  in Oakland at 1 Kaiser Plaza. The Plaza includes a nice restaurant looking out at a large, second floor park not seen from the street. All the floors can look down on the park on one side, Golden Gate Bridge in the background or Lake Merritt on the other.

    Mr. Halvorson commutes up from Alameda rather than coming down from the hills as did Dr. Lawrence. As to who is most in charge, one need only read Mr. Halvorson’s acceptance speech in coming to Kaiser and having Dr. Crosson welcome him on board. Kaiser has always had internal physician control way back to Dr. Sydney Garfield's desert clinic during the Depression (with which he made $50,000 in personal profit each year used to buy apartment buildings in Los Angeles).

    Dr. Crosson’s and Mr. Halvorson’s names appear jointly on many projects, such as the switch from the IBM CIS IT system of Colorado to the EPIC IT system used by Kaiser with Oregon Health Sciences. [Kaiser’s infiltration of universities is discussed much later in Section 28.] As the two men are the co-chairs of the top executive committee at KP, when both names appear on documents it is as final as it will get.

    The Plan/Hospitals board is more of a rubber stamp. Expect to find Kaiser on both sides of the negotiations with EPIC system in Wisconsin with which it now “partners.”; IBM was less likely to allow Kaiser to profit elsewhere from its CIS product. CIS was better medically – according to a past Permanente coder employee – but EPIC did a better job of billing patients (Kaiser has been transitioning back to fee for service with its co-pays).

The Permanente physician partners are paid from two sources at all times:

1) a salary of about $250,000 a year to be frugal, clinic "cost centers" dispensing limited care, and

    Pill splitting (see Section 29), the changing of normal lab values (see Section 30), under reading cardiac stress tests, missing cancer until it is "too late" and then forcing patients into hospice care, channeling people into fibromyalgia and then undermining their self esteem, trying to convince all chronic patients that they all have a similar disease which is handled best by staying home and eating fruits and vegetables, blaming all illness on life style, etc. give witness to the lack of ethics on the way to conniving on how to spend less. All of this is the opposite of the "superior" care label and caring physician ethic painted by the "Thrive" ad campaigns. How does one "Thrive"with less care?

    National Kaiser HMO care is organized by the Care Management Institute (CMI) in Oakland – developed in 1997 at a brief time of no profits for KP, financed by the Kaiser Plan (as if it is non-profit educational adventure), and run by the Permanente physicians for its real profit purpose. The organizational survival plan – a patient - unfriendly plan – is to first defining all care into cheap "evidence" packages (see section 31) and then "making the right thing easier to do" at the front line, provider office. Independent thinking physicians in Kaiser will only find that giving care different from the Oakland hints will cost them so much extra office time explaining that they will be called non-productive or "not manage care suitable." "Kaiserizing" physicians (medical ethic bending) and "Kaiserizing" patients (care expectation reduction) is part of the KP HMO process.

    Mr. Halvorson specifically made the already suspect "charity" of the Kaiser Plan and Hospitals even more business related – supporting CMI "evidence" work, educating future Kaiser physicians, paying for lobbying of Congress, etc.  Lobbying is deducted as an educational effort.

    The methods of tampering include removing material, wrong patient material, copying too small, rearranging pages, lack of pagination forcing cut and paste to reassemble, copying light, copying so signatures and training won’t show up (nurses making insulin decisions), etc. [In the medical legal area, every Kaiser chart I have reviewed reflected serious tampering – CP.]

    Little was done except to have an "independent" legal office run the arbitration system; the head of this office then testified in Sacramento as to how well it was working (consumer groups appropriately complained). Add in forced arbitration with judges who become dependent on Kaiser income – an average of three $15,000 cases a year supplementing their incomes – and the system provides absolute power back to the HMO. Absolute power leads to absolute corruption (an old phrase restated by President Kennedy at Amherst College on the dedication of the Robert Frost Library where I, Dr. Phillips, was simply a premed usher). Kaiser does not mind violating the ethic of talking to the judges on the side as well – see San Diego arbitration case that Kaiser won (Section 38 – baby dies).

    The regulators are afraid of the size and political influence of the HMO – a $30 billion corporation (parallel in size and finances to the VA) using "charity" funds to lobby politicians, e.g. joining the Governor on pet initiative projects.


