Case study 1: Kaiser Permanente
Kaiser Permanente (KP) was established in 1938 as a comprehensive medical system for the workers and their families at Kaiser steel mills and shipbuilding facilities across California and in Portland, OR. In 1945, after WWII ended and many shipyards closed, KP opened membership to the general public. The KP unions played an instrumental role in this expansion by helping KP market to unionized employers in areas where the company had a presence. Today, it operates as a Health Maintenance Organization (HMO) with 8.3 million health plan members in seven regions: Northern and Southern California, Colorado, Georgia, Hawaii, Mid-Atlantic, and the Northwest. Each region is made up of two separate entities, the Kaiser Foundation Health Plans and the Permanente Medical Group (PMG), a physician-owned corporation that owns and operates KP’s medical facilities. The PMG contracts with the Foundation to serve KP health plan members. A key feature in this model is that physicians are employed by KP. The national program office includes a variety of support functions, including human resources, labor relations, information technologies (IT), finance, and patient care services (nursing).
The KP Labor-Management Partnership (LMP) was formed in 1997. At the time, KP faced competitive pressures leading executives to demand deep union concessions. In response, many of the KP unions offered the company a choice: continued harsh labor-saving tactics and escalating labor strife, including a strike, or a partnership to address the fiscal crisis and improve the quality of care at KP. The company agreed to the partnership . The governance structure consists of the LMP Strategy Group, with one representative from each of three sectors: Physicians, Management and Labor, and each region maintains its own tripartite LMP council.
By 2015, the LMP included 12 international and 28 local unions representing 105 000 KP employees or about half of the total KP workforce, across six of the seven regions. Hawaii is not part of the partnership, and not all KP unions are involved in the partnership, most notably absent is the California Nurses Association.
KP also has a network of functional units to support the design and management of change and WFPD strategies. The LMP staff is integrated into these units, and labor representatives are highly engaged in their activities. These units include the following:
National Workforce Planning and Development (housed in national human resources (HR)) provides opportunities to the KP workforce to optimize skills and competencies and manages two LMP education trusts: the Ben Hudnall Memorial Trust and SEIU/UHW Joint Employer Education Fund.
National Innovations Network including patient care services, workforce planning, and IT functions as a loosely coupled “future-sensing” group that examines technology trends, creates proof of concepts and proof of technology, and develops pilots.
Unit-based teams (UBT) are natural work groups of frontline workers, physicians, and managers who solve problems and enhance quality.
Drivers of change
KP’s history of pre-paid, member-based service is critical to understanding the company’s current competitive situation. KP is well positioned to grow in a post-ACA era in which policies to advance integration has proliferated. Growth has been especially dramatic in the Southern California Region, where new individuals that joined via the Health Exchange grew by 4 % per year (from 2 to 6 %). This rapid influx of new members has been most pronounced among younger and healthier individuals as compared to members in KP’s traditional employer-based plans.
KP leadership knew that they needed to understand the implications of this shift in demand and have held focus groups with their newest members. Results have led the company to reorient business strategy around three priorities, as follows:
Convenience. Millennials are demanding “care anywhere and how we want it.” Increased access, convenience, and enhanced experience of healthcare are therefore major priorities for the organizations.
Affordability. Because the individual market is more price sensitive than the group market, there is a heightened awareness that they must reduce the cost of care in order to continue to expand in this market.
Value. At the same time, new healthcare consumers expect more value or increased and enhanced services, and this is driving a number of efforts focused on the care experience.
Three strategic initiatives have emerged in response to these drivers. The LMP and the national innovation units are integrated into all three, as are KP members’ views, as represented through surveys, focus groups, and ethnographic studies.
Perform, Grow, Lead is KP’s strategic plan. It emphasizes affordability targets, meeting rising customer expectations, and transforming care. Guiding principles include the following: One KP, which calls for a common care experience across all regions, and the KP people strategy, which articulates the desired characteristics of the KP workforce as “innovative, engaged, change ready, healthy, and accountable.”
