Healthcare: Kaiser Permanente Expanding, Building and Rebranding; Competitors to Copy Kaiser Model

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Volume 21, Number 15 July 25 - August 7, 2016 • $4.00
SAN FERNANDOVALLEYBUSINESS JOURNAL
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By CAROL LAWRENCE Staff Reporter
Fighting criminal charges in court, repairing
damaged buildings and even losing property –
these are the potential risks faced by property
owners who rent to medical marijuana businesses.
Owners and brokers say dispensaries-as-ten-
ants have altered and damaged buildings’ interi-
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ized, and the marijuana smell causes neighboring
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for prosecution by the city of Los Angeles. As a
Pot Tenants
Bring Problems
REAL ESTATE: Landlords suffer
crime, odors and legal actions.
Please see REAL ESTATE page 35
By MARK R. MADLER Staff Reporter
Book printing may be a shrinking industry,
but apparently not for publishers of academic and
professional journals. At least, Sage Publications
is moving into a bigger building in Thousand
Oaks because of its growth – a trajectory the
company expects will continue.
Employees began moving to the new location
at 2400 Conejo Spectrum St. last month. The
company is leaving its space at 2560 Teller Road
and will no longer occupy the site by September.
Roberta Isaeff, vice president of human
resources and facilities for Sage, said the move
had been planned since last year to coincide with
Sage Growth
Points to Future
MAIL TO:
Retail centers,
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footage.
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The List
How Chester
Wang turned
around Dolphin
Imaging.
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News &
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PUBLISHING: Academic journal
powerhouse takes bigger digs.
Up Front
Looking spiffy
aboard the new
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By STEPHANIE HENKEL Staff Reporter
Kaiser Permanente unveiled its new, state-of-
the-art labor and delivery wing at its Woodland Hills
facility earlier this month. Its roomy 23,000 square
feet features six delivery rooms and 15 mother-baby
suites, among other amenities. But that is only one
of several large construction projects Kaiser has
undertaken in recent years, including in Lancaster,
North Hollywood and Panorama City.
This expansion is driven partly by the desire to
attract customers in new areas as well as to elevate
the brand. But one big reason for the boom: The
Affordable Care Act has greatly boosted member-
ship in Kaiser’s health plans.
Kaiser’s Building Boom Part of Plan
Bedside: Dennis Benton in new maternity wing.
HEALTH CARE: Nonprofit’s footprint
must keep up with patient count.
Please see HEALTH CARE page 34
Goodwill helps businesses comply with ADA.
PHOTOBYDAVIDSPAGUE
Inspector:
David LoPresti
of Goodwill
with regulation
parking space.
LOT OF LIABILITY
By MARK R. MADLER Staff Reporter
S
mall business owners know all too well
about the costs of being ambushed by law-
suits over non-compliance with the Ameri-
cans with Disabilities Act.
Now the Valley Economic Alliance wants to
help prevent the egregious abuses of the federal
law with a most unlikely partner – Goodwill
Southern California.
Together, they are promoting the All-Access
ADA Support team to get out ahead of any costly
and time-consuming lawsuits.
Michael Hadley, economic development
coordinator for the alliance in Sherman Oaks,
said becoming involved with Goodwill on the
program fits the group’s mission of supporting
business and making sure they stay in the San
Fernando Valley.
“We want them to grow and thrive and not
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ley,” Hadley said.
For its part, Goodwill gets access to a larger
Please see COMPLIANCE page 32
The entertainment industry is booming so
much that it’s difficult to book space in Holly-
wood’s usual production houses. As a result,
new soundstages and production studios are
popping up from Sun Valley to Simi. Read about
how entrepreneurs such as Steve Needleman,
above, are putting the Valley area in lights in
this Special Report.
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2. 34 SAN FERNANDO VALLEY BUSINESS JOURNAL JULY 25, 2016
“There’s a whole bunch of people that have
health insurance today that didn’t have it a few
years ago,” said Dennis Benton, senior vice
president and area manager at Kaiser Perma-
nente Woodland Hills Medical Center.
Growth is good. But for Kaiser, growth also
presents something of a dilemma. Because its
business model calls for all those new mem-
bers to be looked after and treated in-house, it
means Kaiser must go on a construction spree
and not merely expand its network of existing
medical providers.
And that has changed its cost structure.
Fixed costs
The Kaiser business model involves growth
costs that competitors don’t have. Most other
insurance companies contract with hospitals,
physician groups and doctors, who provide the
health care in exchange for subsidies and being
in the insurance network.
But at Kaiser, when the customer base
grows, the organization has to expand its
infrastructure, hire doctors and nurses, and
add administrative resources. This creates
higher overhead that must be absorbed some-
where, which could explain Kaiser’s increase
in premiums.
Some recent construction projects include
its 136,000-square-foot medical office build-
ing in Lancaster and a 72,000-square-foot spe-
cialty clinic in Panorama City. Both opened
in 2014, and its 31,000-square-foot facility in
North Hollywood opened in 2013.
“One issue with Kaiser is they are a brick-
and-mortar operation,” said Dylan Roby, an
assistant professor of health services adminis-
tration at the University of Maryland. “Kaiser
is a system that has high fixed costs. If you
think about an organization like Health Net,
it is more readily able to scale up its network
quicker than Kaiser.”