    The newspapers and radio shows appreciate receiving portions of and thus are silenced by the
$40,000,000 a year ad campaigns - the latest called Thrive (now even part of the KP logo). They do not
even check the basic message lies – KP as nonprofit, physicians who will get to know you and advocate for you, trust in us (regardless of lifestyle), etc. And the public does not understand that the Broccoli ad is really about staying home with your illness – all sickness at Kaiser becomes a Broccoli deficiency.

    So there is no "fourth estate" check and balance by the media, the first three "estates" being the three parts of government. When a reporter does get curious, he or she is distracted by having a sudden, invited, private interview (scoop) with the CEO of Kaiser – looking out the windows on the 26th floor - as to his future visions that he called "Blue Sky" (everyone stays home and care is conducted with the computer). This happened to the reporter from USA Today who broke pill splitting and the reporter from the San Francisco Business paper who was getting close to asking if the docs got part of the profit (CEO Halvorson was vague on this).


    Trial lawyers find the record tampering and verdict financial ceilings too restrictive to permit the cost of expert review, so there are far too few cases for the number injured at Kaiser. [Many Kaiser patients stop at the point that they must "DEMAND" arbitration; that plays against the assertiveness of patients who simply WANT fair compensation for incompetence and error.] And so, the public only gets the spoon fed glories in canned news releases; only hurt patients or their families know the reality and the lack of justice. [Few attorneys try to sue Permanente – but IPAs are NOT protected by California’s MICRA caps.] Finally, in its public 990 tax forms – required by the government - Kaiser magnifies its IRS required obligation (to avoid taxes) back to the public as if it is raining presents on the public. In fact, a good deal of its obligation is spent internally on pet and secret projects, the latter including "evidenced based medicine" pamphlets which are so corrupt that Kaiser won’t show them to outside physicians.

Section 3. DELVING DEEPER

[Now, for the next level of detail the reader must take time to see the near to full unveiling of Kaiser. There one can go on to look at the realities of care to perhaps see the Grand Canyon difference between the ad promise and the reality show.]

The order of topics will be:
Section 4 –  The History of Kaiser Permanente;
Section 5 –  The Permanente physicians – the real power at KP – Sidney through Robbie, and now Jay;
Section 6 –  Kaiser CEOs – Henry through David, and now George
Section 7 -  The Kaiser Plan and Hospitals using the same Board, CEO, President, Chairman of the Board, top executive committee,                        tax accountant, audit firm, legal team, advertising, etc.;
Section 8 –  Advertising Promises;
Section 9 –  KP First Tag line – Permanente Medicine (rather than HMO);
Section 10 – Second Tag line – Not-for-Profit;
Section 11 – Third Tag line – Physicians Know Patients "You can do it, Dana."
Section 12 – The Permanente Map – Blueprint of Permanente (thus Kaiser also as the Enabler);
Section 13 – The Genetic Code – Permanente as a Fragile Being (competing with the patient for resource allocation/restriction);
Section 14 – Overextending Everyone’s Training – Janitors through Physicians;
Section 15 – "Team Care" – Physician as Coach; Nurses and Pharmacists Give Primary Care;
Section 16 – Physician Recruiting – Rags to Riches;
Section 17 – Medical Malpractice Covered By the Plan;
Section 18 – Government as Kaiser’s Rich Uncle;
Section 19 – California Helps Kaiser Float $3 Billion in Bonds;
Section 20 – Beltway Relationships – White House, Congress, and Supreme Court;
Section 21 – Agencies Help Kaiser – HHS, NAS, AHRC (the "arc"), CDC; Section 3
Section 22 – Shadow Government Agencies Help – The Forum, G-7, the Robert Johnson Foundation,
                    EPCs in Oregon and North Carolina, etc.;
Section 23 – Bankruptcy Case of Dr. Moses – Protecting Retirement Riches;
Section 24 – Kaiser Physician Sues Kaiser as KP Leaves Kansas City – Physician Insider’s Point of View;
Section 25 – Kaiser Permanente Ventures – Hospital and Permanente Partners;
Section 26 - Analyzing Kaiser’s 990 Form "Charity" Activity vs. IRS Intent;
Section 27 – The Kaiser Family Foundation – Not Independent of KP;
Section 28 – Controlling Universities with Money and Endowed Positions;
Section 29 – The Pill Splitting Case – "After Market" Medication Tampering;
Section 30 – Changing Lab Values Report to Congress and HARP;
Section 31 – Clinical Practice Guidelines – Cheapest Care Possible;
Section 32. – Kaiser Hospice and Nurse "Closers" – Double Morphine Syringes;
Section 33 - Patient Loses Leg at Kaiser – Poor Differential Diagnosis and Tampered Lab Testing;
Section 34 – Huge Potassium Doses and Un-sterile Home Care by a "Closer" – the Vickie Travis Story about Her Dad and his death;
Section 35 – Wrong Care for Prolapsed Cord – Baby death in Oakland;
Section 36 – Wrong Care of Pre-eclampsia – Baby death in San Diego;
Section 37 – Jamie Court’s Book – Making a Killing -Too Many Infants with Paralyzed Arms (Erb’s Palsy Babies) due to Midwife                           Use for Difficult Deliveries;
Section 38 – Kaiser and Employees – Missing Endometriosis and other Diagnoses;
Section 39 – Kaiser and Employees – Forcing Employees to Stay with Kaiser’s Work Comp for One Year;
Section 40 – Kaiser and Employees – Benefits (losing years of records to pay a nurse less in retirement);
Section 41 – Kaiser and Employees – Safety vs. Asbestos;
Section 42 – Kaiser and the Medical Board of California;
Section 43 – Kaiser and the California Medical Association;
Section 44 – Kaiser and the Department of Managed Health Care in California;
Section 45 – Henry Mead Kaiser - $2 million fraud – had to quit Kaiser Plan/Hospitals Board in 2004;
Section 46 – Kaiser and Dirty Endoscopy – the Hepatitis C Story.
Section 47 – Kaiser’s Industrial Clinics Share Diagnoses with Employers – (e.g., Saying that one patient had alcoholic hepatitis –                             which was actually delayed Hepatitis C for which the patient never got help and died.
Section 48 – Conclusion.

