In an effort to cut costs and consolidate management, Kaiser Permanente will shift oversight of its Southern California operations from Pasadena to Northern California, company officials said last week.
The move will likely mean job losses locally, Kaiser officials said, but they could not say how many employees would be affected.
“No doubt fewer of us will be here,” said Kaiser spokesman Jim Anderson. “Losses, yes. Great losses, no.”
Anderson said the seven-story building at 393 E. Walnut St. would likely remain open as an administrative center for Southern California.
Anderson said there are about 1,500 Kaiser workers in Pasadena, and another 900 to 1,000 at other administrative facilites around L.A.
The move is scheduled to begin in the fall and be completed by year’s end.
The non-profit managed care company, which operates the state’s largest health maintenance organization, had announced in January that it would consolidate its Northern and Southern California operations, but had not said where the new statewide headquarters would be.
“Now it’s been decided,” said Kaiser spokeswoman Cynthia Harding. “Practically, it means that our senior leadship of the Southern California division will now be located primarily in Northern California.”
Kaiser employs about 20,000 full-time people in Southern California. The vast majority of those will be unaffected by the consolidation, Harding said.
The move comes on the heels of other corporate dislocations that have diminished L.A.’s presence as a corporate headquarters town.
First Interstate Bank, Security Pacific and most recently Great Western Bank all have been acquired by out of town companies. Similarly, Packard Bell, Thrifty Payless Corp., Western Airlines and Pacific Telesis Group have all moved from L.A.
In Kaiser’s case, the consoliation is intended to eliminate management overlap, to give Kaiser greater leverage in purchasing supplies and in negotiating with employer groups, and to improve customer satisfaction.
Because the company’s corporate headquarters are in Oakland, Harding said it made sense to locate the consolidated California division there.
The move should have no negative affect on Kaiser members in Southern Califronia, according to Peter Lee, director of the HMO Consumer Protection Project at the Los Angeles-based Center for Health Care Rights. In fact, he said, consumers could ultimately benefit.
“Unlike a merger of, say, PacifiCare and FHP or of Health Net and Foundation, which had the potential of impacting consumer choices, this consolidation has the potential of reducing what is already low overhead on administration,” Lee said.
Jim Lott, head of government relations for the Healthcare Association of Southern California, said the move is a smart one for Kaiser. Combining the company’s 2.3 million Southern California members with the 2.5 million in Northern California will give Kaiser enormous purchasing power.
“And I don’t see the location of their office having any impact on how Kaiser manages their practice here,” Lott said. “L.A. will never be ignored by them.”
