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HMO-verhaul Featured

8:17am EDT November 26, 2002
"What's it going to cost me?"

Patricia Kennedy-Scott hears the same question every year from business owners. Kennedy-Scott, Kaiser Permanente's new Ohio Region president and a 25-year veteran of the health care and insurance industry, wants to open the discussion to more than just that ominous question. After all, what good is saving a few bucks when your employees hate the service?

That's why Kennedy-Scott wants to spread the word about the benefits of preventative care. As she points out, if you can prevent your employees from getting sick, it will save your company in the long-run.

"It's beyond the dollars," she says. "You have to look at the value equation, and the value equation does require a look at outcomes. It really does require a look at long-term benefits and health improvement status, it really does look at preventative care."

Kennedy-Scott, who is the first African-American, female president for the Ohio Region, started her career as a junior high school teacher outside Detroit. She taught as she earned her law degree, then began her health care career in the Michigan Attorney General's Office working with the Department of Public Health. From there, she joined Harper-Grace Hospitals in Detroit, and eventually was appointed vice president and chief operating officer of Michigan Hospital and Medical Center.

In 1993, she served on President Clinton's Healthcare Reform Review Committee. Most recently, Kennedy-Scott was vice president of Group Health of Puget Sound Network Services Division in Seattle, where she managed provider network relationships and was accountable for more than 200,000 members throughout Washington and Northern Idaho.

SBN Magazine sat down with Kennedy-Scott to talk about the health care issues facing Northeast Ohio and how health insurance providers can work better with their business customers.

You've had broad health care experience in both the public and private sectors. How do you think that will help you in this position?

I'm sure you've heard the old adage, 'You don't know how it feels until you've walked a mile in my shoes.' Having been in both the public and private side, I have a sense of how it is to work as a regulator, trying to do good, legitimate, appropriate work, and how to help businesspeople understand that and incorporate that into their business world.

I appreciate the work that the people in the public sector do and I appreciate the difficulty that is involved sometimes in doing that work. So, I've walked a mile in their shoes, and I think that that allows me to bring a sense of their values and their public agenda to our table.

What new ideas are you bringing to Kaiser Permanente?

There is no magic bullet for health care. Let's be real clear about that. The trends are as they are, and the external business arena is as it is, and so I'm not bringing any magic bullet.

If I'm bringing something new to the table, it's really a thorough examination of how can we at Kaiser Permanente incorporate some of the ideas that exist outside of Kaiser Permanente into our way of doing business, without jeopardizing the values that we bring to the table around preventative care, coordinated care and evidence-based care.

What are the health care issues facing Northeast Ohio?

My last stop was in Seattle, so this area is very, very different. When you're dealing with an economy that is very Boeing-based, Microsoft-based, high-tech environment, that has one of the lowest unemployment rates in the country, one of the highest education levels, it's just a different type of community.

The market was pretty settled in terms of who was there and what they were doing. I don't want to suggest that the market was divided up, but there were a handful of long-term traditional players who came to Seattle and stayed. Some of the big national firms came through, but didn't stay. I think that the folks in Seattle were, and continue to be, very health-conscious and very sensitive to value vs. who has the lowest price.

This market is very different and the challenges are around the industrial base. You could be talking to somebody in politics or banking and they would say the same thing. The volatility of the market is based on changes happening in the manufacturing and the industrial base, and quite frankly, this area just isn't growing.

We have to figure out ways to bring some growth to the region, because ultimately that's good for Kaiser Permanente and it's good for the region.

If there's no growth, how will you generate new customers?

Kaiser Permanente has to be where the growth is occurring. In Cuyahoga County, growth is pretty flat. But if you look at Medina or Twinsburg, even though those areas don't have huge populations, Medina had a 25 percent population growth. The Twinsburg area had similar growth.

Kaiser Permanente has to be where the growth is because health care is essentially a local endeavor. We all want to go to doctors in our neighborhood and pharmacies in our neighborhood, except when we have something really awful. Then we're willing to go anywhere. Given that health care is essentially a local endeavor, if we want to grow, we need to grow in those communities where there is an opportunity.

Beyond that, even in areas where there is pretty flat growth, we have a tremendous opportunity to experience growth through product redesign. One of the keys is to focus on and develop products which have broader appeal in the HMO market, and we haven't tried that before.

