Three years ago, after a rapid spurt of growth, Kaiser Permanente in San Diego found itself with an embarrassing problem: bad service.
In nonurgent cases, patients frequently had to wait five weeks to see a specialist at the HMO. Elective surgery could take two or three months to schedule.
People noticed. In the fall of 1992, 10% of San Diego County's 7,500 employees who were enrolled with Kaiser dropped out. The county threatened to freeze new enrollments until service improved. Among enrollees who left, poor service and lack of appointment access were cited three times as often as complaints about cost, location or coverage.
Kaiser decided it couldn't continue growing until service improved. For a year, it redirected its marketing efforts from attracting new enrollees to keeping the ones it had. "We simply had to get things fixed," said Chris Crisafulli, Kaiser's medical group administrator for the San Diego area.
Kaiser took an unusual approach, inviting four of its largest employer groups to participate in a turnaround effort. Employee benefits managers were invited to meet with Kaiser's medical director, hospital administrator and chiefs of service. "My task as the marketing manager was to bring the marketplace to Kaiser," said Dennis Humberstone, Kaiser's district manager.
Benefits managers asked why they shouldn't switch to cheaper plans that promised better access. It was the first time providers had heard directly from purchasers. "It made a huge difference," Mr. Humberstone said.
Thus began a slow process of change. The employer advisory council helped develop access standards, including specialty appointments within two weeks 80% of the time, same-day appointments for primary care and operating room access for elective surgery within four weeks 80% of the time.
Kaiser's 478 physicians and 4,700 nonphysician staff members responded with a host of low-cost innovations, such as direct booking for specialty appointments at primary-care offices, more open appointment times, and follow-up visits by telephone or by primary-care physicians rather than specialists.
In time, most targets were met. Operating room backlogs, for instance, fell dramatically, to the extent that some patients complained of being scheduled too soon. More importantly, there was a "fundamental cultural change from a predominantly provider-driven organization to a market-driven one," Medical Director Maurice Alfaro, M.D., wrote in a letter to the staff.
Kaiser had tried before to improve access and service, but it was the massive exodus of defense jobs and other industry from San Diego that galvanized staff and physicians to make permanent changes, Mr. Crisafulli said. "It took a crisis like the economy to bring this about," he said.
Still, any bottom-line impact is unclear. Market share has held steady. Kaiser lost 20,000 enrollees from 1991 to 1993 during local economic downsizing, but the HMO says its decline was less than proportional to its market share. More concrete, Mr. Humberstone said, is a drop in the voluntary termination rate to 5% from 18% after access problems were addressed. Current enrollment is 365,000, or about 23% of the market.
"On a more subjective basis, the relationship with the employers has greatly improved," Mr. Humberstone said. Employers report that employee complaints have stopped or been greatly reduced. Kaiser created a newsletter for employer groups that covers the progress of the advisory council.
Kaiser's closer ties to San Diego County led to a three-year pilot project to provide workers' compensation managed care. "Had we not resolved these issues, we would not have been able to develop this project," said Ann Sommercamp, the county's employee benefits manager.
The employer advisory council continues to meet and set goals. For example, Kaiser is developing a new orientation video that will show enrollees how to access services. "That's something probably most membership health plans don't do because there are concerns about increasing utilization," Mr. Humberstone said. "But our feeling is, if we provide services correctly the first time, we're going decrease utilization and have happier members."