Labor Management Partnership Primer: A Better Way to Work January 2017

Labor Management Partnership A shared strategy for change Established 1997 as a strategy for frontline engagement, workplace innovation and performance improvement Jointly led and funded by Kaiser Permanente and the Coalition of Kaiser Permanente Unions 28 local unions in 11 internationals 115,000 union members Largest, longest running and most comprehensive partnership in the U.S. In 1997, after several years of economic challenges and labor unrest, Kaiser Permanente and the Coalition of Kaiser Permanente Unions agreed to a different approach to doing business. They established an ambitious partnership to engage frontline workers, managers and physicians, solve problems and lead change. Since then KP and the union coalition have negotiated five National Agreements based on shared interests. These agreements go far beyond traditional labor contracts. They include quality and service goals, workforce training and development, employee wellness, joint marketing, performance-sharing incentives and more. Today the partnership covers 28 local unions representing more than 15,000 workers. It is the largest, longest running and most comprehensive such partnership in the country.

Core Principles of Partnership “Health care services and the institutions that provide them are undergoing rapid change. ... Now is the time to enter into a new way of doing business…to unite around our common purposes and work together to most effectively deliver high quality health care and prevail in our new, highly competitive environment.” - National Partnership Agreement, 1997 The challenges facing health care and the sense of purpose for Kaiser Permanente and the Union Coalition are as great today as when the partnership was established.

A Winning Strategy for Kaiser Permanente Kaiser Permanente has gained: Continuous improvement in service, quality, affordability More than 11,000 team-led improvement projects in 2016; 3,100 projects to reduce costs Employee engagement and commitment Operational stability and health plan membership growth Partnership has proved to be a winning strategy for all parties. The organization has enjoyed continuous improvement in service, quality and performance since the launch of the partnership. Thousands of performance improvement projects have delivered measurable results in key areas, as shown in this pie chart. Partnership also provides an alternative way to air differences and solve problem, which in turn has led to greater stability and enabled growth. All of this has benefited Kaiser Permanente health plan members, and enabled top industry rankings in many measures of quality and service. Focus areas for improvement projects, Q3 2016

A Winning Strategy for Labor Coalition union members have gained: Industry-leading wages and benefits Employment and income security A voice for patients, a voice for workers Card-check organizing neutrality; union membership growth 1996 2005 2017 82,000 115,000 57,000 Union members have benefited as well, with excellent wages and benefits, a level of training and security not found elsewhere, and a strong voice in the workplace. In a time when the union membership in general has declined in the U.S, the unions in the Coalition of Kaiser Permanente Unions have seen their membership double in the past 20 years. Membership Growth in Union Coalition

Outside Experts Recognize LMP Success “LMP is showing there’s a better way, and that could be a model for health care.” - Tom Kochan, Sloan School of Management, MIT Leading, business, health care and academic journals and organizations have cited our partnership as an innovative model for others. This has helped us, and other organizations that look to us, better understand partnership and how to continue to improve.

Self-Managed Teams Lead Improvements ? Self-managed teams, called unit-based teams, are the platform for performance improvement at Kaiser Permanente. They are where frontline teams become engaged in learning and decision making about the quality of their work and how to do it better. UBTs are usually co-led by a union member and the manager or supervisor, and in clinical settings they include physicians. Teams are trained in problem-solving techniques like the Rapid Improvement Model and consensus-based decision making. There are now more than 3,500 UBTs in place across Kaiser Permanente. Most day-to-day work in partnership happens in self-managed teams called unit-based teams—natural work groups of frontline workers, physicians and managers who jointly identify and solve problems, set goals and measure results. More than 3,500 unit-based teams lead change across Kaiser Permanente. 7 7

Positive Work Settings Bring Results Work environments associated with high-performing UBTs have: 60 percent fewer patient falls with injuries 38 percent fewer workplace injuries 21 percent fewer lost work days 13 percent improvement in patients’ overall hospital satisfaction Teams achieving high performance have delivered measurably better results in many measures of quality, service, safety and efficiency. Source: Kaiser Permanente Organizational Research

