Affordability

Jeff and Sara Simmons describe themselves as a “pretty average, middle-class” family living in a Northern California suburb with their sons. “We live a Lego life with two boys,” laughs Sara, describing her toy-strewn living room.

But eight years ago, Sara was diagnosed with Type 1 diabetes, thrusting her into a routine of checking her insulin, monitoring her diet—and paying steep bills for medication and medical equipment. Recently, 7-year-old Owen also was diagnosed with the disease. And the family has to plan for the possibility that 5-year-old Griffin might be diagnosed with it as well.   

Even though the family has medical insurance with Kaiser Permanente, the new bills related to Owen’s care overwhelmed them. They applied for help from one of KP’s medical assistance programs, which helped tide them over until they could get a handle on their new reality.

In the months since, the Simmonses have made some tough choices—deciding, for example, to sell their home and move to an area with a lower cost of living. But Jeff, a manager in a major corporation, worries about how families with lower incomes and fewer health care benefits than his would have fared under similar circumstances.

“How do they do this?” he wonders. “How are they surviving all of these curveballs?”

Health care is “absolutely not” affordable for most people, he says—then adds, “Everybody should have affordable health care. Period.”

A difficult equation

The passage of the Patient Protection and Affordable Care Act in 2010 was a major step toward ensuring all Americans have access to health care. As provisions of that act take effect in 2014, Kaiser Permanente will have an extraordinary opportunity to further our historic mission of providing affordable, high-quality health care to working families. But with the opportunity comes a difficult financial reality. Because these incoming new members may not have had access to health care in the past, they may be costly to treat—and federal reimbursements may be on the low side. In addition, the federal government has recently cut the rates for Medicare reimbursements, which typically have provided about one-third of KP’s revenue.

So Kaiser Permanente and unit-based teams face the challenge of treating more—and perhaps sicker—patients with fewer resources while maintaining and increasing the quality of care. Now more than ever, allocating our resources wisely is vitally important.

Frugal power

It’s easy to see how departments with multimillion-dollar budgets play a role in keeping KP affordable. For example, National Facility Services kept an eye on potential energy savings when a new data center was built and saved about $450,000 in electricity costs in 2010 and earned a $300,000 incentive from the local utility company. Another example: KP saved $26 million in 2010 alone by buying safer and more environmentally friendly industrial chemicals. And a redesign of the way KP deploys computer workstations saved $12 million as of August 2011.

But unit-based teams have just as big a role to play, even if most don’t control huge budgets. The fact that there are more than 3,500 UBTs across the organization means savings can add up dramatically.

Some teams are saving “light green dollars,” focusing on efforts that indirectly improve the financial picture. That might be boosting service and quality, which helps us get new members and retain the ones we have, or improving patient safety, which reduces a variety of expenses, including costly hospital readmissions.

Others are tackling “dark green dollars,” direct savings that improve the bottom line right away. In fact, efficiency and non-payroll cost reduction is the fastest-growing category of projects for teams, according to an analysis of UBT Tracker data.

Is your team looking for new ways to save light or dark green dollars—or in need of ideas to get started saving? Read Four Ways to Save.

Fremont’s Operating Room team loved taking the first parts of Northern California’s business literacy training—so much so, it immediately requested the last two sessions, when teams pull out their budgets to review line-item expenses for the department. The review of payroll and non-payroll budgets has caused controversy and concern in some quarters, but the Fremont OR team not only took it in stride, it rode the momentum of the training by developing several performance improvement projects to reduce waste. One of those, streamlining its ready-made surgical supply packs, is projected to save roughly $34,000 a year. The Northern California training began rolling out in 2011. The first three sessions are a tutorial on the basics of Kaiser Permanente business, explaining such things as our integrated business model (how the various KP entities do business together), key sources of revenue, and business concepts like margin goals. The rubber meets the road in the final two sessions, with their look at the department’s financial realities. Team co-leads Yolanda Gho, Operating Room nurse manager, and Gus Garcia, a surgical technologist and SEIU UHW steward, talked with communications consultant Cassandra Braun about the training, its benefits and how it inspired their team to do better.

Q & A

Q. Were you concerned about sharing the department’s payroll and non-payroll budget with staff?

Gho: Not really. I thought, “Why don’t we highlight the areas where we have opportunities to improve, like sutures—ones we can improve on and have control over.” With payroll, my one concern was showing someone’s salary. But it was explained that they didn’t show individuals’ salaries. So I was totally on board.

Q. What was the staff’s reaction to the training?

Gho: The response was quite eye-opening. There was an audible gasp. When they saw [the red lines], they were like, “Oooh, I thought we were doing great. Why do we have all that red on the screen?” What’s great about this group is their minds immediately started running, thinking about what they could do.

Garcia: To me, it’s like: We can fix that, or come up with ideas (for fixing it). That is what melds it all together.

Q. Talk about your project to streamline surgical packs and how it was influenced by the business literacy training.

Garcia: Surgical packs have draping and supplies for each particular procedure. They’re ready-made. So you always had to add things or throw away things that you didn’t want, depending on the procedure. I was trying to see what we need or don’t need. I worked with the supplier and our teams, like general surgery, and I asked their opinion—“What do you need in this thing and what do you not need?” We streamlined the packs to have the bare minimum. So everyone uses everything in the pack.

Gho: After the training, Garcia wanted to revisit this issue, because he had brought this up before.

Garcia: The wheels were turning in my head. If we’re not using it, we’re wasting money.

Q. You also started work on reducing waste of sutures and other supplies?

Gho: Yeah, it was a culture change. In the past, as a nurse or tech, you were trained to always be ready. You were trained that the surgeons shouldn’t have to ask for something. Some people think that if they’re able to do that, they’re seen as efficient and anticipating the needs. But the world is different, the economy is different. Now we have to ask ourselves, “Do we need to have this open to look good or just in case a surgeon asks for it? Or is it OK not to open it, but to have it in the room and ready?” Before, we were all trained that way—anticipate, anticipate, anticipate. We now give ourselves a centering moment before we open sutures or supplies that are not needed immediately for a case.

Q. What advice would you give to other teams thinking about taking business literacy training?

Gho: My advice is to help educate your staff members by being transparent about information that affects them and the team. As a manager, I want to create awareness and understanding of the issues with my staff. It bridges the information and knowledge gap. The more we’re armed with information, the better decisions we make.

Garcia: If it was up to me, I’d have everyone take the class. I think it just gives you a different perspective. It breaks it down and gives you an overall view that staff members don’t get to see all the time. It keeps them informed.

Gho: People tend to complain about things but do nothing about it. In our UBT, you bring solutions. We’re doers. It’s our chance to do something.