Bremerton-based KPS Health Plans is in the process of streamlining its operations, and President Richard Marks said the company is healthy and viable, poised for continuous growth.
KPS is introducing the so-called Lean model, a business system that helps implement lean practices and principles for more efficient operations by identifying value to the end customer and eliminating workflow waste through a series of steps. Some of the key principles were pioneered by Henry Ford, and in modern times Toyota is considered the lean leader in the world, according to the Lean Enterprise Institute.
“Waste could mean waiting for the next thing in the process or redoing work. What it will help us do is improve the flow of the work from the point when you design whatever it is — a product or service — all the way through to the end point, the customer,” Marks said.
Some KPS customers, as well as parent company Group Health are already using Lean. Marks said he was especially convinced it was a logical next step once he learned all the positive changes it brought at the Navy shipyard, which is one of KPS’ major customers.
In December, the organization started training employees, with the ultimate goal to train everyone so all employees can improve their work process and have measurable outcomes. A state grant was obtained that allowed KPS to use a contractor through Green River Community College who specializes in Lean.
By the end of this year, KPS plans to engage three-quarters of the workforce into a formal improvement project.
“Hopefully, the results will be visible to our customers,” Marks said, citing examples such as faster and more accurate claim processing.
KPS saw troubled times and near-bankruptcy more than a decade ago that led to it being placed in receivership in 1999. As the company was rebuilding its financial base and many felt it was close to coming out of the state receivership, it was surprised by an announcement that the Office of Insurance Commissioner tentatively accepted a purchase offer from Group Health in 2005.
Marks said the company has turned the corner, built a solid financial base, and has made — and still making — many positive changes. He said while its customer base is statewide now, they are still focused on how to best serve the local community and consider it an integral part of the business. He projects steady growth for KPS, seeing the company as a vibrant and healthy business that’s been trying to be innovative.
Marks took helm of the company officially in July 2007 after serving as interim president. He has worked for Group Health for 22 years before becoming a consultant. As a consultant for nine years, he specialized in strategic and business planning for health care and nonprofit organizations. He succeeded Elizabeth Gilje, who was credited with helping turn KPS around during the receivership.
Currently at more than 43,000 members, KPS added about 2,000 members in 2007 but lost about 1,700 in 2008 — a decline Marks said can be attributed to the economy. He noted that enrollment is cyclical for health-insurance providers, and the numbers for 2009 will not be in until January and even February. In December, he said he expected to see enrollment to go up, but it was too early to know by how much.
“As we grow, our objective is to be able to do it without adding to our administrative costs,” he said. Using Lean enterprise principles will help with that goal, he added.
The reasons behind the growth include the solid customer base among federal employees and participation in the “chamber benefit services plans” that has helped increase the business customer base, Marks said.
Asked about the competitiveness of health plan rates — which are viewed by some as less affordable compared to other insurers — Marks said it’s always a challenge to compete against bigger providers. “We would not be doing our job if we didn’t work, day in and day out, to moderate health care costs,” he said. “I think our prices are competitive, and we’ve been working on that.”
As one example, he noted new 2009 small group plans, launching Jan.1, called Solutions and Solutions Plus. The plans include vision and dental options, and emphasize preventative care.
“It’s what the small business customers have been asking for,” said Cathie Valentine-McKinney, KPS Health Plans director of Public Relations and Communications. “They were looking for a plan that’s somewhat inexpensive but also covers employees fully.”