    Everyone will have decide to what level of information it is that they want to pursue in understanding this huge HMO, a $25 billion corporation and a national HMO player since for over two decades. Transparency is the only chance for change.

Section 4. HISTORY OF KAISER PERMANENTE – Sydney and Henry

A. Sidney applied to go to medical school at the end of his sophomore year; only one medical school of four accepted him –        the University of Iowa; he got his medical degree in 1928;

B. He did his internship in Chicago and then switched to a surgical resident at the county hospi tal in Los Angeles;

C. When graduating from UCLA School of Medicine and Surgery Residency, there were few open practices in the middle of        the Depression, except to the best graduates; however, there was a job out on the desert for taking care of those working        on the Los Angeles Aqueduct Project to bring water from the Colorado River;

D. Soon Dr. Garfield realized that he did not want to be an employee physician but would rather be an owner and contract for      the service;

E. He borrowed money from his father and others and opened his own $50,000 "Contractors’ Hospital," the loyalty of which     to business was never in doubt; he wanted "pre payment" since "the one who pays the bills control the service." (Smillie             book page 8)

F. He developed prepayment with the "San Francisco Exchange" of large project con tractors –Bechtel, Kaiser, and others;        this was the beginning of what would develop into Kaiser enterprises and Garfield Physicians, finally into KP when tax              changes were re quired to protect prof-its;

G. As to the desert practice, "… Sydney Garfield retained earnings from the 5-year period [1933-1938] of $250,000. It was     an astonishing sum in 1938 when the average annual American in come,excluding those on relief, was $1350." [Smillie book     – page 18

H. Later Dr. Garfield was asked to do the same for the dams going up in Washington and Oregon; the relationship with the          Kaiser family became much closer;

I. Finally, in World War Two the US set up shipbuilding for England’s insatiable (and later our) need for Liberty ships (one a      day); Mr. Kaiser took on the challenge – although not a shipbuilder – and Dr. Garfield tended to the employees, often 4F        (with health problems)  and unable to go to war;

J. In the book Mr. Kaiser Goes to Washington one can read about Henry Kaiser, Sr. making money off the government –          "The Rise of a Government Entrepreneur" – Kaiser has always been about solving government problems where after                Kaiser’s methods were not regulated;

K. After the war the US government turned over the Kaiser clinics with little charge to the prepaid  health system, one of the          many ways the government built Kaiser up;

L. The shipyard towns of the West Coast became and still are strongholds for Kaiser, 75% of the patients always being from       California;

M. The State of California has always helped Kaiser to grow and flourish, like no other state;

N. Henry Kaiser, Sr. and Dr. Sydney Garfield ran the medical organization like a father- son team, Mr. Kaiser did external           relations and co-signed Bank of America funding while Dr. Garfield ran the physicians and hospitals on the inside;

O. It was a workable duality, and they even became neighbors in Lafayette, California, as they married sisters: "Sidney and           Helen Garfield moved next door to Henry J. and Alyce Kaiser in Lafayette. Garfield and Kaiser were now brothers in- law,     married to sisters who were extremely close to each other, visiting back and forth every day. In the evenings, the two               couples would gather for cocktails and conversations. Sydney Garfield was now the brother-in-law, physician, and close          personal confidant of Henry J. Kaiser." (Smillie book page 111)

P. Later the other physicians thought it was all too comfy – particularly when the two men developed Walnut Creek Kaiser           Hospital without asking the others.