We're not interested in selling things because we can sell them. We're interested in selling things that support our values and that are value-added to our present and future members.

So, product development will be very important, being in areas where there's geographic growth is important and telling our story is important. I have worked for organizations like Kaiser Permanente for most of my career. I worked at Group Health of Puget-Sound, which I describe as Kaiser's twin separated at birth.

Even though they have emerged over the last 50 years in different community, at the end of the day, they're similar organizations and they have similar values around coordinated care, evidence-based medicine and preventative care. As we develop new products, those are values we have to infuse.

Finally, we at Kaiser Permanente don't talk enough about ourselves. Kaiser Permanente overall is a $21 billion enterprise across the country. We have 8.5 million enrollees. When people think of Kaiser Permanente, they think it's (just) an HMO.

What I want to do over the next several years is to tell the story of Kaiser Permanente, so when people see the name, they'll start to think of our population-based medicine approach, they'll start to think of our preventative care, they'll start to talk about that we provide care along the entire continuum.

Traditionally, there's been a strained relationship between HMOs and business owners. How will you work to improve that relationship?

Let me tell you a story. I had client in Seattle who called me and said, 'Pat, I want you to know that I'm canceling Group Health.' I said, 'Oh, let's talk about it.' He said, 'No, I don't want to talk about it until I can find an insurance plan that makes sense. I've looked all around the community, and there's no health plan that makes sense.'

The good news was he wasn't dumping us to go somewhere else, but the bad news was, as an industry, we had let a small business owner down because we're designing products that he doesn't need and don't make sense to him.

One of the things I'd like to do is to design products and have offerings that do make sense. The way you do that is to not only look to a user perspective, but a purchaser perspective. In health care, we have two levels of purchasers.

We have the first purchase, which we call 'getting on the shelf,' so we have to get on the shelf before it's even offered to the next level, to the user. As an industry, we've focused a lot on what makes sense to that second purchaser, and that's important. We have to sell things that people believe add value to their lives. But it also has to make sense and fit in the revenue envelope and the value envelope of employers.

Health care, it is what it is, and there are answers out there that Kaiser Permanente is seeking to find in terms of using technology to reduce the cost of health care. We're working constantly in Washington to keep the health care agenda on the radar of legislators. We're looking for proven ways of treating certain diseases.

We're doing all of the right things in order to have a dialogue with an employer around, 'What is it that makes sense to you, and how can we package it?' The numbers show the rapid inflation around pharmaceuticals, around new technologies, and if you don't have the latest, the consumer response is they don't believe they are getting what they deserve.

We're fortunate that we're not in the hospital business, so we don't have to respond to that on an on-going basis, and we have a great relationship with the Cleveland Clinic, which provides our hospital care.

The answer is that it's not just up to the insurance industry or the health care industry to find the answer. It's a partnership between our colleagues in the business industry and the recognition that inflation is as it is, and we have to figure out how we use the dollars that we have in the most efficient and effective way.

What can business owners do to work better with their health insurance provider?

The discussion should be more than about, 'What is it going to cost me this year?' Looking at outcomes, looking at customer satisfaction, those are important elements around a purchase decision. That is an important part of the dialogue.

With large employers, that is part of the discussion. With smaller employers, it's not usually part of the discussion because their core is so small.

Some employers say, 'I want to pay for it today, I don't want to worry about the benefit that it's going to create in 50 years because I'm not going to have these employees working for me anyway.' I would submit to you that the days of people changing jobs every three to five years are over.

I believe that the baby boomers who are now in our 50s are no longer interested in spending the next 10 years changing jobs every three to five years. We're interested in staying. So, an investment in my health status today is a good investment for Kaiser Permanente or for whatever employer you happen to be with.

It's beyond the dollars. You have to look at the value equation, and the value equation does require a look at outcomes. It really does require a look at long-term benefits and health improvement status. It really does look at preventative care.

Just the number of preventable illnesses is astonishing if patients are given the right education, the right exposure. And a simple one is flu shots, and we give them away because it's an investment in prevention.

If you look at hospitalization rates in January and February, and you look at the rate among the elderly and people with chronic diseases, it's very easy to justify giving away those shots. You pay for the shot and have the expenses associated, but what you are doing is preventing hospitalization, flu, pneumonia and other respiratory-based diseases, which are expensive diseases to take care of. How to reach: Kaiser Permanente, www.kp.org