Vision 2025 is an ongoing initiative to understand what healthcare consumers will look like and how KP can position itself to meet needs in a rapidly changing healthcare market. It develops care models and offers strategic road maps to guide planning and change. Health information technologies are central to this strategy, including the use of social media to keep its members informed and healthy and new mobile technologies to enhance staff communication and reporting. Remote diagnostic tools will also be more available to patients for common ailments like strep throat, to allow self-testing and more rapid recoveries. In the next 5 to 7 years, they see increased use of remote monitoring technology, sensors, and virtual care, as well as health analytics to enhance the nurse role in triage and care management . As one interviewee put it, “…if it can be automated, it will be.”
Reimagining Ambulatory Design (RAD) is an initiative of the Southern California Region that may spread across KP. Its goal is to design a new ambulatory care delivery model aligned to the principles of consumerism. In extensive research with members, the leads of this effort discovered that “…people wanted access to care in a much more radically different way… It has to do with much more embedding of services into the community, into the home, into work…and much more local access for simple things.” This “life-integration vision” has sparked several experiments to redesign and relocate KP clinical operations in Southern California.
Workforce planning and development strategies
Human resource (HR) leaders and the Coalition of Kaiser Permanente Unions (CKPU) staff report that early on the focus of WFPD was on creating consistent workforce metrics and analytics to help the regions forecast future staff and skill needs. They now view these tools as necessary but insufficient. A regional HR leader described the change:
So, at first…we forecasted membership growth, utilization, supply, turnover, retirement, we looked at the local labor markets, we connected with a university for economic analysis of the projected nursing workforce, and the fluctuations around the economy. And then we realized that most forecasting is based on the previous year, or the previous three, or the previous five years, projecting forward. But if you’re in the midst of complete transformation of how you’re providing care, how accurate are those numbers? …We need to understand what kinds of jobs (are coming); we need to understand how work is transforming. So, it really started in 2012 to 2013, (we have been) trying to get a movement towards a kind of qualitative approach to understanding change.
Key to this new approach is that it is integrated with KP’s strategic growth initiatives. As one HR leader explained, “workforce development is being driven by the business need.” Part of this emanates from the “affordability” imperative, which both HR and labor representatives agree has given finance a larger role in the company. At the same time, HR leaders describe the emerging WFPD approach as “maturing,” by which they mean that finance is one important player but that they also take into account other interests. Indeed, HR leaders view themselves as “intermediaries” who help senior leaders understand the strategic value of the workforce in the context of the drive toward labor-cost-saving solutions.
The LMP, which was further strengthened in the 2015 National Agreement, has several mechanisms that integrate labor and innovative WFPD strategies into the strategic change processes. First, for collective bargaining, they use an “interest-based approach,” rather than traditional, positional bargaining. Both sides emphasize that there is full transparency in this process—management shares information on the company’s financial situation, competitive standing, and other data related to the subjects of bargaining and labor provides insight into the affect of change on the workforce. This open exchange results in accommodation, as illustrated by the Employment and Income Security Agreement (EISA), which stipulates that any innovation or change at KP must include a plan for retaining the effected employees.
A second LMP mechanism consists of the negotiated programs to support innovation and the implication of change for the workforce. The national agreement delineates the mission and values of joint programs, sets aside funds, and directs LMP staff and company to consistently integrate the programs across all KP regions. Examples of these national efforts include Total Health, which advances wellness, health, and safety in the workplace; unit-based teams, which identify quality improvement and cost containment solutions at the ground level; and the National Taft-Hartley Education and Training Trusts, described above.
Lastly, an important characteristic of the LMP governance and planning structures is that it is holistic and aims to permeate every level of the system. In theory, every manager has a designated labor partner with whom they are encouraged to engage in strategic and operational decisions that affect the workforce. Both sides report that this works better in some regions than others, but where it does work, they say that the engagement is ongoing and includes strategic decisions that affect not only the workforce but also the future direction of the company.
Jobs for the Future, an initiative in the Southern California region, illustrates how these mechanisms work together to integrate labor and WFPD strategies into the strategic change processes at KP. The project grew from the HR leader’s intermediary strategy of showing up and intently listening at meetings related to the RAD project, a strategic change initiative aimed at redesigning ambulatory care. According to this leader, he quickly convinced the VP overseeing the project of the value of labors’ early involvement, and soon after, a LM committee was formed to explore the proposed innovation and its impact on the jobs and workers.
Rather than focus on the contentious questions of workforce impacts, the committee first set out to develop a holistic view of the redesign (new care models, technologies, facilities, etc.) in order to target the operational initiatives that would have significant impact on jobs. Though the HR lead reported that some labor and management participants fell into traditional roles and knee-jerk reactions, he observed that these positions quickly gave way as the committee became more engaged in the processes to redesign the care models and workflows.
