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Healthcare Insights: Collective Bargaining and Value for Patients

John August

There is a great deal in the daily news….so much of it so tragic.

So, it would not come as a surprise that a major story in healthcare may have been missed: 

There was very big recent news: On April 26, 2023, Kaiser Permanente, based in Oakland, CA (one of the largest health plans and health systems in the nation, caring for 12.6 million people) announced that it will acquire one of the largest non-urban health plans and health systems in the country, Geisinger of Danville, Pennsylvania, caring for 1 million people. 

In a review of press and industry commentary on the proposed merger, the term VALUE BASED CARE is at the heart of the news about this merger.

In this edition of Healthcare Insights, we will focus on the centrality of the healthcare workplace and collective bargaining and this idea of Value Based Care: what does value based care mean, and why is it a concept so central to nearly all discussion about the future of health and healthcare here and in many other countries? While it is a concept full of common sense, it is also both controversial and has been difficult to implement.

And, in a time when unionization and collective bargaining are ideas and activities that are getting a lot of attention, it is important to think of the role collective bargaining can and must play as the nation and the world continues to go through the greatest technological, demographic, social, economic, and political transformations in nearly 100 years. Healthcare in the United States is a major part of the transformation as it accounts for 18% of the nation’s economy. The role of collective bargaining and value-based care stands out as a living example of what is possible. As such, collective bargaining’s own transformation in the larger social nexus is magnified.

What makes this merger so important?

There is a great deal of enthusiasm about the merger of Kaiser Permanente and Geisinger. Both Kaiser Permanente and Geisinger are enterprises with long histories of successfully delivering value-based care. 

In brief, “Value-based care ties the amount healthcare providers earn for their services to the results they deliver for their patients, such as the quality, equity, and cost of care. Through financial incentives and other methods, value-based care programs aim to hold providers more accountable for improving patient outcomes while also giving them greater flexibility to deliver the right care at the right time.” 

To most people, this simple, straightforward definition makes common sense. And taking that common-sense logic a step further, it is very important to recognize that Value Based Care is embedded in national health care policy: “CMS (Centers for Medicare and Medicaid) aims to have all Medicare beneficiaries and most Medicaid beneficiaries enrolled in accountable care programs by 2030, and the agency is committed to promoting health equity through its value-based initiatives.”

Let’s remember that by many standards, the people of the United States do not get great value from the highest amount of money in the world spent on healthcare. Compared to other wealthy countries, the U.S. ranks last in the health of the population and first in spending:

  • Health care spending, both per person and as a share of GDP, continues to be far higher in the United States than in other high-income countries. Yet the U.S. is the only country that doesn’t have universal health coverage.
  • The U.S. has the lowest life expectancy at birth, the highest death rates for avoidable or treatable conditions, the highest maternal and infant mortality, and among the highest suicide rates.
  • The U.S. has the highest rate of people with multiple chronic conditions and an obesity rate nearly twice the OECD average.
  • Americans see physicians less often than people in most other countries and have among the lowest rate of practicing physicians and hospital beds per 1,000 population 

To achieve higher value in health and healthcare for the American people is a social, economic, moral, ethical, and political challenge and necessity!

Though the imperative to achieve value-based care for the American people has been much discussed, the pace to achieve success has been quite slow:

“A decade after the passage of the Affordable Care Act, the vision of moving the U.S. health care system ‘from volume to value’ has been partially realized, with few value-based payments initiatives systematically reducing spending or improving quality. While participation in value-based payments continues to grow, the adoption of advanced forms of value-based payment through alternative payment models lags behind both the goals set by the Secretary of Health and Human Services in 2015 and the threshold required for widespread practice transformation. Furthermore, the complexity of the current suite of alternative payment models and allure of traditional fee-for-service prevent the widespread adoption of full risk-bearing contracts. The high costs of care with the impending insolvency of the Medicare trust fund, persistence of poor quality of care and health disparities along racial and socioeconomic lines, and mixed success of alternative payment models indicate the need for a revamped vision for the 2020s.

