Our Point of View

August 12, 2009

Kaiser Permanente Comments on Workforce Adjustments in California

For more than a year, Kaiser Permanente has been working to address the changes occurring in the health care environment and in the broader economy, including continuing levels of high unemployment and corresponding membership losses, upcoming reductions in Medicare Advantage reimbursement rates, continued pressure to contain rising premium costs, as well as the changes that health care reform and new technologies will bring. Within this new landscape, Kaiser Permanente is addressing these challenges so that we may continue providing our members, customers, and communities high-quality care and service at an affordable price.

Kaiser Permanente has already taken a variety of actions to reduce the growth of our expenses and control our costs more effectively. These efforts have included adjusting timelines for our capital spending; reducing full-time positions through attrition, greater flexibility in managing schedules and assignments, careful hiring and improved attendance; and, limited workforce reductions, as necessary. While we have made some progress toward our goals, the magnitude of the challenges we face required us to make additional workforce adjustments in the Northern California and Southern California regions.

On August 11, Kaiser Permanente notified approximately 1,850 of our 135,000 employees in California that their positions are being eliminated. These are very difficult decisions, and we recognize the uncertainty this creates for these employees and their families, and we are taking many steps to minimize the impact. It is important to understand, however, that position elimination doesn’t automatically mean that an employee will be laid off. We will be working to place as many employees as possible into other positions. We have offered voluntary separation incentives to certain groups of employees, and our hope is that the number of employees who choose voluntary separation will reduce the number affected by the position eliminations announced on August 11. Further, we are offering employees severance packages with up to 52 weeks of pay, and extended health care benefits.

Because of our commitment to our members, customers, and the communities we serve, we carefully evaluated these positions and the needs at each facility so that these actions will not reduce the quality care and service we provide. While most medical centers have positions that were eliminated, this is not an across-the-board elimination of positions in all California locations.

The steps we are taking now are difficult, but they are also necessary and will help align Kaiser Permanente to the new realities of the health care environment and the California economy.