When an insurer like Health Net has an
increase in enrollees, the company does not
necessarily need to build anything but will
sign up a proportionate number of existing
doctors’ practices to cover the new customers,
a far more flexible and cheaper approach than
Kaiser’s construction projects.
Winning model
The Kaiser model differs from other health
insurers as the organization provides the insur-
ance as well as the health care to its custom-
ers. This allows Kaiser to have more control
over the entire process and allows the non-
profit to streamline operations.
For instance, a patient goes to a Kaiser
location for a dermatology appointment and
because its systems are integrated, can be
notified of an overdue mammogram at the
same appointment. As a result, the patient
may be able to have a mammogram that same
day or schedule it for later.
Kaiser’s delivery system of care takes a
more integrated approach, which other insur-
ers and health care providers have been trying
to emulate since the Affordable Care Act went
into effect. For example, last year Indianap-
olis-based Anthem Inc. launched Vivity, a
plan similar to Kaiser’s.
“There is a big push across the whole
health care industry to be more patient-cen-
tric and to really provide full service to
the patient,” said Sharoni Billik, owner of
health care advertising firm Sharoni Billik
Healthcare Communications of Encino.
“It’s not just about treating a patient when
sick, but it’s really providing a full service
with preventative care, making things easier
for the patient.”
Jason Sandler, partner at OHM Benefits
& Insurance Solutions in Northridge, who
sometimes sells Kaiser insurance to employer
groups, has noticed the shift in the industry
but believes other providers still have some
catching up to do.
“We have seen some movement in the
traditional carrier sector that does lean toward
that single-model approach that Kaiser uses,
but right now, I don’t see any carriers’ options
that are quite at that level (of Kaiser).”
Kaiser implemented its integrated system
since inception over 70 years ago, while a lot
of other insurers began incorporating similar
systems in more recent years.
“We’ve grown up and evolved that way
(with an integrated system) for so many
decades now, so it’s just how we do busi-
ness,” said Kaiser’s Benton. “It’s seamless.
The patients come to see doctors, doctors
refer to other doctors who are right here. Any
radiology service, pharmacy, anything else —
it’s quite literally one-stop shopping. … It’s
actually interesting to us to watch the industry
evolve in trying to be like us. Our biggest sell-
ing point is that we provide that comprehen-
sive, integrated care that other organizations
are just starting to dabble in.”
The organization’s holistic approach to
health care has carried over to its marketing
strategy, which currently highlights its focus
on patient health, happiness and well-being.
It’s current “Thrive” campaign embodies this
message and is somewhat emblematic of the
nonprofit’s recent expansion.
But with the capital investments and
changing market under health care reform,
Kaiser’s position in the market has shifted.
“Historically, Kaiser has been known as
the low-cost leader,” said OHM’s Sandler.
“If you wanted cheap insurance, you went to
Kaiser. In very recent years, that has turned
around. I think they are trying to portray
themselves as a mainstream carrier that offers
state-of-the-art technology and facilities, and
pricing that is still competitive in the market-
place but not necessarily bargain basement.”
On Covered California, the state’s health
insurance marketplace, Kaiser tends to be
one of the more expensive offerings with
comparable prices to such middle-tier insur-
ers as Health Net Inc., which was recent-
ly acquired by Centene Corp. of St. Louis;
San Francisco-based Blue Shield of Cali-
fornia; and Anthem. Compared to low-cost
providers such as Molina Healthcare Inc. of
Long Beach, Kaiser can be substantially more
expensive, depending on the plan.
Competition
To compete with Kaiser, rival insurers and
health care providers are beginning to create
deeper partnerships with each other to provide
more comprehensive care to patients. If other
networks successfully integrate their health
care systems, they could potentially reduce
Kaiser’s market share. These networks would
provide consumers with both integrated care
and more options from different health care
providers as opposed to Kaiser, which only
offers care in-house.
“There are lots of threats on the horizon,”
said University of Maryland’s Roby. “Organi-
zations that previously wouldn’t work togeth-
er are now working together to create different
models that might compete better.”
But for the time being, Kaiser is thriv-
ing. In addition to the new labor and delivery
wing, the Woodland Hills campus embarked
on a solar rooftop project just a few weeks
ago and is in the process of installing 20 solar
panel canopies over the 60,000-square-foot
parking structure. The project will produce 1
megawatt of energy and is scheduled for com-
pletion by the end of September.
The location is also upgrading its venti-
lation, electrical, plumbing, heating and air
conditioning systems and has another project
on the drawing table. Pending board approval,
the hospital hopes to expand its emergency
room and add 10 operating rooms in the next
three years.
Outside of Woodland Hills, Kaiser also
is building a medical office building for pri-
mary care in Porter Ranch as well as another
location in Ventura that will focus on medical
specialties like neurology and endocrinology.
Both are slated to open in 2018.
Health Care: Competitors to Copy Kaiser Model
Maternal: New mother-baby suite at Kaiser Permanente in Woodland Hills.
PHOTO BY JEFF CUTTING
Continued from page 1
Rendering: In recent years, Kaiser has built facilities in Lancaster, Panorama City, North Hollywood and Woodland Hills; above, planned medical offices in Ventura.
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