About LMP

When Henry J. Kaiser and Dr. Sidney Garfield created a health plan for Kaiser’s shipyard and construction workers in the 1930s and ’40s, they laid the foundation for Kaiser Permanente.

From an initial customer base consisting almost entirely of union members, Kaiser Permanente grew to be the largest nonprofit health plan in the country, serving a wide range of members. Today, the Labor Management Partnership, an innovative relationship among Kaiser Permanente managers, workers and physicians, is the largest and most comprehensive partnership of its kind.

The Labor Management Partnership started in 1997, emerging from mounting strife between Kaiser Permanente and its unions that threatened to derail the organization. Instead of continuing a traditional approach and launching a campaign against KP that ultimately could damage the organization—and the workers it employed—the Coalition of Kaiser Permanente Unions approached KP leaders with an idea for how to do things differently.

Today, the 1997 agreement continues as the guiding document between KP and the Coalition unions. In 2018, after the Alliance of Health Care Unions formed, a new 2018 Labor Management Partnership Agreement was reached between KP and the Alliance unions. Under these partnership agreements, the parties agree to work collaboratively to improve the quality of care for Kaiser Permanente's members and communities and help KP lead the market in health care — while providing job security and the best place to work for its employees.

Working in collaboration

On a day-to-day basis, partnership means that workers, managers and physicians share decision making and problem solving by staying grounded in their common interests. Employees, managers and physicians work in unit-based teams — collaborative work groups that, in the course of their ongoing work, improve quality and service and make KP more affordable. Partnership is credited not only with improving patient care and satisfaction, but in making Kaiser Permanente a better place to work by giving employees a voice on the job. 

Over the years, the parties have worked together on such policy issues as nurse-to-patient staffing ratios and health care reform and ratified groundbreaking accords such as the Employment and Income Security Agreement. Perhaps the most ambitious endeavor was the 2005 launch of 3,500 unit-based teams that work on improving care, service and affordability every day. Together, Kaiser Permanente and the unions have bargained a series of groundbreaking National Agreements, including the ones in force today with the Coalition of Kaiser Permanente Unions and the Alliance of Health Care Unions. All used an interest-based approach.

What if every organization and every union had a labor management partnership like ours?

It’s not as far-fetched as it sounds. On Aug. 16, more than 250 union, business and government leaders from all over the United States gathered in Chicago for Partnership Day, a meeting hosted by the Federal Mediation and Conciliation Service at its biennial conference—and offered a realistic look at the ups and downs that occur in partnerships and what it takes to launch and sustain them.

“We know partnership can make a difference,” Allison Beck, FMCS director, told the gathering. “This is not some fantasy that happens in a make-believe world.” She should know. As leader of the FMCS, the federal agency that mediates labor disputes across the United States, she’s seen firsthand how acrimonious relationships can ruin companies and unions—and how more open and respectful ones can help them both succeed.

The partnership between Kaiser Permanente and the Coalition of Kaiser Permanente Unions is the longest-lasting and strongest one in the nation, so conference participants asked many questions about how it operates.

A race to the top

Dennis Dabney, KP's senior vice president of National Labor Relations and Office of Labor Management Partnership, told the packed room he spends a lot of time on the phone with leaders from other companies interested in starting and strengthening partnerships.

“I've seen so many companies engaged in a race to the bottom,” Dabney said. “I'd like to see more engaged in a race to the top.” If he has any regrets about Kaiser Permanente’s partnership, he said, it's that we didn’t create unit-based teams sooner.

Health care costs too much. The cost of care threatens Kaiser Permanente’s social mission to provide affordable, quality health care to all.

There are no simple solutions, but KP has many advantages that others do not—including our integrated model of care that can better manage and prevent illness; a prepaid, nonprofit structure that keeps revenue in the system to better serve members and patients; and unit-based teams. As they create the best place to work, UBTs are continuously improving quality, service and affordability at the front lines of care.

This report highlights many ways that unit-based teams are getting results that matter to members and patients. Affordability of care, one of the issues that matters most to members, was the fastest-growing focus area for UBTs in 2012 (see Figure 1).

