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Kaiser Permanente - Strategy Paper

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Submitted By bhatiaash2002
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Kaiser Permanente (KP) is a well-known example of a fully integrated healthcare delivery system (IDS). It uses a “closed-group” staff HMO model, which implies that it is a payor and a provider of healthcare services. Through tight integration of its clinical services, KP offers one-stop shopping for most services including hospitalization, outpatient offices, pharmacy, radiology, laboratory and surgery. It uses care pathways, innovative IT Systems to derive Insights and lessons for improving patient outcomes and places a strong emphasis on Preventative Care. KP enables constant patient communication and continuously strives to achieve its ‘Home as a Hub’ goal of providing care. Thus, using the Single Connect Model, KP engages in a pro-active strategy.
KP operates within the US managed Healthcare Industry. Over the last 2 years, the implementation of the Affordable Care Act (ACA) created significant opportunities for insurance providers by opening up an untapped market of individuals who were previously uninsured, and combined with increased premiums, resulted in higher Operating Results. Most recently, we witnessed the announcements of mergers and acquisitions among 4 out of the 5 largest insurance providers (Aetna’s merger with Humana for $37 billion and Anthem‘s acquisition of CIGNA for $54 billion). In 2014, KP had 9 million members and annual revenues of $ 56.4 billion, thus, creating big opportunities for high volume Suppliers, while increasing KP’s bargaining power. KP emphasizes procuring generic (cheaper alternatives) drugs, standardized medical equipment from local suppliers (who also provide maintenance and support) and IT products and services from big suppliers such as IBM. Thus, Supplier Power is low, while switching costs of suppliers for KP are not high relative to the switching costs for the supplier. Buyer Power is high due to the price transparency

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