The 2020s require a new strategy that moves from a short-term focus on testing new payment models to a long-term focus on expanding models that are most likely to generate substantial savings and improve quality.” 

Given the importance placed on the achievement of value-based care, and the slow pace of implementation, it is understandable that expectations are high for the news about Kaiser Permanente and Geisinger.

That enthusiasm for the acquisition of Geisinger by Kaiser Permanente is embedded in how the value-based models of these large systems can expand and show how success can be achieved. As part of the acquisition, a new entity has been established called Risant:

Risant Health is a new nonprofit organization, created by Kaiser Foundation Hospitals, to expand and accelerate the adoption of value-based care in diverse, multi-payer, multi-provider, community-based health system environments. Risant Health’s vision is to improve the health of millions of people by increasing access to value-based care and coverage and raising the bar for value-based approaches that prioritize patient quality outcomes. In addition to Geisinger, Risant Health will grow its impact by acquiring and connecting a portfolio of likeminded, nonprofit, value-oriented community-based health systems anchored in their respective communities.

Health systems that become part of Risant Health will continue to operate as regional or community-based health systems serving and meeting the needs of their communities, providers and health plans while gaining expertise, resources, and support through Risant Health’s value-based platform. Risant Health will operate separately and distinctly from Kaiser Permanente’s core integrated care and coverage model while building upon Kaiser Permanente’s 80 years of expertise in value-based care.

Our mission calls on us to find new ways to promote high-quality, affordable, and evidence-based care with equitable and improved health outcomes. Through Risant Health, we will make our value-based care expertise, technology and services available to community-based health systems, like Geisinger, to strengthen their ability to provide value-based care models with a focus on high-quality and equitable health outcomes,” said Greg. A. Adams, chair and CEO, Kaiser Permanente. “We know fully replicating KP’s closed integrated care and coverage model is not viable in all communities. By helping other health systems achieve our value-based quality outcomes and savings in multi-payer, multi-provider environments, we believe Risant Health can deliver a transformative new solution to America’s systemic health care problems. And, given its history in this space, we can think of no better organization than Geisinger to be the inaugural health system to join Risant Health.” 

In becoming part of Risant Health, Geisinger, headquartered in Danville, PA, will strengthen its ability to enhance its services to its patients, members and communities across Pennsylvania, while expanding its impact on healthcare broadly. Geisinger will maintain its name and mission, and will continue to work with other health plans, employed physicians, and independent providers. At the same time, Geisinger will build on its foundation by benefitting from Risant Health’s value-based platform that offers the best in value-based care practices and capabilities in areas such as care model design, pharmacy, consumer digital engagement, health plan product development, and purchasing. As the first health system to become part of Risant Health, Geisinger will participate in developing the organization’s strategy and operational model

At the heart of the value-based model of Kaiser Permanente are four basic principles that has created the largest system of its kind in the nation:

  1. System-wide capacity for the prevention of illness and injury. 
  2. Pre-payment This means that each month Kaiser Permanente receives a fixed amount of payment for each member of the health plan. This pre-payment is the fundamental premise of value-based care: the organization takes on full risk to achieve the best possible outcome. Poor outcomes, errors, unnecessary testing and procedures are less prevalent in Kaiser Permanente than in fee-for-service medicine, adding to the value or each dollar spent. Because the only revenue the organization receives is the monthly pre-payment, it is inherently incentivized to deliver care in a state of continuous improvement, identifying best practices of evidence-based treatment without duplication of services and myriad forms of error and misallocation of resources.
  3. Doctors all work in multi-specialty group practices which have their own divisions of research. Through this system, evidence-based medicine is the standard, and as best practices are achieved. They are spread throughout the practice.
  4. Fully integrated electronic medical records. Every encounter, every test, every procedure, and all health information of every health plan member can be accessed across the system of doctors, laboratories, imaging facilities, hospitals, and clinics. Through such a system, repetitive procedures are avoided, and more importantly, all health plan members’ medical conditions and histories are known to all providers in the system at any time. Errors and duplication are thus avoided.

