Breaking a half-century tradition in its two California regions, Kaiser Permanente will eliminate inpatient services at some medical centers and contract with community hospitals.
Kaiser physicians treat enrollees in community hospitals in all but two of its other 10 regions.
The costs of hospital ownership-reflected in its rate structure-have burdened Kaiser in the overbedded California market, where it serves almost 5 million enrollees. On average, its 16 Northern California hospitals operate at 50% capacity, and its 10 Southern California hospitals run at 42% capacity.
Higher rates have held down enrollment growth in California, although there are recent signs of a turnaround.
As a first step in its new strategy, Kaiser's Northern California region is exploring alliances with three not-for-profit facilities: 460-bed Summit Medical Center and 146-bed Children's Hospital in Oakland and 504-bed Alta Bates Medical Center in Berkeley. The process will take up to 90 days, Kaiser said.
Some alliances might involve non-Kaiser patients being treated at Kaiser hospitals, a spokesman said.
Kaiser had planned to replace its aging 344-bed Oakland facility with a new hospital in Emeryville, but new construction is now unlikely, the spokesman said.
In its Southern California region, Kaiser is four to six months from deciding which of its medical centers would eliminate inpatient services and contract with community hospitals.
The moves are not considered hospital closures, a spokeswoman said, because inpatient service areas will be converted to outpatient use.
Partnering with community hospitals will not only benefit Kaiser but also will "strengthen local healthcare systems," said Oliver Goldsmith, M.D., medical director of Southern California Permanente Medical Group.