Teams launched nearly 1,400 efficiency and cost-reduction projects last year, more than doubling the number of such projects undertaken in 2011.

That bodes well for the future, because the number and effectiveness of UBTs’ performance improvement projects increase as teams develop. For instance, UBTs that are rated high performing—defined as reaching Level 4 or 5 on the UBT Path to Performance—are three times more likely than Level 1 teams to take on cost-reduction projects, using proven tools such as process mapping, the “6S” performance improvement tool, and spaghetti diagrams (see Figure 2).

And these teams are getting results. Waste- and cost-reduction projects can yield immediate savings of $20,000 to $50,000. Spread across the organizations, these efforts could save more than $100 milliion a year. Some examples of the work being done:

• At the Baldwin Park Medical Center Laboratory in Southern California, phlebotomists worked to reduce the use of more expensive butterfly needles, substituting standard needles when they will work—saving more than $45,000 in 2012. Other labs are also doing this; potential savings if implemented program-wide: $2 million.
• The Fremont Medical Center Operating Room team in Northern California, after taking business literacy training and looking at their own costs and budget, identified wasteful practices in the use of ready-made surgical supply packs, saving about $34,000 a year. Potential savings if implemented program-wide: $750,000.
• The Point Loma Primary Care team at the San Diego Medical Center in Southern California applied 6S to organize supplies and standardize ordering, saving more than $20,000 in 2012. Potential savings if implemented program-wide: $4.2 million.

As these examples show, individual teams can implement improvements that can save a significant amount of money in their own corner of the system. As practices spread among the 3,500 unit-based teams now working across Kaiser Permanente, the savings can add up quickly.

Achieving the full cost-saving potential of UBTs will not be automatic. More teams need to take on cost and waste issues. Even with the jump last year, only one-fifth of UBTs undertook such projects. Successful practices must be spread more systematically across departments, facilities and regions. And more teams need the kind of business training that led the Fremont OR team to act.

But those changes are coming. “The growing number of cost saving and efficiency projects are helping build a culture of savings and waste reduction among high-performing teams across KP,” says Peter Nixon, director of metrics and analytics, Office of Labor Management Partnership.

High-performing UBTs outscored others on two questions in the 2012 People Pulse survey regarding employee views of their department’s efficiency. (see Figure 3). Members of high-performing teams are more likely to say their departments have efficient work procedures and seek improvements to reduce costs.

“These findings suggest that members of high-performing teams see waste reduction and efficient work processes as part of their job,” Nixon says. “That is good news, because it’s the discretionary effort, commitment and intelligence of frontline teams that gets results.”

Our National Agreements commit us to operating principles that you won’t find in most labor contracts:

Power of partnership

Interest-based bargaining doesn’t guarantee success. It works for us because our partnership works.

The partnership between Kaiser Permanente and the Union Coalition came about in 1997, in a challenging environment. The company had a long and close history with the labor movement. But amid growing market pressures and labor unrest in the 1980s and ’90s, we were at a crossroads. Most of the local unions representing KP workers formed the Coalition of Kaiser Permanente Unions to launch a unified corporate campaign.

Facing what would have been a mutually destructive strike, the leaders of both parties took a chance on an alternative approach. They agreed to:

• Work collaboratively to improve the quality and affordability of care for the patients and communities we serve
• Help Kaiser Permanente lead the market in health care
• Involve unions and individual workers in workplace decisions
• Provide job security and be the best place to work in the industry.

Solving tough issues

Today it is the largest, longest-running and most comprehensive such partnership in the country. It covers 80 percent of our represented workforce and includes 43 local contracts, in addition to the national agreement. It has delivered industry-leading contracts, and helped Kaiser Permanente achieve industry-leading quality, solid growth and a culture of collaboration.

In short, our partnership is more than a labor relations strategy, it’s an operational strategy that provides strength and stability for Kaiser Permanente and our workforce, and better care and service for our members, patients and customers. It provides an infrastructure for continuous performance improvement and a way to better resolve difficult issues.