Q. For decades all of the Kaiser industries were beholding to Mr. Kaiser, Sr., and Dr. Garfield was the employer of all of the        physicians; profits were likely split up 50-50% - the Bechtel-Kaiser approach – but have never been published; [Dr                Garfield’s ownership of apartment buildings could be a good place to start].

R. At one point the Kaiser Family Foundation split off with a $50,000,000 endowment; of ten they have bailed Kaiser out 
     (e. g. Michigan) but try to appear on the web to have no history and no relationship to KP (see Section 27);

S. In fact, KFF has handy professor chairs at universities who coincidentally always sup port Kaiser in articles – Stanford and    Harvard public health departments and/or out comes research units, like Duke and Oregon Health Sciences (see Section          28);

T. One interesting connection is that KFF pays Harvard to conduct health polls and then pays the Washington Times to run the      polls, to give KFF a national voice in health care (also Section 28);

U. Sidney Garfield always managed to be part of the profit system; and as the Founder, he taught many ideas [few that                  patients know or would like]:

1. He had a "pencil stub club" making sure that no one got a new pencil until the first was a stub; he expected the same of      hospital equipment;
    

2. He created the idea of the "economy of shortages" whereby you could under-finance an area and see what creativity         or harm developed;

3. In 1960 he talked about "New methods of providing health care as opposed to sick care must be tested."

E. THE TAHOE [ONE] AGREEMENT – 

The Tahoe One Agreement is listed by Mr. Paul Wallace of Kaiser in his power point slide history - "Making the Right Thing Easier to Do" -as a key moment in Kaiser’s history. Original Kaiser materials may be found in the Kaiser Collection in the Bancroft Library materials and UC Berkeley [plan to spend many hours to get a few documents as librarians watch that no papers are removed or harmed – which is good, CP]; some of the documents are also available on the KaiserPapers.info.

Preceding events – Walnut Creek Kaiser, Hawaii Kaiser, the Permanente responses – power plays back and forth [See "Toward the Tahoe Agreement p. 121-142 in Dr. Smillie’s book];

2. Serious contest of wills in this new business "partnership;"

3. It is all about the outcomes of sharing power 50:50 and sharing profit 50:50.

4. Author Smillie went on to describe the minor variations since;

5. [Physicians have an agreement with Permanente which sometimes shows up in court cases; the special 50:50 paper is more       rarely seen – see Section 24 – "Article K" – all ten pages]

6. Original signatures on the Working Council split can be found in the Bancroft Library or at the KaiserPapers.info; both Henry     Kaiser and Sidney Garfield signed [and also married sisters and lived next door to each other in Lafayette, California].

  

DD. This profit sharing is also found in Dr. Raymond Kay’s in Historical Review of Southern California Permanente Medical             Group (Kay’s book p. 43).  The signatorts are typed out clearly in the back of the book.

EE. "TAHOE TWO" – ALSO KNOWN AS THE RECOVERY PLAN FOR 2001

The Balanced Budget Act of 1997 – which ended up pulling out some $300 billion fromthe hospital industry - was already expected by 1996. The managed care industry took a nose dive in lockstep in 1997 (source The Bleeding Edge page 35) just as many small hospitals also came up short and closed. For Kaiser this touched off two years of loss of profit, something that had not happened before or after in its sixty year history. There was cross blaming between the Permanente groups and the leaders of the Plan/Hospitals. Out of this clash Permanente became particularly stronger. The new plan was called the Recovery Plan for 2001, which was really an attempt to not only go back into the black but to recover the lost profits as well.  (It is also called Tahoe II.)

The changes included all of the following and more:

A. the American Heart Association wants every patient with chest pain – who might be a possible heart attack – to have        oxygen;  Kaiser does not think this is necessary;

B. the American Diabetic Association feels that sedentary patients (really couch potatoes) should be checked for                 diabetes;     Kaiser does not think that is necessary.