All unit-based teams are rated on a 5-point scale of performance Targets for Team Development All unit-based teams are rated on a 5-point scale of performance 78 percent of teams rated high performing (Level 4 or 5) as of December 2016 Level 1 Level 2 Level 3 Level 4 Level 5 Pre-Team Climate Foundational Transitional Operational High-Performing Learning what a UBT is and how it works. Establishing structures and norms. Demonstrating progress. Joint leadership, improved performance. Full collaboration and measurable success. The National Agreement includes a consistent “path to performance,” summarized here, for all UBTs. At a more detailed level, the path to performance provides specific criteria for judging teams’ progress in seven dimensions of performance – including leadership, training and engagement – at each stage of development. As of year-end 2016, 78% of all teams in KP were rated high performing, exceeding the 75% goal for the year. 9

Rapid Improvement Model: Plan, do, study, act Using the “Plan, Do, Study, Act” cycle, teams set goals, establish metrics, identify and test changes, then spread successful practices. Unit-based teams use the Rapid Improvement Model (used widely in the quality movement) to set performance-improvement goals, conduct small tests of change, and track results. By answering the questions, “What are we trying to accomplish?” “How will we know that change is an improvement?” And “What change can we make that will result in improvement?” teams take a structured, data-based approach to change.

KP Value Compass The Value Compass guides decision making by reminding teams what creates value for Kaiser Permanente members and patients. Unit-based teams are guided in their day-to-day work by the KP Value Compass — whether it is conducting a test of change, making decisions, or solving problems. The Value Compass helps us implement and balance the four things that support our patients and members’ needs – best quality, best service, most affordable care and being the best place to work, so we can attract and engage the best people.

Performance Improvement Project QUALITY: Making Early Detection Easy RESULTS of patients agreed to cancer screenings Eye Care Services, Redwood City Medical Center (Northern California) This team uses prompts in the KP HealthConnect electronic health record system to book cancer screenings for eye-care patients identified as overdue for a screening.  On this page and the next three are examples of the kinds of performance improvement projects and outcomes that unit-based teams have achieved in the course of their day-to-day work.

Performance Improvement Project SERVICE: Giving Patients a Voice Neonatal Intensive Care Unit, Downey Medical Center, Southern California RESULTS Patient satisfaction scores rose from 74 percent to 88 percent one year later. To better integrate parents into the caregiving and information sharing for their newborns, this team: created “quiet time,” when parents listen and jot down notes while the outgoing nurse updates the incoming nurse devised a discreet signal if nurses needed to step away to discuss sensitive information out of the parents earshot http://www.lmpartnership.org/stories/five-minute-fix-sharpens-team-focus

Performance Improvement Project AFFORDABILTY: Common Sense Solutions Southwood Specialties, Georgia Gastroenterology department reduces costs by hiring fewer contract specialists and scheduling procedures so that: doctors perform anesthesia four days a week instead of five patients requiring anesthesia are seen only on days physicians are available nurses perform sedation, which does not require a physician

of safety concerns resolved within 90 days; 3.5 years with no injuries Performance Improvement Project BEST PLACE TO WORK: Engaging for Safety of safety concerns resolved within 90 days; 3.5 years with no injuries RESULTS West Los Angeles Ambulatory Care Pharmacy After a spate of injuries, the team took steps to encourage workers to speak up about safety concerns. They made several changes, including: monthly rounding by team co-leads ergonomic training for all quick resolution of problems

A Competitive Advantage “We have tapped into the potential of smart people all over the organization who come here every day and try to figure out, ‘How do I improve quality, how do I improve service, how do I improve affordability?’ That’s an incredible competitive advantage to our organization.” Our Labor Management Partnership has helped make Kaiser Permanente a better place to get care, and a better place to work. It has made Kaiser Permanente and its workforce stronger, set us apart, and given KP a unique competitive advantage. Bernard J. Tyson, Chairman and CEO, Kaiser Foundation Health Plan and Hospitals