For example, during the Ebola crisis of 2014, health care providers and members of the public were concerned about how to best control spread of the disease. Kaiser Permanente, our union partners and the Centers for Disease Control and Prevention stepped back from the fear and misinformation that prevailed elsewhere. We worked together to develop training processes, educate people and agree on steps to ensure the safety and compensation of employees involved in caring for patients with the Ebola virus. Two of our hospitals were among the first in the United States to be recognized as part of the nation’s Ebola preparedness and response plan.

Frontline teams lead change

Day-to-day partnership is most evident in more than 3,400 unit-based teams—our term for the natural work groups that deliver care and service. Team members are trained in performance improvement techniques to spot opportunities, conduct small tests of change, assess results and implement solutions. They provide a new level of learning and decision making about the quality of their work and how to do it better.

UBTs are co-led by a union member and the manager or supervisor. In clinical settings they include physicians. We track the performance quarterly of every team, based on jointly set measures of performance, and we set aggressive goals for the number of teams to reach high performance, measured on a 5-point scale.

Seventy percent of them are rated high performing. That’s important because our data show that high-performing UBTs get better outcomes on service, quality, safety, attendance, patient satisfaction and employee satisfaction.

New tools and skills

Amy Edmondson, Novartis Professor of Leadership and Management at Harvard Business School, has studied Kaiser Permanente’s model of teaming and offered this assessment:

Unit-based teams are a way to be entrepreneurial and a way to build greater accountability by those on the front line. The teams push people to brainstorm, to be attentive to what they see and to put their own experience to good use. The teams have the opportunity to identify challenges and they have tools and skills with which to work, but it’s up to them to put them to good use to make a difference for patients.

Our teams now have more than 7,700 frontline improvement and innovation projects under way. To align local team efforts with the organization’s broader strategic goals, all projects are focused on one or more points of the Kaiser Permanente Value Compass – a guidepost that shows our four shared goals of best quality, best service, most affordability and best place to work, with our patients and members at the center of all we do.

Kaiser Permanente Value Compass

About 35 percent of these projects are focused on reducing waste or improving affordability. And 267 of those projects, produced joint savings of $10 million in 18 months; potential savings are much more. Twenty-eight percent of projects are focused on service enhancement. Here’s a snapshot of improvement projects conducted at each point of the Value Compass:

• Best quality: A medical imaging team worked across departmental lines to ensure that patients who visited the medical office for a flu shot, and also were due for a mammogram, could get one promptly, many within 20 minutes.
• Best service: A cross-functional team of service center workers redesigned work processes to handle incoming calls in the wake of the Affordable Care Act. The team cut the number of customer handoffs by 60 percent and reduced mean processing time for members’ issues from 26 days to three days.
• Most affordable: An inpatient pharmacy team launched a cost-reduction effort that is saving more than $600,000 a year by better managing inventories, alerting physicians to less costly equivalent drugs and reducing drug wastage.
• Best place to work: As part of our voluntary workforce wellness program, 62 percent of eligible employees – more than 80,000 people – participated in a confidential health assessment to identify potential health risks. 

Getting measurable results

We know our strategy is having an impact on organizational performance and the workplace experience. Our 2014 employee survey showed strong correlations between several measures of employee engagement and job performance.

Departments that scored high on an index of 18 measures of workforce effectiveness (including things like taking pride in the organization, information sharing, understanding of goals and being held accountable for performance) reported significantly better results in service, quality, workplace safety and attendance. For instance:

• 9 percent higher patient satisfaction scores
• 18 percent fewer lost work days
• 41 percent fewer workplace injuries
• 91 percent fewer bloodstream infections in at-risk patients

In addition, members of high-performing unit-based teams are far more likely to say they have influence in decisions affecting work, are comfortable voicing opinions, and feel co-workers are respected despite differences.

Higher job satisfaction also contributes to significantly lower employee turnover. In California, for instance, our turnover rate for all hospital-based employees ranges from 6 percent to 8 percent, depending on the job type – versus the 2014 industry average of 9.4 percent statewide reported by the California Hospital Association.

