Kaiser Permanente is mapping an expansion that could top $400 million and put all Atlantans within a 15-minute drive of a Kaiser medical facility.
The multi-year project, which will create about 500 jobs, is driven by Kaiser's strategy of directly managing more of the care that gets delivered to members. The hoped-for result: a better handle on the quality of care and lower medical costs.
Under the integrated model, "we control our own destiny," said Peter Andruszkiewicz, president of Kaiser Permanente of Georgia. "We're not negotiating with providers ... in order to provide the care."
Oakland, Calif.-based Kaiser, which has 17 medical facilities in metro Atlanta, will add up to 20 sites, including clinics and ambulatory surgery centers, by 2012. Kaiser will also boost the number of specialities it provides in-house by at least a third. Areas of focus include high-volume specialties such as cardiology, neurology and urology.
While Kaiser does not plan to open a hospital in Georgia in the next two to three years, senior officials did not rule out such facilities.
The build-out will have repercussions in the region's health-care industry. It will offer employment opportunities for some area primary care doctors and specialists, while posing a competitive threat to others. If Kaiser built its own hospitals, like it has in four markets, it could draw fire from some Atlanta hospital systems.
The Kaiser expansion also threatens to ding the market share of insurers in the area and take away some of their network providers.
To staff the new capacity, Kaiser has hired 50 physicians in the Atlanta market this year and plans to add at least as many annually for the next three or four years. With its national profile, salary-based employment and investments in state-of-the-art electronic medical records, Kaiser is in a strong position to lure medical talent.
The insurer plans to recruit physicians from outside Georgia and hire local doctors, said Dr. Rob Schreiner, executive medical director of The Southeast Permanente Medical Group Inc.
"There are physicians who started out in private practice in the Atlanta area, who are fed up with a lot of the bureaucracy ... in the traditional practice," Schreiner said. "They are coming to us looking for practice opportunities."
Multiple benefits
Despite being in Georgia for nearly 25 years, Kaiser has a mere 5 percent market share.
The Kaiser model has been resisted in some markets, such as Atlanta, because consumers want open access to the physician of their choice, noted Brad Guest, principal at BDC Advisors LLC, a health-care consulting firm.
"But the ability to form tight networks," he said, "is going to be increasingly critical to ... cost reduction [and] quality of care."
Kaiser's anemic market share might also have to do with under-investment in Atlanta.
"We've never really built the entire coordinated care system [needed] to be able to drive the quality results that will provide value and affordability to our customers, so that we can grow," Andruszkiewicz said. "We've never really given it a chance."
The expansion, ultimately, is a market share play.
In Georgia, for instance, Kaiser does only about a third of its speciality care inside its system. In markets where Kaiser has integrated 80 percent to 90 percent of specialty care, it has 15 percent to 20 percent market share, Andruszkiewicz said.
Kaiser expects to grow its share by about a percentage point — or about 50,000 members in metro Atlanta— over the next four years, said Dan Styf, vice president of strategy for Kaiser Permanente of Georgia. The increase in capacity is expected to boost market share down the road.
"The more complete we can make this coordinated care experience," Styf said, "[the] higher quality it's going to be, the more affordable it's going to be in the community."
By expanding its integrated network, Kaiser can offer members more physician choices and better compete with insurers who have open networks.
