Staying in Touch Is What’s Behind Kaiser’s $1 billion Quarterly Operating Gain

There was a time when healthcare providers knew their patients and their patients’ healthcare needs. A patient stayed in touch with his or her doctor on a regular basis and the doctor could make care assessments and ongoing recommendations for patients over time.

Kaiser, the nation’s largest integrated health system with annual revenue of about $71 billion, has revived that type of care regimen and it is paying off for them and their patients. The health system earned $1 billion of operating income in a quarter—an eye-popping number for any healthcare system let alone a not-for-profit — because it knows its patients and has regular contact with its 11.7 million health plan enrolls.

Kaiser stresses continuity of membership. It has one of the highest rates of membership retention in the industry. That retention rate falls across all lines of business, including commercial and Medicare managed care, and it allows Kaiser to promote preventative care and head-off avoidable health problems that can cause medical costs to skyrocket.

Said another way – they stay in touch and they know their patients!

Even though 95% of its 11.7 million members are covered on a capitated basis, by staying aware of their patients’ healthcare needs they can still make money as a for-profit healthcare system. Kaiser executives commented that frequent contact with enrollees, many of whom have been with Kaiser for years, allows Kaiser to keep costs in check. For example, Kaiser can track enrollees with chronic conditions to assure they are getting their prescribed check-ups and adhering to medication schedules.

Kaiser knows how enrollees are progressing health-wise because the company constantly hears from them. The company’s 11.7 million members had 100 million medical encounters with Kaiser’s clinicians last year, 52% of which were virtual either by email, secure communication portal or telemedicine, their CEO told a Nashville audience last April.

Rather than seeing those medical encounters as costly, Kaiser views them as crucial to keeping enrollees healthy. The proof is in Kaiser’s medical cost trends vs. the competition. In each of the past three years, Kaiser’s expenses have increased under 2% a year, lower than general inflation and less than half that of overall medical inflation.

Old fashion healthcare and the practice of medicine still works – know your patients and know their medical needs! It’s good for the bottom line and it’s good for patients.