Next, the committee developed a rigorous methodology to assess the impact on jobs and formed LM subcommittees to apply the method to the redesign of specific work areas. In the end, the committee proposed three new jobs: a roving receptionist of the future that would take on multiple roles of patient greeter/way finder/educator, a multifunctional healthcare worker that would staff new small walk in clinics and perform patent care and diagnostic functions, and a patient navigator who would facilitate the extension of care into the arena of social determinants by helping to coordinate community resources. Each of these new roles transgresses existing occupational, as well union boundaries and jurisdictions.
The difference between the new with the old approach to labor relations managing change at KP are explained by the HR leader as he reflected on this project:
The traditional way of doing it is you’re assigning labor relations people who don’t understand the operations and all the technology and innovations. They’re not included in those conversations. So they go to the bargaining table, and the labor person has only been told that there is either going to be a layoff, or a change in jobs, and we are doing this because of the need for affordability, or because we need to cater to the customer. They are like, what!!??? So it is just kind of set up for an antagonistic type of relationship…because there hasn’t been this pre-work, conversations and joint learnings about why this change is really happening, how it will improve care. There is a big disconnect between the innovators planning this change and the bargaining with unions to implement downstream workforce implications.
Interestingly, a union representative also sees her role as an intermediary in the broader change processes at KP:
What I’m trying to do is to help facilitate the conversation. It’s really hard to make management own what they want… What classifications do you need? Where are you going to lay-off people? And where do you want to grow, right? Put it on the table, take the consequences…. And you will get (union) members that say, I am not changing… Kaiser has a lot of money; they do not need to do this… And they’re wrong, but they are human; they are afraid. (So I say) basically you’re stuck: either you learn this, or you won’t have a job… So, that’s the conversation I’m trying to facilitate. I try to get everyone to put their issues on the table and work it out…
While there are many success stories in the transformation of WFPD at KP, informants also expressed concerns.
Several informants talked about the continued resistance of some business units and regional operations to the new WFPD approach. As one person explained, “the C-Suite is on board with a human capital strategy and there is a fair amount of engagement of line employees in unit-based teams, but the middle management is not fully engaged”.
While informants view the LMP as a powerful mechanism for managing the impacts of change, involving workers who are represented by unions outside the LMP and the large number of exempt employees in KP (almost half of the workforce) is challenging. As one informant put it, “So what is the governance for this work with the other half? Who sets the priorities, allocates the resources, and oversees the initiatives?”
The fluid fiscal environment and constant innovation are expanding the role of finance in strategic change and workforce decisions. Informants did not challenge the need for more fiscal control; their concern was over the episodic nature and the short-term time horizon of the financial decision-making process. As one person put it, “it does not matter if the company and the LMP have invested in a long-term strategy to fill a skills gap, finance can insist on a last minute reduction in force or a redeployment to meet fiscal targets.”
Several informants expressed the need to figure out how to bring workforce initiatives to scale and spread innovations, like the Jobs of the Future, to other regions. They believe that a deeper understanding of the knowledge, skills, and methods that underlie the emerging WFPD model might help spread innovation in KP.
Case study 2: Montefiore Health System
The Montefiore Health System is headquartered in the Bronx, NY, and currently covers approximately 350 000 lives through a variety of value-based reimbursement relationships with commercial and government payers. Over 80 % of Montefiore’s revenue is derived from the Medicare and Medicaid programs. Its leaders describe it as an “open ecosystem” with long-standing partnerships with the community, its labor unions, community-based organizations (CBO), and local high schools and community colleges. This, we shall see, is a critical characteristic of Montefiore’s approach to workforce changes.
The organization has a long history of seeking out capitation and other forms of risk-sharing agreements. Twenty years ago, Montefiore executives formed an Integrated Provider Association (IPA), which encompassed its salaried physicians, as well as community-based, voluntary (private-practice) physicians, and approached private payers with a request to develop risk-sharing contracts. While Montefiore experienced some losses during the early days of managing these agreements, they pushed ahead, understanding that the change would take time and that returns would be realized only when there were higher volumes of covered lives. The passage of the ACA, and in particular the launching of Medicare’s Pioneer Accountable Care Organization (ACO) program, in which Montefiore was selected to be one of the original participants, opened new opportunities for value-based contracts.
