The 12 Permanente Medical Groups and their 9,300 physicians affiliated with the Kaiser Foundation Health Plans throughout the country are considering becoming a unified organization and may even contract with other health plans.
"We felt that healthcare is changing so dramatically around us that it is absolutely essential we capitalize," said Ian Leverton, M.D., director of Permanente Inter-regional Consultant, a Kaiser subsidiary that offers consultation to the Permanente medical groups.
The 12 Permanente groups are scattered throughout the country, serving such locales as Southern and Northern California, Colorado, Hawaii, Missouri, North Carolina, Texas and portions of the Northeast. Historically, they have operated autonomously, with separate business plans.
The restructuring, which Leverton said was likely to occur by mid-1997, would signal a further shift from Kaiser's traditionally insular staff-model approach. Kaiser's California regions announced earlier this year that they would begin to divest themselves of hospitals, as well as open them up to other health plans. Kaiser plans in other regions have been in joint venture talks with various payers.
While the Permanente physicians are still mulling over the possibilities, Leverton said it was likely that two entities would emerge from the link-up: a "federation" to ensure uniform quality measures throughout the system and a for-profit business owned by the physicians to be called PermCorp. The latter would focus on contracting, management of non-Permanente medical groups and expanding into other territories, Leverton said.
"We have a lot of cultural ties, but we think we're wasting them, not getting the potential synergies that could come from a common style of Permanente practice," Leverton said.
He said restructuring in such a way would give the Permanente groups the ability to contract with other entities but added that wasn't the primary purpose.
The boards of the 12 groups would have to vote unanimously to approve any joint plan, Leverton said.
Industry observers generally praised Permanente's anticipated moves, which they said reflected the ongoing consolidation of physician practices and medical groups. However, they believe PermCorp. will have to create a distinct image for itself to compete effectively with the PhyCors and MedPartners of the world.
"It's a smart move, definitely a departure for them. But at the same time, they are really trying to respond to the marketplace," said Barbara Adachi, head of Deloitte & Touche's integrated healthcare group in San Francisco. "(Their) whole world has changed with these consolidations in the delivery system, so they have to try and be more flexible, and not just be a big structure within four walls."
"While I'm sure there are some benefits to be gained, how do you deal with a medical group of that size, and get them to work on a common basis while avoiding large administrative bureaucracies?" asked Richard Sinaiko, president of Healthcare Practice Enhancement Network, a Los Angeles-based consulting firm for medical groups.