A new packaged deal: Kaiser Permanente first applied the HMO concept on a wide-scale basis.While some historians believe HMO-style plans date hack to ancient China, the modernization of the prepaid health plan occurred nearly 60 years ago.
Kaiser Permanente Kaiser Permanente is an integrated managed care organization, based in Oakland, California, founded in 1945 by industrialist Henry J. Kaiser and physician Sidney R. Garfield. is credited as being an innovator in the modern health maintenance organization plan--a prepaid health plan in which members pay a monthly premium, and in exchange the HMO HMO health maintenance organization.
A corporation that is financed by insurance premiums and has member physicians and professional staff who provide curative and preventive medicine within certain financial, provides maintenance care for them and their families. Kaiser Permanente's role began when industrialist and Kaiser founder Henry J. Kaiser Henry John Kaiser (May 9, 1882—August 24, 1967) was an American industrialist who became known as the father of modern American shipbuilding. Early life
Beginning as a cashier in a dry-goods shop in Utica, New York, Kaiser moved many times as he pursued the learned about Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. surgeon Dr. Sidney Garfield's new approach in health care.
Garfield had established a prepaid health clinic for construction workers in Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, in 1933. The boon took off when he soon found himself faced with the difficult task of finding financing and getting insurers to pay bills in a timely fashion. In addition, many of the men he treated lacked health insurance. With the help of former engineer Harold Hatch, Garfield came up with a prepayment concept in which insurers world pay a fixed amount per day, per covered worker, up front.
Kaiser was intrigued by Garfield's development and he commissioned Garfield to provide similar service, first for his workers who were constructing Grand Coulee Dam Grand Coulee Dam (k`lē), 550 ft (168 m) high and 4,173 ft (1,272 m) long, on the Columbia River, N central Wash. in Washington State starting in 1938 and then for Kaiser's nearly 90,000 employees in his Richmond, Calif.-based shipyards during World War II.
Kaiser had a vested interest Vested Interest
A financial or personal stake one entity has in an asset, security, or transaction.
For example, if you have a mortgage, your bank has a vested interest on the sale of your house.
See also: Right in providing health-care coverage to those in need. When his mother died in his arms when he was only 16 years old, he believed his family's lack of money kept her from the medical care she needed and he pledged to make health-care coverage a part of his vision. Kaiser and Garfield opened the prepaid plan to the public in 1945. In 10 years, enrollment surpassed 300,000 members in Northern California Northern California, sometimes referred to as NorCal, is the northern portion of the U.S. state of California. The region contains the San Francisco Bay Area, the state capital, Sacramento; as well as the substantial natural beauty of the redwood forests, the northern . Today, Kaiser Permanente says it is the largest nonprofit HMO in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. .
The HMO has evolved since the mid-20th century, but not without some bumps along the way.
The 1965 enactment of Medicare for the elderly and Medicaid for the poor spawned an upsurge in managed care organizations, including HMOs. In the early 1970s, the federal government, insurers and employers were searching for an answer to escalating health-care costs. On Dec. 29, 1973, President Richard Nixon signed the HMO Act of 1973 into law. The act provided $375 million for HMO development and subsidization of HMO premiums and required private employers with 25 employees or more to offer HMOs.
Kaiser had a hand in the development of the act by providing insight on HMOs and serving as a model for the creation of the act. Patti Elwood Jr., chief architect of the act and coiner of the term "health maintenance organization," recalled in a historical perspective of Kaiser Permanente's beginnings how he immediately hoarded a plane to Kaiser's Oakland headquarters when the U.S. Department of Health, Education and Welfare leaders agreed to his idea for the act.
The following decades also provided stepping stones
The Stepping Stones are three prominent rocks lying 0.5 miles north of Limitrophe Island, off the southwest coast of Anvers Island. into the modern HMO. In the 1980s, HMOs gained attention when Congress attached an HMO provision under the Employee Retirement Income Security Act The Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.A. § 1001 et seq. (1974), is a federal law that sets minimum standards for most voluntarily established Pension and health plans in private industry to provide protection for individuals enrolled in these plans. . ERISA See Employee Retirement Income Security Act.