From the beginning, this active pursuit of value-based contracts has been supported by a subsidiary called a Care Management Organization (CMO), which developed a robust care management infrastructure with the explicit objective of understanding and addressing the upstream determinants of health. The CMO’s approach to care coordination includes health education, linkages with social services and government benefits, health system navigation, provider communication, chronic care management and care transition management, and medication review and reconciliation. A focus on patients with high medical expense and high risk of hospital and emergency department utilization by interdisciplinary care management teams has generated savings that that are reinvested in the delivery system. Care coordination is extended beyond Montefiore’s facilities through active partnerships with community-based, voluntary physicians as well as a wide range of community service organizations.
The CMO supports this care model with a robust WFPD infrastructure that includes a comprehensive competency map for all key CMO workflows supported by a wide range of training programs to ensure employees are prepared with the required skills.
In addition to the CMO WFPD capabilities, Montefiore Human Resources (HR) and Labor and Employee Relations functions have structures and mechanisms to integrate HR as well as labor into unit-based change. For example, HR stations a HR person in every department whose role is to understand the local culture and help HR anticipate and support change. This sensing function also enables HR to ensure the engagement of labor in planned changes.
Regionally, Montefiore also has a long history of labor-management partnership through its participation and leadership in the 1199SEIU Training and Employment Fund. The fund, which was established in 1969 to provide education and job training programs for healthcare workers, is the largest joint labor-management training organization in the United States. It covers 250 000 workers (190 000 in New York City) and more than 600 employers, including hospitals, nursing homes, registered nurses (RN), and home care workers. 1199SEIU and healthcare employers jointly govern the fund and Montefiore’s Executive Vice President is on the Board of Trustees.
Since its formation in 1969, 1199SEIU has established a total of nine funded initiatives, of which Montefiore contributes to five, that cover three main areas:
Training and upgrading: There are two training and upgrading funds (one specific to RN and one general) that work with Montefiore and union leaders to identify high-demand skills and occupations and develop training programs in response. It includes counseling and tutoring, adult basic education and pre-college preparation programs, and an array of college education benefits to support workers in attaining college degrees in healthcare-related occupations.
Job security: An additional fund provides a safety net and rapid re-employment services for laid-off workers, who receive priority employment from hundreds of healthcare institutions in the NYC area. They also support job counseling, placement, training programs, and benefits to assist workers’ transition into a new job in healthcare.
Labor-management initiatives: This fund seeks to increase worker voice in the planning and implementation of efforts to increase quality care, patient satisfaction, and operational effectiveness. It supports technical assistance on the development of joint governing structures and training in joint problem solving around quality and performance issues.
The funds are financed by collective bargaining contributions, with employers contributing 0.5 % of gross payroll to the Training and Upgrading Fund and smaller amounts to the other funds. The funds have also received over $300 million in grants to open their programs to community members and other healthcare workers who are not members of the 1199SEIU.
Drivers of change
The ACA’s payment reforms allowed Montefiore to leverage its experience with value-based purchasing and deepen its commitment to population health. However, New York state health policy, in particular the ambitious Delivery System Reform Incentive Payment (DSRIP) Program, a product of New York’s Medicaid Redesign Team (MRT) Waiver Amendment, is likely the greatest driver of change at Montefiore.
DSRIP will fundamentally restructure the healthcare delivery system by reinvesting in the Medicaid program, with the primary goal of reducing avoidable hospital use by 25 % over 5 years. Up to $6.42 billion dollars are allocated to this program with payouts based upon achieving predefined results in system transformation, clinical management, and population health. The entities that are responsible for creating and implementing DSRIP are Performing Provider Systems (PPS). PPS are providers that form partnerships among major public hospitals and safety net providers, with a designated lead organization for the group. There are 25 PPS across the state, with Montefiore leading one in the Hudson Valley and participating in a second PPS in the Bronx (Bronx Partners for Healthy Communities) led by St. Barnabas Hospital (SBH).
