Labor Management Partnership Primer: A Better Way to Work June 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 116,000 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 way of doing business. They established an ambitious partnership to engage frontline workers, managers and physicians, solve problems and lead change. Since then Kaiser Permanente 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 LMP is the largest, longest running and most comprehensive such partnership in the country, covering 28 local unions representing more than 116,000 workers.

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: Focus areas of projects started in Q1 2017 Continuous improvement in service, quality, affordability 5,290 team-led improvement projects in Q1 2017 alone; 793 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. Tens of 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, advanced our social mission and helped KP achieve top industry rankings in many measures of quality and service.

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 82,000 116,000 57,000 Membership growth in Coalition of Kaiser Permanente Unions 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.

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-Directed Teams Lead Improvements ? Self-managed teams, called unit-based teams, are the platform for performance improvement at Kaiser Permanente. They are where frontline teams engage 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-directed 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, 2016

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 73 percent of teams rated high performing (Level 4 or 5) as of May 2017 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. Teams take a structured, data-based approach to change by addressing three questions: “What are we trying to accomplish?” “ How will we know that change is an improvement?” “What change can we make that will result in improvement?”.

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.

for eye-care patients identified as overdue for a screening. Performance Improvement Project QUALITY: Making Early Detection Easy Eye Care Services, Redwood City Medical Center (Northern California) This team uses prompts in the KP HealthConnect electronic health record to book cancer screenings for eye-care patients identified as overdue for a screening. On this page and the following three are sample projects and results in each of the four points of the Value Compass – quality, service, affordability and the workplace. Thousands of such projects are completed by teams across the organization every year.

Performance Improvement Project SERVICE: Team Boosts Capacity Mt. Scott Pharmacy (Northwest) Hit by high patient volume and glitches with a new software system, the team: jointly reorganized schedules used performance improvement tools to improve workflow made stress-busting, wellness activities part of their routine

Performance Improvement Project AFFORDABILITY: Cutting Supply Costs Linen Team, Kaiser Sunnyside Medical Center, Northwest The team asked units across the hospital to help reduce the cost of their scrubs linen inventory. To meet its goal, the team: gave units that were high linen users a review of par levels to ensure they had what they needed on hand tracked each unit’s preferred scrub sizes and stocked par level accordingly, so the unit gets only what it needs

monthly rounding by team co-leads ergonomic training for all Performance Improvement Project BEST PLACE TO WORK: Engaging for Safety West Los Angeles Ambulatory Care Pharmacy After a series of injuries, the team made changes to encourage people to speak up about safety concerns. Changes included: 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