The Role of Collective Bargaining

With the foregoing explanations of what value-based care is, how the Kaiser Permanente model of care achieves value, and how the establishment of Risant which will serve as an expansion lever for value-based care, it must also be noted that the Kaiser Permanente Value Based Model is carried out every day in a nearly 100% unionized environment. 137,000 union members are part of national collective bargaining units and are a part of the largest labor-management partnership in the history of the United States. The organization operates in California, Hawaii, Colorado, Oregon, Washington State, Georgia, Maryland, Virginia, and the District of Columbia.

The National Agreements (collective bargaining agreements) are among the very largest collective bargaining agreements in the United States.

Embedded in the National Agreements is the Value Compass. Here is the language from the collective bargaining agreement associated with it:

“The Value Compass sets forth the way in which this National Agreement becomes a key operating strategy for Kaiser Permanente. To improve performance measures by focusing on the needs of our patients and members requires involvement from everyone. We seek to move from projects to pilots to whole systems improvement, recognizing that all four points of the Value Compass impact the whole value that the organization creates. The Value Compass is designed to achieve the KP Promise, which ensures our members always have the best health care experience. The KP Promise is a commitment to our members to provide health care that is: » quality you can trust; convenient and easy access; » caring with a personal touch; and affordable.”

Kaiser Permanente’s Value Compass…succinctly defines the organization’s shared purpose. (It is) a recognition of the challenges that every member…has the responsibility to meet every day.”— PAUL ADLER AND CO-AUTHORS IN THE HARVARD BUSINESS REVIEW, USC Marshall School of Business




Value compass

The Value Compass guides the work of 3500 Unit Based Teams (UBTs) which are formed in every department across the health system. From operating rooms to emergency rooms, laboratories and diagnostic imaging centers, pharmacies, warehouses, medical records, clinics, and hospital units, UBTs are multi-specialty teams of physicians, managers, and frontline staff. With the assistance of dedicated facilitators in performance improvement process, teams identify problems to solve that will bring value to the patient. Cutting waste, speeding up test results, improving time and accuracy on member phone calls for scheduling appointments or health plan questions, improving biometric readings on chronic conditions like hypertension and diabetes, elimination of hospital acquired infections, UBTs bring value-based results to patients on a very large scale.

As of August 1, 2022, based on unit-based team self-reporting of organizational savings, $602,656,955 in savings has been achieved. (The Promise of the Kaiser Permanente Labor Management Partnership, John August and Jim Pruitt, September, 2022, Unpublished book chapter)

Note that an equal part of the Value Compass includes “Best Place to Work” alongside Best Quality, Best Service, Affordability as part of the overall purpose of the Value Compass which is to create Value for the Patient.

Definitions of “Best Place to Work for all 137,000 employees include:

“Joy in work is about being connected with what you do and why you do it. It’s the feeling of success and fulfillment that comes from doing work that matters. It connects us with colleagues and patients through a sense of shared purpose.

Joy in work is practical and science-based, according to the Institute for Healthcare Improvement, which has taken the lead in researching the subject. Studies link joy in work to reduced turnover, higher productivity and improved patient experience, outcomes and safety.

It doesn’t mean there won’t be fatigue, long hours and tough days. But cultivating joy in work creates the deep engagement that helps keep stress from turning into burnout — which was a serious issue in U.S. health care even before COVID-19 arrived on the scene.

Take the time to explore what brings joy in work to you and your team. Everyone will benefit.”

“Joy in work for me is my motivation to turn a patient visit into a better experience through empathy and connecting with the patient.”

Kelli Bechino, Certified Medical Assistant, SEIU Local 49 

All of these definitions of “Best Place to Work” are part of the value equation for patients. “Best Place to Work” completes the Value Compass: through collective bargaining, the health plan and hospital, the physicians, and the unions agreed that a highly engaged, secure, joyful, healthy workforce is central and essential to deliver the promise of value.

Finally, in a critically important 2020 research study, the essentiality of engaged frontline staff in the building of new health hubs in Southern California tells a profound, data-driven story. The new health hubs were determined to be integral to advancing value in primary care.

