Santa Cruz now has 3 Kaiser Permanente facilities that have been doing well. The cost of insurance is much less expensive compared to the other carriers in town. Because of this, businesses have been interested in switching their small business and large business insurance over to Kaiser.
Statistics show that employed people are more healthy than the unemployed. So, because Kaiser has entered the market, healthy and employed individuals are now going to the Kaiser facilities for treatment. Kaiser is then sending those patients over the hill to San Jose hospitals or to Watsonville hospital. This can have a major impact on the Dominican Hospital in Santa Cruz.
Because healthy people are leaving town for their hospital visits, more unhealthy, and uninsured locals will be going to the Dominican Hospital.
The Dominican Hospital is losing its healthy and paying patients.
Kaiser has a great business model, and it is a financially responsible move on their part to outsource to their better hospital systems in San Jose. However there are side effects and it'll be interesting to see what happens to our Santa Cruz hospital. They may need to innovate, they may need to outsource as well, or create new systems to ensure that the doctors working there are the best and receiving patients who can afford what they're in the hospital for.