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February 3, 1997 
Contact: Chuck Idelson
(415) 437-3325
For Immediate Release

Kaiser Checking Doctors on Patient Stays, Prescriptions Limits on Patient Care Could be Linked to New Physician Pay Plan

Internal Documents Show How Physicians Monitored on Costs

New documents showing how Kaiser Permanente physicians are closely monitored for prescriptions and for extendiing patient stays which may be a direct financial incentive to limit care, charged the California Nurses Association today. What makes the scrutiny of doctor-recommended care especially ominous is a new physician compensation program quietly adopted late last year that links up to 30% of physician pay to "variable" factors, said CNA officials. "The constellation of these trends is alarming," said CNA President Kit Costello, RN. "Kaiser is tieing a large part of physician pay to performance, and placing every doctor in Kaiser under a microscope to see how much care they give. Physicians who treat a higher number of chronic or seriously ill patients may be unfairly labeled as ‘high utilizer’ doctors. How perverse -- to be penalized for taking care of sick people."

Recent documents obtained by CNA (available upon request) include:

  • A "Utilization/Discharge Worksheet" for hospital discharges that records reasons why a patient was not discharged, and a code that identifies physicians who ordered a delay. Each sheet notes the "M.D. who prevented Disch(arge)" and the "# (number) of avoidable days." 
  • Pharmacy utilization reports from Kaiser Vallejo Medical Center. The sheets track each provider by an identification number and medical department. Each provider is followed for the cost of each prescription and the total costs of all prescriptions, the number of prescriptions, and the number and cost of prescriptions over their department average. "In the past few years, Kaiser has cut patient stays and placed other limits on patient services," said CNA Executive Director Rose Ann DeMoro. "These documents demonstrate that Kaiser is seeking to intimidate doctors who defy the trend and put the needs of their patients ahead of Kaiser’s market goals.

  • "In the past few years, Kaiser has cut patient stays and placed other limits on   patient services," said CNA Executive Director Rose Ann DeMoro. "These documents demonstrate that Kaiser is seeking to intimidate doctors who defy the trend and put the needs of their patients ahead of Kaiser’s market goals. With the new compensation program, these conscientious doctors may also pay a heavy financial penalty.Kaiser’s new physician compensation program was adopted by the TPMG (The Permanente Medical Group) Board of Directors in November. It divides pay into "core" and "variable" pay. "Variable" pay, up to 30% of an individual practitioner’s compensation, will be based on performance, much of it undefined, including not just the individual doctor’s work, but the work of new physician teams.

    While specifics remain vague in public statements by Kaiser, minutes of a TPMG Board meeting September 4, 1996 include a cost analysis of TPMG activity co-authored by TPMG Executive Director Harry Caulfield, MD.

    In the report, Caulfield claims studies that show Kaiser pays a "higher cost per unit" for physician visits with patients than other medical groups. Caulfield cites goals of increasing patient loads for each physician, and says that to meet projected "cost reductions and to generate new funds for new projects, savings from the physician payroll are required."

    DeMoro noted that the discharge and pharmacy reports echo other areas in which doctors are increasingly monitored for providing patient care services. These include time spent with patients, the ordering of blood and other laboratory work, respiratory and physical therapy, and diagnostic tests. For example, the number of tests ordered, such as MRI, X-Ray, and CT scans, are now also recorded per physician alongside with departmental averages. "Computer refinements have made the scrutiny more precise, and Kaiser’s drive to maximize profits at the expense of care makes this screening especially ominous," DeMoro said. "This is a disgraceful performance by a corporate giant that spent $60 million a year in advertising just in 1995 proclaiming a supposed ‘Commitment to Quality’ and that Kaiser is somehow ‘Different from the Ground Up’ compared to the other giant corporate medical chains in the health care industry," DeMoro added. Kaiser’s pressure on physicians also comes at a time when it is making even greater concessionary demands on its Registered Nurses. Half the RNs in Northern California Kaiser are being asked to give 15% of their wages back to Kaiser, as well as to accept huge reductions in medical and retirement benefits, time off, and employment rights for the most experienced nurses, said Costello.

    Kaiser is also seeking to tie nurse bonuses to cost reductions. "This proposal says to us make a choice -- patients’ advocate or corporate partner. Any demands that a nurse or doctor put the company’s performance ahead of the patient’s need is morally repugnant," Costello said.

    Yet Kaiser made over $2 billion in profits in the three most recent years for which data is available, gave its chief officer David Lawrence a 12% pay hike in 1995, and spent an additional $96 million in 1995 on consulting fees.