See Employee Retirement Income Security Act (ERISA). required all employers with more than 50 employees to offer an HMO choice in health plans. It wasn't until the 1990s, however, that HMOs garnered the most fame. The percentage of working Americans with private insurance enrolled in managed care rose from 29% in 1988 to more than 50% in 1997, according to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. the Health Resources and Services Administration The Health Resources and Services Administration (HRSA) is an agency within the United States Department of Health and Human Services whose goal is to improve access to health care for those without insurance. .
But the by type around HMOs in the '90s soon gave way to a downward trend that many believe still continues. "The concept was a good idea, but the reason that HMOs are now on the decline is that they didn't include the patient in the decision-making process.
Instead, the HMO set copays and because there wasn't involvement by individuals, it developed an idea of entitlement and no awareness of the actual cost," said Marc Bilodeau, senior vice president with insurance broker Willis Group Holdings Ltd.
The HMO Legacy
But despite its ups and downs ups and downs
Alternating periods of good and bad fortune or spirits.
ups and downs
alternating periods of good and bad luck or high and low spirits , many industry experts believe the innovation of the HMO has provided much value to the health-care system. "Perhaps one of the most notable contributions of the HMO is its focus on and advocacy of the concept of prevention," said Susan Pisano, vice president of communications for America's Health Insurance Plans. Fee-for-service plans pre-managed care usually didn't have coverage for prevention, she said, and HMOs looked at the concept broadly to include primary prevention (such as flu shots), secondary prevention (such as screening for cancer), and tertiary prevention tertiary prevention Medtalk Treatment that alters the course of clinical disease--eg, with CABG or PCTA. See Percutaneous transluminal coronary angioplasty Psychiatry Measures to reduce impairment or disability following a disorder–eg, through rehabilitation. (treating people with chronic disease comprehensively).
As the HMO continues to evolve, Pisano said, it will likely borrow features from some of the newer models that emerge. In turn, many of those models will also adopt some of their features from today's HMO. "I don't necessarily think we'll see a time when a particular model is the answer to all of the health-care system problems or addresses all the needs. But I think the HMO model has contributed important basic concepts to the health-care system and it will continue to evolve as a major model."
While the original concept was good and still offers much value, Bilodeau said today's HMO is taking on a different appearance. HMOs are now beginning to again move back to more restricted care, he said. "The original concept of limited networks based upon fees and reimbursement schedules was the way to contain costs, but I now think it will be limited networks based upon quality of care and quality outcomes." In addition, he believes the concept of preferred providers is increasing and traditional staff model HMOs will continue to evolve. Staff model HMOs, like that found at Kaiser, work well because "everyone is based on salaries, there's no fee for service, you negotiate relative income for providers and you own the bricks and mortar A store (shop, supermarket, department store, etc.) in the real world. Contrast with clicks and mortar. ," he added.
"In addition, it looks like we're going back to centers of excellence--limiting providers based upon quality outcomes," Bilodeau said. "That's the difference of today's HMO and that's why I think it's sustainable. You can't do it just based purely on cost; that doesn't make any sense."
Kaiser Permanente also sees some changes in the HMO from its early form. "While we served as a model for the HMO act, when you look at what an HMO is today, in many respects we're not really an HMO--but something more," said Tom Debley, Kaiser's director of heritage resources. There are now many variations--some of which don't include the idea of integrated efficient delivery systems, he said. "We're still struggling with that idea in the United States nearly 70 to 80 years after it was first discussed as a public policy problem."
Kaiser Foundation The mission of the Kaiser Foundation is to assist individuals and communities in preventing and reducing the harm associated with problem substance use and addictive behaviours. External links
A.M. Best Company # 64585
Headquarters: Oakland, Calif.
Lines of Business: Health insurance. Includes the not-for-profit Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries, and the for-profit Permanente Medical Groups.
2003 Net Income: $996 million
Distribution: National consulting houses, regional brokers and brokerage firms, membership exchange, direct
For ratings and other financial strength information about this company, visit www.ambest.com.