Union Coalition members and Kaiser Permanente also collaborate on many issues rarely open to union participation. For instance:

Workforce planning and development: We invest heavily in workforce training and development – and we develop and implement most of that work jointly. For instance, a union-management Jobs of the Future Committee in Southern California is identifying emerging technology, assessing the impact on workers, managers and physicians, and developing training plans and career paths. More such efforts and investments are under way.

Market growth: Bringing together union members and Kaiser Permanente sales and marketing teams, our joint growth campaign helped win, expand, win back or retain 33 accounts covering 125,000 Kaiser Permanente members in 2014.

Meeting organizational challenges

Our partnership is not perfect. It can stretch us to engage and educate our many stakeholders, and find time to solve problems and improve work processes in the course of day-to-day operations.

But in my experience, the biggest challenge is spreading innovation – facilitating the exchange of ideas and the adoption of successful practices from one team, medical center or region to another. We know that new initiatives can take root faster and more consistently if they’re modeled on a proven concept – especially when they are championed by our own work teams. Variation can be a plus when you’re looking for new and better ways to do things; when you’ve found the best way, you need to make it a work standard.

We recognize and spread success by communicating with teams regularly in multiple formats; through peer consultants and sponsors in every facility; a system-wide database that tracks teams’ tests of change and outcomes; and UBT Fairs, where teams share their findings in person.

Keys to success

Our Labor Management Partnership is now in its 18^th year, and we are still learning how to take it further. We continue to believe it can be a model for labor relations and health care delivery. Four factors in particular are essential to success:

• Develop leadership at all levels: Since its founding, our partnership has thrived under three different Kaiser Permanente CEOs and three different Union Coalition executive directors. Change is not sustainable if it depends on one top leader. Frontline and mid-level leadership, on both the management and union side, is key. We train for partnership at all levels, and have found that interest-based problem solving and bargaining are powerful learning development tools for up and coming leaders.
• Build trust: To work together, partners must trust one another. That trust must be earned, and is established over time. It will be tested, but the building blocks are well known: Do what you say you will do. Honor your commitments. Treat others with respect and deliver results.
• Measure results and share data: We set goals and track performance for all our teams. We share business and financial data with our partnership unions in bargaining, and share departmental and unit-level results with teams working on performance improvement projects. Teams can’t succeed without good information upon which to set clear expectations.
• Create a shared framework: Our workforce is diverse in every way – demographic, geographic, professional and technical. We also have different (and sometimes competing) needs, interests and concerns. But we share a desire to make our members’ and patients’ lives better. The Value Compass – with the member and patient in the center – provides a common touch point that we use to set priorities and guide decision making.

Our union and organizational leaders know how to do business in traditional, more adversarial labor relations settings. We’ve done it. We choose to work in partnership – not because it feels better (though it does) or because it’s easier (it’s not). We do it because it gets results – for the organization, the unions and workers, and the members, patients and communities we serve.

It’s time to look beyond labor relations and find new ways to innovate and engage teams. Our leaders took a risk 18 years ago to listen, understand and work together. It proved to be better way to deliver health care and achieve our social mission.

This article was originally published in “Perspectives on Work,” the magazine of the Labor and Employment Relations Association (LERA), Volume 19. Reprinted with permission. For more information, visit LERAweb.org.

Also see a PDF of the original article, with additional information about Kaiser Permanente and the Labor Management Partnership.

Bernie Nadel is director of customer service and call center operations at Patient Financial Services in Southern California. He co-chairs the Regional Operations LMP Council, bringing together 27 business units, including the regional laboratory, central refill pharmacy and optical services.   

None of us was born into a unit-based team. Partnership is learned. Teams and their leaders need guidance and a playbook.

I tell other managers partnership makes my job easier. I have 10 other people helping to come up with solutions. I know some managers are uncomfortable with that approach. They act as though they can opt out of the Labor Management Partnership. It’s as if they said, “I know we have KP HealthConnect™, but I want to use this other computer program.” I say, if you don’t want the LMP, don’t work at Kaiser Permanente. You don’t get to opt out of the company’s policy.