C. the national standard is some nine OB visits in a pregnancy; Kaiser believes that can be done with six visits;

D. and this is the tone of the many documents presented as outpatient or inpatient science.

A. as much of the system is simply imported from Wisconsin through the EPIC company, the cost is inflated by adding in      the time needed to train all Kaiser staff;

B. the figure was to be over 10 years, so the yearly cost was not so huge;

C. the number looks large enough to steer anyone away from the idea that profits were being made each year;

D. EPIC trainers from Wisconsin recall going into Colorado and having to almost start from scratch; about the same time      Kaiser was testifying in Washington that it had all but conquered IT problems and the Electronic Medical Record from      all its experience back to the 1968 years of Multiphase Testing.

10. Meanwhile, with knowledge so codified, physicians could move away from patients as coaches and convince the same               patients that they had more access through the care "teams" taking their places; patients experienced more contact though           not understanding that it was less expertise, e. g. a pharmacist whose goal was to talk the patient out of Prilosec and back to       the weaker Zantac.

11. Kaiser agreed to go into more venture projects partnering with Permanente at the 50:50 level once again; often the trick was       to pour Kaiser IT at a value of $14 million into a business like Caretouch and then spin it off with Dr. Lawrence "still on             board";

12. The profit split of 50:50 as well as the presence of the physicians in the boardrooms as decisions were made – really simply       rubber stamped made sure the Kaiser executives and the Permanente physicians were partners at every level – one for all           and all for one.

13. The new plan included taxing the Kansas City and North Carolina Kaiser units to prop up the Washington, DC showcase           unit and then close the former two as not viable; excellent materials on this show up in the Johnson County Courthouse on           the Western side of Kansas City (see materials on KaiserPapers.info (in Section 24);

14. The Permanente Journal was also started as an improvement of a newsletter in the Northwest. It is published in Oregon but       vetted in Oakland – legally and medically. It is the national communication system for the Kaiser physicians – with medical         articles featured on the cover and then cost saving measures filling half of the interior. MUCH information can be obtained           from these public magazines – now almost completing 10 years at 4 magazines per year.  The nurses now get it since they           are care givers (Beyond scope of diagnostic practice.)

    This all is referred to as the TAHOE TWO agreement because it renegotiates the power of Permanente v. Kaiser, this time with a stronger physician power role and the same 50% profit sharing;

    Later Dr. Lawrence was actually further demoted in power as he made a raid in Denver and grabbed all the IT equipment and staff to centralize IT; the physicians had no warning and it reminded them of the Kaiser Sr. tactics before.

Section 5 – THE PERMANENTE PHYSICIANS – ONLY A " PERCENT PROFIT"



    For a while I, Dr. Phillips, was stumped by the Permanente statement to Medicare in 1984 that they only made "5% profit" against my calculations that the profits were as much as a doubling of salary for each senior partner physician. I finally figured it out – Permanente represents half the KP budget (rather than the usual 20% of most systems). Permanente pays for clinic leasing, lots of the personnel, and the physicians. A 5% profit of the whole Permanente cost center of 50% allows for doubling of the physician partner income.

    In 2005, Kaiser is trying to create an 8% organizational profit ("excess income") of $2 billion against the total of $25 billion budget. Early results will be announced in February of 2006 to kick off the bond market auction in New York (and organize the profit split to Permanente), and final results to be posted on 990 tax forms in November 2006]. Half of the budget involves Permanente and so does half of the profit.

    So a $1 billion profit will go to Permanente who I estimate to have 3000 of the 10,000 physicians as partners. If $100 million is used to give bonuses to nurses, techs, union bosses, etc. there would still be $900,000,000 to split among 3000 partners $300,000 each (a doubling of their base salary). Yet Permanente could say to Medicare then and now – that we (Permanente) only make a "5% profit," so what is the harm? After all, you require us to include physicians as part of the risk. But then the Plan and occasionally the Kaiser Family picks up physician shortfalls by the IRS settlement, Permanente is really not ever at serious risk.




