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Healthy Outlook

Jane Finley is helping guide Kaiser Permanente through a busy point in its Valley existence, monitoring hospital construction and other expansion projects, labor negotiations, plan development and a host of other concerns. Through the window of her Panorama City office she can monitor the daily progress of the company’s new hospital, a $150 million project scheduled to open its doors in June of 2007. As senior vice president and valley service area general manager in charge of area operations, she’s also thinking about further expansion throughout the region. Among other options, Kaiser could be opening up smaller medical offices, without all of the company’s signature services like in-house laboratories and pharmacies, in order to reach more members. Kaiser is also deciding what role it will play in the growing Antelope Valley, where existing hospitals sometimes seem pushed to their capacity. Kaiser recently decided to keep its urgent care center in the area open longer, but is faced with the question of whether or not to invest in a hospital. Finley’s concerns go beyond offices and infrastructure, however. Recently, she was one of the company’s representatives from Southern California in its negotiations with 85,000 union-represented employees. Kaiser’s interest-based negotiating strategy is a hallmark of the company’s business model, and has attracted interest from researchers from major universities studying labor practice. In an interest-based strategy, both sides work as a team rather than adversaries. Last year, the company broke from its traditional health plans to offer a high-deductible HMO for the first time in the face of rising health care costs. Finley has been helping to sell the plan in the Valley, and said that the new option has also directed more customers to Kaiser’s traditional HMO. Finley will celebrate 21 years with Kaiser Permanente this December; she says that the chance to work with bright people and do fascinating work has kept her at the company. In that time she’s been a planning analyst, a director of planning, director of hospital operations in Panorama City and now senior vice president and valley service area general manager. Question: How is work at the new campus proceeding? Answer: It’s coming along right on schedule. We’ve still got a long way to go, but we’re hopeful that we might beat our schedule by a little bit. It’s on budget which is really important for us. The exterior is being put on, the windows are going in, but on the inside we’re able to do a lot of things in parallel to keep projects moving pretty quickly. The electrical system’s going. Last week we did a hardhat tour and the elevators are in. It’s a 400,000 square-foot-building. We’ll have 218 licensed beds and 10 ORs. Ninety percent of the rooms are single rooms. The other building was built in the early 1960s, and we still have double- and triple- occupancy rooms. We have 262 beds right now. We’re lowering the number of beds but we have an average daily census of about 120 to 130 so it really positions us well. This actually may be the peak construction period, we’ve got close to 350 or 400 tradesmen and women on site. Once the skin gets put on and it’s in a sealed environment, it will be heated and cooled by a new central plant and we can focus completely on the work inside. Q: Kaiser was recently negotiating with a number of unions, how did that process go? A: We just closed, nationwide, all 44 negotiating tables. There are 85,000 represented employees nationwide that are represented by this contract. It’s a five-year contract. I was really fortunate to participate as one of two representatives from Southern California on the Common Issues Committee, which is a group of management and labor from each of our regions that synthesize all the work from bargaining task groups and put it in contract form and then to negotiate the economic settlement. Kaiser has a pretty unique, interest-based negotiating process, we’re organized around specific topics and given workplace problems to solve. That group of labor and management works together to create a recommendation. There’s another one on work/life balance, performance improvement and service. There are eight altogether. In Southern California, we have 19 local unions, I think we’ve got about 30,000 represented employees. Q: How is this different from other negotiation practices? A: You really start with what you want to get accomplished, what is the fundamental interest you’re trying to address, as opposed to going in being positional. We have federal mediators monitoring the process, the National Labor Relations Board wants to be sure that these are real negotiations. We also had representatives from the Massachusetts Institute of Technology who are doing a study on this type of labor negotiation and its impacts. Being a representative from Southern California is really quite an honor. Q: What expansion plans are Kaiser contemplating in the Valley area and is it possible the company will be using its strategy of opening smaller offices faster to serve more members? A: The concept is to move a little bit quicker into communities where we think there is growth potential. We’re also hiring more doctors right now, and we’re trying to look at how we can get closer to our membership and move our processes along. Operating smaller locations is really kind of difficult for us because we get a lot of feedback from our members that they really like the full-service facilities. They like not only seeing their doctor, but getting their lab work and using the pharmacy. So it’s kind of in conflict a little, but to move faster and have these smaller offices, you can’t really build a full-service facility. We have done this throughout our history, especially as we go through periods of growth. We get closer to our members, and from that they grow into larger medical offices. Our Santa Clarita facility started that way about 10 or 15 years ago. We lease a small space there, and as our presence grew there we built the Santa Clarita medical office building. Q: What communities have you identified as growth areas in which the company may need to establish more of a presence? A: We’re really fortunate in this service area because we’ve got the whole expanse of the Valley, including Moorpark, Simi, Thousand Oaks, Santa Clarita and the Antelope Valley. But there’s also quite a bit of opportunity for us here in the San Fernando Valley. Businesses are here, there is some economic growth and there are some really exciting redevelopment opportunities. Every market here is a growth market. While we see growth in Moorpark and Thousand Oaks and other areas, where are the jobs? For many of these folks they’re still in the core of the Valley. We’ll have to see how job developments play out. Q: How has the company’s Deductible HMO, which offers lower premiums with a deductible between $1,500 and $3,000, been selling? A: It’s performing basically as we expected, but it’s also stimulating interest in our full product. I think when people are seeing a choice, they’re looking at the choice and therefore thinking more about the traditional HMO. I think people might have been turned off by us because we thought that there was only one offering, they didn’t see that we actually have a full variety of offerings. With the introduction of this product, we really got people’s attention. What they found was, ‘You know what, while the high deductible is nice, the traditional product is a pretty good value for the entire scope of benefits you get and what your out of pocket expenses are. For small business, the high deductible may be presenting a health care coverage option where previously they didn’t have one. For the small- the medium- sized businesses, I think they check out the deductible plan but then realize that the traditional plan is pretty good value. It’s opening doors for us. Q: What is Kaiser’s expansion strategy in the growing Antelope Valley? A: The hospitals, Lancaster Community Hospital and Antelope Valley Medical Center are doing a great job in providing service to that area. There just aren’t enough of them, the emergency room situation up there is very tight. The infrastructure is really an issue. What we’ve done is expanded our presence up there through the opening of the Palmdale Medical Office building about two years ago. We’ve added physicians up there and added more specialists. We contract with both Lancaster Community and Antelope Valley Medical Center. We’ve also recently expanded our urgent care to 24 hours. What we’re trying to do with that is provide greater access for those urgent but non-emergent cases to help create access in those emergency rooms. Long-term, it’s a big decision to build a hospital and it’s not something to be entered into lightly because you’re making a commitment to the community to 40, 50 or 60 years. It’s something that we’re taking a look at, but it’s a big decision.

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