A major focus of DSRIP is to develop strategies to realign, redeploy, and retrain the healthcare workforce across the provider networks within broad regions throughout the state. DSRIP has also merged the Office of Mental Health, Office Alcoholism and Substance Abuse, and Department of Health (DOH), so there is a single regulatory structure with payment aligned. This means all community-based organizations (CBO) will begin to receive their funding from this single payer/regulator at the state level. Montefiore executives describe the program as “right-sizing” Medicaid. All care will be managed, and the number of contracts with HMOs will be dramatically reduced from 17 to 7–10 plans. Ultimately, the program’s goal is to achieve 90 % value-based payment in 5 years.
Over time, Montefiore’s leaders have realized that to make their value-based contract model work, they needed to create economies of scale. The strategy has so far resulted in the outright acquisition or other partnership arrangements with nine hospitals, several of which are in the Hudson Valley, a region that is largely exurban, dominated by solo practices, and radically different from the Bronx in terms of patient demographics. In addition, Montefiore views its engagement in DSRIP as an opportunity to expand its model to a broader continuum of care in the Bronx as well as in the Hudson Valley. Finally, it has begun to expand into new lines of business with the establishment of the Managed Long Term Care Plan (MLTCP), which may transform Montefiore into a fully integrated delivery system. The implication of these expansions is significant, both for the workforce and more broadly in terms of testing the feasibility of Montefiore’s population health model in new environments.
Workforce planning and development strategies
The central workforce dynamic resulting from the DSRIP rollout and Montefiore’s policy of acquisitions is that Montefiore is rapidly blurring its traditional workforce boundaries. This has multiple implications for its approach to WFPD. First, the inclusion of new facilities and regions requires HR to integrate the workforce into Montefiore’s culture, often in the context of downsizing and redeployment of staff. Second, the merging of the various social service payment schemes into one payer/regulator under DSRIP will mean that Montefiore has a direct financial interest in strengthening CBO services and, therefore, the capabilities of its workforce. Third, early discussions among partners in the PPS suggest a commitment to relocate any displaced workers from partner organizations in the PPS to avoid unemployment. This will not only intensify the imperative to expand care coordination across providers and CBO, but now extend WFPD outside the traditional boundaries of Montefiore’s employees. An HR leader described the change:
Whereas in years past we focused on our own employees and attracting top talent, now we are (also) interested in folks in the community and their future, and how to get them interested in a health care profession…We are partnering with schools, and building health care curriculums…And we have a greater focus on development and education of our community partners. We are doing more with internships and externships and volunteerism…It’s really about building the health of the community.
Montefiore’s WFPD strategies are emerging within three loosely coupled and well-resourced efforts: expansion of the CMO’s competency and training map, leveraging regional ties through its LMP, and embracing DSRIP aims to build a strong provider network. Each is closely tied to Montefiore’s strategy to build economies of scale and improve population health.
The first strategy involves the expansion of the CMO comprehensive training program to support Montefiore’s efforts to bring its care management model to scale. A core feature of this effort is a competency map that specifies what each worker needs to know and do and identifies curriculum pathways for each of the 80 clinical and non-clinical roles in the CMO. One informant shared that the map enables the CMO to scale up training and target delivery throughout the growing continuum of care.
It’s not scalable to create an education program that trains every single person here on how to arrange transportation or how to find a pharmacy that delivers. We want that to be role specific and matched to the right skill set so the training that goes with each role is then matched to what we expect people in that role to do… If we hadn’t gone to a model like that, it’s just not scalable.
The CMO model has both loose and tight elements. The loose characteristics include the placement of facilitators in the CMO units to listen and support people in developing the skills and knowledge required to continuously improve the model. There is also an educational council comprised of representatives from throughout the system that helps ensure frontline input into learning needs and evaluation of training programs. Its tightening mechanisms include standardizing some elements of training to help spread the care coordination model to the new Montefiore and the PPS partners.
The second WFPD strategy involves leveraging Montefiore’s affiliation with the 1199SEIU League Training Fund to intervene into the regional healthcare labor market to address broad workforce challenges facing the industry as a whole. For example, Montefiore, in partnership the Training and Upgrading Fund, agreed to provide a clinical site for a RN-to-BSN bridge program being offered by the City University’s Lehman College in the Bronx. This partnership brought to light Montefiore’s concerns about nursing school curricula, which are largely focused on training nurses for acute care roles and lack preparation around care coordination and population health. The partners addressed this gap in this one-time bridge program with the inclusion of a care management module. Since then, the parties have worked together to revamp the curricula to better prepare nurses for care management and care coordination careers—which include courses on the broader institutional changes in healthcare and changing care models. Montefiore and the training fund’s involvement in two regional DSRIP PPS will likely afford them an opportunity to replicate this kind of partnership with other schools of nursing and programs to train workers for other high-demand occupations.