Other ideas to be added to this section:

4. Outside expenses hurt the profit line, so if they stay with urban areas and get at least 50,000 patients from startup buy-outs,       then almost all specialty referrals can be internal – two layers of gate keeping;

5. The physicians get benchmarking materials in the mail with each check (every two weeks) that shows where they stand as a       business unit, e.g. pharmacy utilization;

6. Physicians have 15 minutes for most all visits, although the number is rarely published;

7. Test interpretation should not include words like borderline – it’s either clearly positive or negative; (this deprives patients of       information)

8. Physicians can receive "Talking Points" quickly so that they can write ‘Letters to the Editor’ whenever there is a KP brand         embarrassment;

9. Physicians have the dues paid by the Plan to join medical societies so that they can rise to the top – one recent President of         the California Medical Society was a Kaiser emergency physician; it helps to have the voting power to get him there;

10. The Medical Board of California uses a disproportionate number of Kaiser experts to evaluate care; it is likely that Kaiser         allows double dipping for this time spent – a Kaiser administrative salary and a Medical Board payment;

11. The physicians heading up IT have no problem bragging to Congress that Kaiser has always been on the frontier if                     Information Technology even as Kaiser buys a brand new system EPIC and has to learn from scratch; government does not       go back and check Kaiser;

12. Those physicians with the best business record – supporting Permanente more than patients – rise to the top; the message            back down is that business comes first and every doctor is being constantly audited for every decision;

14. Physicians in deposition or the courtroom are instructed to say that they do not know what Kaiser Permanente really is –           thus never getting into the profit systems they all really understand;

15. The Guidelines the physicians develop are not from science but from profit motive, e. g. "do not test sedentary patients for         diabetes";

Section 6 - KAISER’S CEOs SIDNEY, …, DAVID, AND GEORGE

E. Mr. Kaiser and Dr. Garfield finally agreed that Dr. Clifford Keen should head the program starting in January of 1954; the                  Permanente physicians were skeptical;

F. Dr. Keene developed a Kaiser Foundation Research Institute at the Richmond Hospital because he felt it would felt "respectability"     for the Kaiser organization would be gained (Smillie p. 129); [Kaiser is now the largest nonacademic "research" unit in the United         States with lots of CDC money pouring in.]; (it's hospital libraries are some of the worst.)

G. Meanwhile, Henry Kaiser kept calling each of the new hospitals "My Baby" suggesting he still thought he was running the show as        the Boss;

H. When Henry Kaiser told a subcommittee of Congress that the physicians are entirely independent of lay or corporate control, the          Permanente physicians wrote back to Congress to correct the error; [this issue plays out to this day – as Kaiser ads try to make the      physicians look as if unimpeded in their decisions, the opposite being true];

H. For a number of years Edgar Kaiser was president of the Kaiser Foundation and Hospitals – that would have matched his meeting     with Mr. Ehrlichman in the White House (See introduction); he retired in 1980 and died in 1981;

B. That he could help Kaiser by being involved in tours with advance teams that played up his being a member of the            National Academy of Science [for what?];

C. That he could castigate the Dr. Welby type of physician as an eagle soaring over the canyons of the past, irrelevant to      today; that as a physician he could represent both sides of KP;

20. Dr. Lawrence vowed to stay out of medicine in his retirement but has been working with England on importing Kaiser’s             tough rules that keep patients out of hospitals or move them through double fast;

   21. Mr. George Halvorson from Minnesota became the next CEO. He was then running an HMO of about 1,000,000                        subscribers but had been considered successful (keeping costs low) and a national player with the Association of Health                Plans. His actions so far:

B) he changed Kaiser from the IBM/CIS program in Denver to the Wisconsin EPIC program developed in Kaiser in           Oregon;

D) he thus tossed out a $1 billion IT effort that will still be kept as part of the $3 billion cost of EMR (electronic medical        records);

E) EPIC stands for embedded pop-ups, and Kaiser achieved its goal of having pop-up suggestions on every front line          computer so Oakland could run the care of all 8 million patients;

F) This is consistent with the "Permanente Patient Relationship" we will find within the Permanente Map (Section 12); as        the corporate practice of medicine is inconsistent with the Hippocratic style of personal physician advocacy for the            patient, it is illegal in all states;

G) The pop-ups force every Kaiser physician to "do the right thing" or lose time trying to ex- plain why not, the latter not       a choice as it would trigger inefficiency and be degraded at the next, secret partners meeting;

H) The pop-ups had been developed by a joint study of Kaiser and the Oregon Health Science University using Kaiser         partner physicians to see how they could be gradually molded to accept this approach.

I) Mr. Halvorson has decided – differently from Dr. Lawrence – that long term power will come from truly giving Dr. Jay     Crosson 51% of the power (thus to the Permanente Federation);

22) As with Dr. Lawrence, Mr. Halvorson’s salary each year (of over a million dollars) can be expected to be doubled with              bonuses as the profits role in; he can be rewarded as the CEO of the Plan and then as the CEO of the H