Here is the article in full.

“Kaiser Permanente (KP), one of the largest managed care systems in the United States, envisions a care system that is fully integrated into the everyday lives of its patients (members). As a step toward this future, the Kaiser Permanente Southern California (KPSCAL) regional team began in 2015 to introduce a group of modern, technology-enabled ambulatory care clinics. These clinics deploy technology and workplace innovations to address some of the pain points of traditional clinics and to bring health care more seamlessly into members’ lives. In this case study, we examine KP’s approach to developing and implementing these innovations. KPSCAL followed an integrated design process that resulted in changes in not only deployed technology but also the broader work system. Instead of being driven by popular technological innovations, KPSCAL focused on specific member concerns with the ultimate aim of improving their experiences. A diverse set of workers and their union representatives— including those from the frontlines—were engaged in the design, implementation, and ongoing operation of the clinics. The case study helps illustrate one of the central propositions of the MIT Task Force on the Work of the Future: technology produces better outcomes for organizations and the workforce when integrated with work processes and workforce development (emphasis added).

This case study provides an example of how technology, work systems, and physical space designs can be integrated to serve patients and medical staff. Technologies were designed and modified with input from a wide range of people involved in the visioning, planning, opening, and operation of the new facilities. Well before the new clinics were scheduled to open, work systems were adapted through negotiations with designated labor representatives who were participating in the Jobs of the Future Committee discussions of these issues. Employees—from clinic leaders to physicians, nurses, and service staff—participated in fine-tuning workflows and gaining expertise needed to train their peers in the new work practices. Once the clinics opened, further input into ways to adapt and improve operations is provided by unit-based teams and informal huddles and meetings. The integrated approach to the use of technology and the early and extensive involvement of the workforce and union representatives observed in this case illustrate the value of working together in a labor-management partnership (emphasis added). However, partnerships like this are the rare exception in U.S. workplaces. There is no union presence in the vast majority of U.S. workplaces, and in workplaces where unions are present, union-management relationships too often tend to be arms-length in nature. Perhaps this case illustrates the potential of and need for moving American labor-management relationships in a more collaborative direction. While this case study is situated in health care, the processes used to integrate technology, work systems, and physical layout and the extensive opportunities for input may well have implications for other industries. Our hope is that the case provides a basis for discussion and further learning both for the MIT Task Force on Work of the Future and for others engaged in shaping future workplaces.”

Value Based Care systems must accelerate if the nation is to improve health and reduce the cost of healthcare.

The proposed acquisition of Geisinger by Kaiser Permanente along with the expansion of value-based systems through the newly formed entity Risant presents a timely focus and attention to what is needed to expand this essential model of care and financing.

Success depends on more than intention and incremental steps. Success depends on transformed health systems on a massive scale, using models that have proven successful.

Success also depends on the full engagement of the workforce to drive the change. Restructured financial incentives to increase value and reduce cost alone are not enough to achieve lasting improvement. The entire workforce must be collaborative partners to lead the transformation as seen in the example of Kaiser Permanente and its unionized workforce. We will be watching to see if these proven methods and systems will carry over into the Geisinger and Risant systems.

Collective bargaining enabled the dialogue and engagement with Kaiser Permanente to advance its unique model of value-based care in partnership with its workforce. 

That is very big news in light of the major expansion of the Kaiser Permanente model at a time when it is needed most.


John August is the Scheinman Institute’s Director of Healthcare and Partner Programs. His expertise in healthcare and labor relations spans 40 years. John previously served as the Executive Director of the Coalition of Kaiser Permanente Unions from April 2006 until July 2013. With revenues of 88 billion dollars and over 300,000 employees, Kaiser is one of the largest healthcare plans in the US. While serving as Executive Director of the Coalition, John was the co-chair of the Labor-Management Partnership at Kaiser Permanente, the largest, most complex, and most successful labor-management partnership in U.S. history. He also led the Coalition as chief negotiator in three successful rounds of National Bargaining in 2008, 2010, and 2012 on behalf of 100,000 members of the Coalition.