On the internal front, though labor union relations were described as being “very collaborative” and “very well integrated into the facilities,” the degree to which the LMP is involved in Montefiore’s innovation and growth strategies is unclear. The nature of labor relations at Montefiore maybe best illustrated by the way in which CMO managers described problems redefining jobs and job titles. They essentially work hard to respect the union, but efforts to engage unions in the redefinition of jobs, as occurred in KP’s Southern California region, have not taken place.
In the union contract you have certain titles and those titles really still largely crosswalk to functions that you would have seen in a hospital or maybe in a physician’s office. But to get a new title is hard. It has to be negotiated… So what we’ve tried to do is take our functions and crosswalk them to existing titles. Our titles don’t always completely (crosswalk to the new duties)…It would be nice to have more flexibility, because it takes too long (to negotiate change).
Despite these challenges, HR leaders described their relationship with labor as being based on mutual trust and collaboration. For example, Montefiore developed training for hospital staff on Hospital-Acquired Conditions for which CMS will no longer reimburse. They partnered with 1199SEIU to roll out the program, which they believe greatly facilitated workers’ confidence that the program would be beneficial and not harmful to their interests.
The third workforce strategy involves embracing the DSRIP aims to build a strong provider network. With reduction of potentially avoidable emergency room (ER) visits and hospital admissions as end goals, the NY DSRIP stipulates that an immediate task is to “retrain the workforce for care continuum and redeploy them to ambulatory and home care.” Executives describe this challenge on several fronts. First, they report “We work across health care settings and CBO’s in the PPSs to standardize titles and competencies, and to establish criteria for determining how care will be coordinated.” They point out that this process is made particularly challenging by the vast array of ways that organizations across the PPS network have organized jobs. “Some organizations require care managers to be RNs, while others employ individuals with … a high school diploma or a GED as care managers. There is a lot of cross cutting (comparison) that we need to do.”
CMO leaders say a key challenge is ensuring that its standards are maintained as the number of organizations involved in the continuum of care expands through the DSRIP process.
There are a myriad of organizations out there that provide all kinds of services… peer groups, housing groups, mental health, substance abuse, transportation… They’re not going to be our employees… (but) we’re going to have to make decisions about (whether) we are comfortable actually turning over the responsibility for case management in a particular case.
The second area of work required by DSRIP will be to manage the relocation process. DSRIP anticipates that, over time, hospitals will reduce the number of beds or close shrink and that ambulatory-, home-, and community-based care will grow. Workers will need to be retrained to move into these new settings within PPS. The 1199SEIU League Training and Employment Fund, which spans multiple employers, will likely play a role in managing these transitions through its Job Security Fund.
Despite what is largely a story of successful relationships, Montefiore informants were frank about the challenges ahead that concern them.
The first is a reflection of the need for continued maturation of the labor partnership. In particular, the lack of flexibility in renaming and redefining jobs has been an impediment to change and expansion plans. “It would be nice to have more flexibility.”
Another challenge is related to the design and use of community health workers (CHW) across the new DSRIP PPS networks. Currently, these jobs are different in their design and function, based on where the work is performed in a very broad spectrum of care coordination. Historic interests and political dynamics have in part shaped these varied roles. There are deep differences over how to integrate CHW, e.g., whether they should be hired directly into the organization, and of course, there are divergent views on which union might claim this growing cadre of workers. The question is whether the CMO’s data-driven innovation strategy will work in this highly politicalized context or whether new consultative mechanisms are also needed to successfully integrate diverse occupational roles and cultures.
The third challenge regards the spread of the model to the Hudson Valley. Currently, Montefiore’s relationship with its newly acquired facilities in the region is largely financial—but ensuring institutional stability will require Montefiore to transport its care coordination and community-based approach. This model is in part reliant on a large system that can move workers affected by change in one facility to new roles and locations in the expanding continuum of care. It remains to be seen whether there are the workforce relationships and mechanisms that will facilitate such processes in this suburban and exurban area of the state.