Kaiser Permanente workers are on strike. Here’s what makes it such a unique health care company
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October 05, 2023
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A Kaiser Permanente health care center is pictured in Anaheim, California, U.S., October 3 as more than 75,000 Kaiser Permanente healthcare workers could go on strike from October 4 to October 7 across the United States.
(Mike Blake/Reuters vis CNN)
By Samantha Delouya | CNN
Los Angeles — On Wednesday, thousands of unionized health care employees walked off the job after failed contract negotiations with their employer, Kaiser Permanente, a company whose business model is distinctive, compared to most health care providers in the United States.
Here’s what you should know about the medical system.
Unlike traditional health care providers in the United States, Kaiser operates both as an insurance plan and a provider of all care covered by that plan. Patients (or their employers) pay a membership fee to Kaiser Permanente to access its services. That means that although thousands of workers are on strike at Kaiser, the company will continue to collect money from membership fees.
“They have members, they have subscribers and so they will continue to get their monthly payments,” said John August, former executive director of the Coalition of Kaiser Permanente Unions.
Founded in 1945 in Oakland, California, Kaiser Permanente is one of the nation’s largest not-for-profit health providers. It operates 39 hospitals and 622 medical offices across California, Colorado, the District of Columbia, Georgia, Hawaii, Maryland, Oregon, Virginia and Washington. It also employs nearly 213,000 employees and has a membership of 12.7 million, according to Kaiser’s website.
Members are mainly locked in to using Kaiser health workers
Kaiser’s membership dues set it apart from America’s traditional “fee-for-service” health care model, in which a doctor or health care provider is paid a fee for each service they perform.
Kaiser was designed to be a one-stop shop for all patients’ needs. Members can access a wide array of services through the system, including primary care, lab testing, telemedicine, mental health care, pharmacy services and even cosmetic treatments. However, except for emergencies and special cases, any care outside Kaiser Permanente’s system is not covered.
Hundreds of healthcare workers and union members hold a Labor Day march on Monday, Sept. 4, 2023, from Los Feliz Elementary School to Kaiser Permanente Los Angeles Medical Center on Sunset Boulevard. (Photo by Howard Freshman, Contributing Photographer)
About 200 Kaiser Permanente workers picket in Irvine on Wednesday, October 4, 2023. The health care employees launched a three-day strike claiming unfair labor practices and staffing issues. The strike involves more than 75,000 Kaiser workers nationwide, including 23,000 in Southern California. (Photo by Mindy Schauer, Orange County Register/SCNG)
Kaiser healthcare workers picket outside the medical center in Oakland, Calif. on the first day of the strike Wednesday, Oct. 4, 2023. (Ray Chavez/Bay Area News Group)
Kaiser Permanente employees chant outside Kaiser Permanente San Jose Medical Center on their first day of strike on Wednesday, Oct. 4, 2023, in San Jose, Calif. (Dai Sugano/Bay Area News Group)
Julio Rivera, right, an anesthesia technician, leads a chant outside Kaiser Permanente San Jose Medical Center on the first day of strike on Wednesday, Oct. 4, 2023, in San Jose, Calif. (Dai Sugano/Bay Area News Group)
Kaiser Permanente employees picket outside Kaiser Permanente San Jose Medical Center on the first day of strike on Wednesday, Oct. 4, 2023, in San Jose, Calif. (Dai Sugano/Bay Area News Group)
Julio Rivera, right, an anesthesia technician, leads a chant outside Kaiser Permanente San Jose Medical Center on the first day of strike on Wednesday, Oct. 4, 2023, in San Jose, Calif. (Dai Sugano/Bay Area News Group)
Kaiser Permanente employees including Edwin Moreno, right, a housekeeping aide, picket outside Kaiser Permanente San Jose Medical Center on the first day of strike on Wednesday, Oct. 4, 2023, in San Jose, Calif. (Dai Sugano/Bay Area News Group)
Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Sabrina Sanchez, left, and fellow Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Mike Gardener and fellow Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Carmen Grant, left, and fellow Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Oakland patient Mario Zelaya supports Kaiser Permanente healthcare workers as he takes part in a picket line during the strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Oakland patient Mario Zelaya supports Kaiser Permanente healthcare workers as he takes part in a picket line during the strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
People cross the street as Kaiser Permanente healthcare workers form a picket line during their strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
Kaiser Permanente healthcare workers form a picket line as they begin a strike nationwide at Kaiser Oakland Medical Center in Oakland, Calif., on Wednesday, Oct. 4, 2023. About 75,000 healthcare workers across the country take part in the largest strike in United States history. Workers demand higher wages and solutions to staffing shortage. (Ray Chavez/Bay Area News Group)
“If you join Kaiser Permanente, you are saying, ‘I’m going to see Kaiser doctors, and I’m going to go to Kaiser hospitals,’” said Gerald Kominski, a senior fellow at the UCLA Center for Health Policy Research.
Proponents of Kaiser Permanente argue that its fixed membership fees offer a financial incentive to focus on preventative care and keep patients healthy rather than performing a high volume of costly medical procedures.
“One of the reasons that Kaiser has grown over the last few decades is because they offer quality care at an affordable price,” Kominski said.
It’s a nonprofit entity
Although Kaiser Permanente operates as a nonprofit entity, it generates billions of dollars in profit. During the first six months of the year, Kaiser Permanente reported a total net income of $3.3 billion.
Nonprofits are generally required to reinvest surplus assets back into the business, though they are allowed to reserve money for future unexpected expenses.
The coalition of unions that is striking against Kaiser Permanente has accused the company of hoarding profits despite its nonprofit status. The coalition argues that Kaiser should reinvest more money in frontline care, including higher pay for employees and a strategy to combat chronic short staffing that has left workers feeling overworked and burnt out.
“Kaiser executives must address the Kaiser short-staffing crisis that frontline health care workers see getting worse at great costs to patients — patients who have seen their premiums going up along with their wait times. The Kaiser model has certainly proven effective at generating billions in reserves for the company,” said Renee Saldana, a spokesperson for SEIU-UHW, the largest union representing Kaiser workers on strike. “It’s time for Kaiser executives to invest those resources in addressing the desperate needs of Kaiser patients and frontline health care workers. That means Kaiser executives providing relief on increasing premiums to consumers, and relief to their battered frontline health care workforce in the form of improved staffing and retention.”
However, Kaiser took a profit hit during the pandemic, reporting a net loss of more than $2 billion in the first six months of 2022. Kaiser cited rising costs and pandemic-related disruptions for the multibillion-dollar losses.
Workers are feeling Covid-19 burnout
Kominski said he believes the health care industry and its workers have yet to rebound from the pandemic.
“The fact that there’s burnout and problems with retention and recruiting because of the work environment is, in my opinion, probably one of the longer-term consequences of the pandemic,” he said.
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