profit and not for profit entities . industry healthcare founded july 21 1945 ; 71 years ago 1945 07 21 founder henry j. kaiser sidney r. garfield headquarters ordway building oakland california u.s. key people bernard j tyson health plan and hospitals ceo geoffrey sewell m.d. federation executive director see section below revenue 60.7 billion usd 2015 1 net income 1.9 billion usd 2015 1 number of employees 186 497 employees 2015 18 652 physicians 2015 1 website kp.org kaiser permanente ka z r p rm n nte kp is an integrated managed care consortium based in oakland california united states founded in 1945 by industrialist henry j. kaiser and physician sidney garfield . kaiser permanente is made up of three distinct but interdependent groups of entities the kaiser foundation health plan inc. kfhp and its regional operating subsidiaries ; kaiser foundation hospitals ; and the regional permanente medical groups . as of 2014 kaiser permanente operates in eight states and the district of columbia and is the largest managed care organization in the united states . as of december 31 2015 kaiser permanente had 10.2 million health plan members 186 497 employees 18 652 physicians 51 010 nurses 38 medical centers and 622 medical offices . 1 as of dec. 31 2015 the non profit kaiser foundation health plan and kaiser foundation hospitals entities reported a combined 1.9 billion in net income on 60.7 billion in operating revenues . 1 each permanente medical group operates as a separate for profit partnership or professional corporation in its individual territory and while none publicly reports its financial results each is primarily funded by reimbursements from its respective regional kaiser foundation health plan entity . kfhp is one of the largest not for profit organizations in the united states . kp s quality of care has been highly rated and attributed to a strong emphasis on preventive care its doctors being salaried rather than paid per service and an attempt to minimize the time patients spend in high cost hospitals by carefully planning their stay . however kaiser has had disputes with its employee s unions faced civil and criminal charges for patient dumping faced action by regulators over the quality of care it provided especially to patients with mental health issues and has faced criticism from activists and action from regulators over the size of its cash reserves . contents 1 structure and governance 1.1 governance 1.2 national structure 1.3 regional entities 2 history 2.1 early years 2.2 world war ii 2.3 postwar growth 2.4 managed care era 2.5 regional evolution 2.6 kp healthconnect 2.7 international reputation 3 quality of care 3.1 historical issues 4 research and publishing 5 controversies 5.1 mandatory arbitration 5.2 labor unions 5.3 cash reserves 6 see also 7 references 8 external links structure and governance edit kaiser permanente provides care throughout seven regions in the united states . two or three four in the case of california distinct but interdependent legal entities form the kaiser system within each region . this structure was adopted by kaiser permanente physicians and leaders in 1955 . governance edit each entity of kaiser permanente has its own management and governance structure although all of the structures are interdependent and cooperative to a great extent . there are multiple affiliated nonprofits registered with the u.s. internal revenue service . according to form 990 governance questions kaiser foundation hospitals and kaiser foundation health plan do not have members with the power to appoint or elect board members meaning that the board itself nominates and appoints new members . 2 chairman and ceo george halvorson retired in december 2013 after serving since 2002 . 3 on november 5 2012 the board of directors announced that bernard j. tyson kaiser s president and chief operating officer for the last two years would replace halvorson 4 the first time an african american was appointed to that position . 1 national structure edit the two types of organizations which make up each regional entity are kaiser foundation health plans kfhp work with employers employees and individual members to offer prepaid health plans and insurance . the health plans are not for profit and provide infrastructure for and invest in kaiser foundation hospitals and provide a tax exempt shelter for the for profit medical groups . permanente medical groups are physician owned organizations which provide and arrange for medical care for kaiser foundation health plan members in each respective region . the medical groups are for profit partnerships or professional corporations and receive nearly all of their funding from kaiser foundation health plans . the first medical group the permanente medical group formed in 1948 in northern california . kaiser doctors become permanente stockholders after three years at the company . 5 in addition kaiser foundation hospitals operates medical centers in california oregon and hawaii and outpatient facilities in the remaining kaiser permanente regions . the hospital foundations are not for profit and rely on the kaiser foundation health plans for funding . they also provide infrastructure and facilities that benefit the for profit medical groups . regional entities edit kaiser permanente is administered through seven regions including one parent and five subordinate health plan entities one hospital entity and nine separate affiliated medical groups various legal entities serve the areas of the us where kaiser operates california the largest two colorado georgia hawaii mid atlantic and pacific northwest . northern california 3 351 449 members 6 kaiser foundation health plan inc. kfhp kaiser foundation hospitals kfh the permanente medical group inc. tpmg southern california 3 499 035 members kaiser foundation health plan inc. kfhp kaiser foundation hospitals kfh southern california permanente medical group scpmg colorado 531 908 members kaiser foundation health plan of colorado kfhpco colorado permanente medical group p.c. cpmg georgia 222 074 members kaiser foundation health plan of georgia inc. kfhpga the southeast permanente medical group inc. tspmg hawaii 226 900 members kaiser foundation health plan inc. kfhp kaiser foundation hospitals kfh hawaii permanente medical group inc. hpmg mid atlantic vicinity of washington d.c. including maryland and virginia 581 000 members kaiser foundation health plan of the mid atlantic states inc. kfhpma mid atlantic permanente medical group p.c. mapmg northwest northwest oregon and southwest washington 480 386 members kaiser foundation health plan of the northwest kfhpnw kaiser foundation hospitals kfh northwest permanente p.c. physicians and surgeons nwp on december 4 2015 it was announced that kaiser would acquire seattle based group health cooperative making it its eighth region . 