Owning the work

Recently, our UBT went through a list of issues to work on. Call volume is up 30 percent, and we’re figuring out how to deal with that. We are going to do several tests of change. UBT members are gung ho about it. If I were to try to make those changes myself, I’d miss things. I would not get the insights of the people who interact with our members every day. And the people doing the work wouldn’t have the ownership and energy that comes with having a voice. Employees know I believe in partnership—and I give them the time to do it. That is a challenge. But you can’t solve the problems if you don’t invest.  

Not that long ago this call center was a toxic environment. There was low trust and low morale. All that has switched 180 degrees. A big step was my predecessor attending a sponsorship training class, which led her to involving UBTs more in day-to-day operations. I wanted to build on that.  

Taking the first step

LMP is a dance between labor and management, and management has to take the first step. When labor sees that management is serious, that’s when it changes. We’ve shown that you can change the culture.

Recently, we had a meeting with top executives about improving the consumer financial experience. Our UBT representative group prepared a report, and it gave our executives insights they couldn’t get any other way. It was not slick, it was real. I’m grateful to the group for the experience, commitment and knowledge they bring to this work every day.

Close to 5,800 KP members in the Mid-Atlantic States get their Kaiser Permanente coverage through SEIU 32BJ, a regional union representing building service workers. Many of them speak English as their second language. To help this group get the most for their health care dollars, KP and 32BJ kicked off a campaign in April and May to educate and engage new 32BJ union members.

Maria Naranjo, deputy director, SEIU 32BJ Capital Area District, led the campaign with the help of Brenda Muñoz, labor liaison and analyst, KP Office of Labor Management Partnership. The field team included two 32BJ staff members and seven 32BJ members (four were bilingual). Of the seven 32BJ members, six already were KP members who could share their own experiences with KP.

“We want 32BJ members to be champions of health and KP in their workplace—and to do this, they need to understand their plan coverage and how KP works,” says Muñoz.

Team hits the field

The team visited close to 300 worksites and collected more than 1,100 names and phone numbers of members they spoke with. In addition, 32BJ sent 5,000 text messages and KP’s Regional Access Services staff placed more than 2,600 outreach calls to help members choose a physician, make appointments, identify health needs and learn about an upcoming heath fair. The goal was to provide as many touch points as possible by contacting members via mail, phone and in-person visits.

At the end of the campaign, Kaiser Permanente and 32BJ hosted a health fair at the D.C. Convention Center. It was the first time 32BJ partnered with a health plan to host a health fair. More than 100 32BJ members and family members attended and were offered free health screenings for blood pressure, BMI, glucose and total cholesterol.

Attendees also had a chance to meet with a KP physician, enroll in My Health Manager, select a primary care physician, make future appointments, ask questions and learn more about the KP system. Additional resources at the fair included workplace safety tips, healthy lunch tips and answers on health plan benefit questions. SEIU 32BJ was impressed with the health fair, which got positive feedback from attendees.

Creating value for members

Throughout the campaign, the team learned a lot about KP’s SEIU 32BJ members and their needs. The team identified several areas for improvement, and it is determining how to continue to engage these members through workshops, further education, health fairs and promotion of preventive health.

“SEIU 32BJ is a potential growth area,” Muñoz says. “In order to retain these members and encourage growth, we must provide the resources they need to show them that KP is not only committed to providing them with high-quality health care, but that we can provide culturally competent care.”

An earlier version of this story appeared in Inside KP Mid-Atlantic States, July 2, 2014.

Kaiser Permanente’s chief executive officer, Bernard Tyson, recently sat down with the New York Times to talk about leadership for a regular business column featuring corporate leaders called the “Corner Office.” Tyson recalled the standards for integrity his father, a carpenter and minister, set for him as a child. He also discussed how those early lessons have affected the kind of feedback he looks for today as the leader of one of the country’s largest nonprofit health care organizations.

Q. What were some early leadership lessons for you?

A. I grew up in a large family, with two brothers and four sisters….

Read the full interview on the New York Times website.