7 in addition to the regional entities in 1996 the then twelve permanente medical groups created the permanente federation a separate entity which focuses on standardizing patient care and performance under one name and system of policies . around the same time the permanente company was also chartered as a vehicle to provide investment opportunities for the for profit permanente medical groups . 8 one of the ventures of the permanente company is kaiser permanente ventures a venture capital firm that invests in emerging medical technologies . 9 kaiser permanente s headquarters the ordway building in downtown oakland one of kaiser s six other office buildings in oakland history edit kaiser sunset hospital complex in los angeles california early years edit the history of kaiser permanente dates to 1933 and a tiny hospital in the town of desert center california . at that time henry j. kaiser and several other large construction contractors had formed an insurance consortium called industrial indemnity to meet their workers compensation obligations . dr. sidney garfield had just finished his residency at los angeles county usc medical center at a time when jobs were scarce ; fortunately he was able to secure a contract with industrial indemnity to care for 5 000 construction workers building the colorado river aqueduct in the mojave desert . soon enough garfield s new hospital was in a precarious financial state with mounting debt and the staff of three going unpaid due in part to garfield s desire to treat all patients regardless of ability to pay as well as his insistence on equipping the hospital adequately so that critically injured patients could be stabilized for the long journey to full service hospitals in los angeles . 10 19 26 however garfield won over two industrial indemnity executives harold hatch and alonzo b. ordway . it was hatch who proposed to garfield the specific solution that would lead to the creation of kaiser permanente industrial indemnity would prepay 17.5 % of premiums or 1.50 per worker per month to cover work related injuries while the workers would each contribute five cents per day to cover non work related injuries . later garfield also credited ordway with coming up with the general idea of prepayment for industrial healthcare . garfield also later explained that he did not know much at the time about other similar health plans except for the ross loos medical group . 11 hatch s solution enabled garfield to bring his budget back into the positive and to experiment with providing a broader range of services to the workers besides pure emergency care . by the time work on the aqueduct concluded and the project was wrapped up garfield had paid off all his debts was supervising ten physicians at three hospitals and controlled a financial reserve of 150 000 . 12 garfield returned to los angeles for further study at county usc with the intent of entering private practice . however in march 1938 consolidated industries a consortium led by the kaiser company initiated work on a contract for the upper half of the grand coulee dam in washington state and took over responsibility for the thousands of workers who had worked for a different construction consortium on the first half of the dam . edgar kaiser henry s son was in charge of the project . to smooth over relations with the workers who had been treated poorly by their earlier employer hatch and ordway persuaded edgar to meet with garfield and in turn edgar persuaded garfield to tour the grand coulee site . garfield subsequently agreed to reproduce at grand coulee dam what he had done on the colorado river aqueduct project . he immediately spent 100 000 on renovating the decrepit mason city hospital and hired seven physicians . 13 unlike the workers on garfield s first project many workers at grand coulee dam had brought dependents with them . the unions soon forced the kaiser company to expand its plan to cover dependents which resulted in a dramatic shift from industrial medicine into family practice and enabled garfield to formulate some of the basic principles of kaiser permanente . it was also during this time that henry kaiser personally became acquainted with garfield and forged a friendship which lasted until kaiser s death . 14 world war ii edit kaiser field hospital in richmond california . defunct since 1995 in 1939 the kaiser company began work on several huge shipbuilding contracts in oakland and by the end of 1941 would control four major shipyards on the west coast . during 1940 the expansion of the american defense industrial complex in preparation for entrance into world war ii resulted in a massive increase in the number of employees at the richmond shipyard . 15 in january 1941 henry kaiser asked garfield to set up an insurance plan for the richmond workers this was merely contract negotiation with insurance companies and a year later kaiser asked garfield to duplicate at richmond what he had done at desert center and mason city . 16 unlike the two other projects the resulting entity lived on after the construction project that gave birth to it and it is the direct ancestor of today s kaiser permanente . 17 on march 1 1942 sidney r. garfield & associates opened its offices in oakland to provide care to 20 000 workers followed by the opening of the permanente health plan on june 1 . 18