not-for-profit tax status be only for strictly
Most people in the world think of a not-for-profit
entity as being in
existence for the primary purpose of doing good for the community or on
a much larger scale - for the world as a whole. The terms
or non-profit bring to mind the Red Cross, Goodwill Industries, The
Army or even Amnesty America and it's affiliates. We tend to think of a
non-profit as being an altruistic enterprise that dedicates all of its
efforts towards acts that benefit others.
Some businesses have taken abusive advantage of
the various state and
US tax codes to declare themselves a non-profit corporation. This means
that only a portion of a non-profits' income must be donated to the
to qualify. This donation or contribution may be made in the form of
of goods, or of donation to another non-profit corporation and/or
The following presentation is a graphic example of
a corporation stretching
the non-profit loopholes until they are big enough to drive
the Titanic through.
Is Kaiser Permanente Really A Not-For-Profit
The IRS doesn't even recognize them as an entity
so I do not understand
how they can say they are a Not-For-Profit Organization.
After you read the content of this web page, if
you are so inclined,
we encourage you to follow this link:
which will take you to The People's Email Network where you may voice
your opinion on this topic. At the same time you will be
Congress know where you stand on this issue and what you think they
do about it.
Is Kaiser Permanente
Really A Not-For-Profit Organization?-
The IRS doesn't know who they are so we do not understand how they
can say they are a Not-For-Profit Organization.
Is This Self
Proclaimed Not For Profit Which is Really
Three Separate Companies Actually an Impostor?
While it appears that Kaiser and the for Profit
Permanente stretch the
truth it is vitally important that Kaiser be absolutely truthful
they are trusted by patients with their lives. Firemen and Policemen
held with high standards of ethical behavior. Kaiser and the
should be held to a higher standard of behavior because they
with life and death issues.
Kaiser Permanente is a (fictional entity) - a
trade name. It is composed
of not-for-profit and for-profit companies. In our opinion the brand
Kaiser Permanente is deceptive and intentionally misleading when
represent themselves as a not-for-profit organization. In our
this misrepresentation is a clever marketing gimmick designed to
Kaiser Permanente as a health care provider with no financial
(or motives) and with only the pure purpose of benefitting the health
of the Kaiser member.
There is no tax status for the brand name Kaiser
Permanente. The IRS
does not recognize them as they are not listed as an organization or
in IRS records.
INTRODUCTION - By
Dr. Charles Phillips
1. Kaiser Permanente - a three part
organization - originally
developed as a profit system between two men - Henry Kaiser, Sr. and
Garfield, MD; both were millionaires, Dr. Garfield making
in profit in four years during the depression from his (pre-Kaiser)
2. The reorganization of the prepaid
health system came in about
1948 per Dr. John G. Smillie's book on Kaiser - "Can Physicians Manage
The Quality and Costs of Health Care? - The Story of The Permanente
Group" page 77 - 4th paragraph down - "For tax reasons, it was
to establish clear-cut distinctions between the Foundation, a nonprofit
trust, the hospitals, a charitable corporation, and the
a profit making partnership. Since Garfield had a proprietary
in both the hospitals and the medical group under the previous
structure, it was necessary to buy him out of the hospitals, which
J. Kaiser did, and to restructure his proprietor-employer relationship
with the other physicians."
3. All of the original names included
"Permanente" (named for
a year-round small river in Los Altos - the Plan, the Hospitals, and
Medical group; in 1952 the names changed to the Kaiser
the Kaiser Foundation Health Plan, and the Kaiser Foundation Hospitals
4. The Permanente physicians, not
wishing to look like Kaiser
employees, kept the name of the Permanente Medical Groups, though that
displeased Henry Kaiser and the legacy he wished to create. (Pages 115
5. The division of profits between the
Hospitals and the Permanente
physicians occurred after after "3 days of continuing and frequently
discussion" (page158) at the home of Henry Kaiser on Lake Tahoe; the Tahoe
ended up with a formal division thereafter of the following: "Excess
would be equally distributed"
between the hospitals and the
6. The same Tahoe
I agreement made sure that the physicians could be present
the Health Plan board and the Hospitals Board, the composition of the
being the same; in 1998 there was a reaffirmation of the
and acceleration of physician power in the Tahoe
II (and also at http://www.natpact.nhs.uk/uploads/BobCrane.ppt
The Bob Crane Power Point Presentation ) and (http://xnet.kp.org/permanentejournal/winter00pj/map.html)agreement
setting up the National Partnership Committee.
7. The flow of money from Plan profits to the
individual physician in
retirement - half of the expected $1.5 billion profit of 1994 going
way - is a subject that has been kept as secretive from the public as
missile launch codes of the President;
the Documentation Shows
Permanente claims to be a non-profit
organization which is recognized by the IRS.
Permanente is composed of Kaiser Foundation Health Plans
corporations), Kaiser Foundation Hospitals (a nonprofit, public-benefit
corporation), and the Permanente Medical Groups
"Today, we are the
largest nonprofit health care organization
in the United States, serving approximately 8.2 million people in nine
states and the District of Columbia, thanks to the dedication of some
employees and physicians.
Page 8 of IRS form Form
990 year 2002 -
Why the Kaiser Health Plan - not the Permanente is a non private
12. An organization that normally receives
(1) more than 33 1/3% of
its support from contributions, membership fees, and gross receipts
activities related to its charitable, etc., functions-subject to
exceptions, and (2) no more than 33 1/3% of its support from gross
income and unrelated business taxable income (less section 511 tax)
businesses acquired by the organization after June 30, 1975.
are not a
non-profit. Check for yourself at the IRS:
The only listing using the words Kaiser
Permanente is a division of
Kaiser Foundation Health Plan - The
Group Health-Kaiser Permanente Community Foundation
to Form 990 year 2003 - The Group Health Kaiser Permanente Communitty
in Seattle, WA.
Group Health describes themselves an an affiliate of Kaiser. Not a
affiliation--unique in the Kaiser Permanente family--creates
nonprofit company, Kaiser/Group Health, to oversee and coordinate Group
Health and Kaiser Permanente Northwest. They make up the Northwest
Each of the local organizations retains its own governance system and
responsible for activities such as quality assurance and health care
Because of the planned and subsequent accomplishment of an affiliation
between GHC and the Kaiser Foundation Health Plan, GHC initiated the
corporation, GHP. GHP is a professional service corporation whose
shareholders are physicians, physicians' assistants, certified nurse
and other professional health care providers. GHP was granted corporate
status by the state and the professionals began providing health care
shareholders on or about December 31, 1997. Under the law, such a
must have all of its shares of stock owned by the professionals.
NO. 98 20064
a a non-profit when it has over 25 BILLION dollars(and growing) above
costs since 1991?
From Washington State:*When one corporation
exercised virtually complete
authority and influence over a second corporation, controlled the
of the second corporation, as well as the policy and daily operations
the appointment of the medical director, the second corporation is a
of the first under the definition in WAC 296-15-023. ….Group Health
P.C., 98 20064 (2000) http://www.biia.wa.gov/self.htm
"Kaiser tries to escape its reality of being
a prepaid health plan allowed
by Congress to ration health with ERISA
It tries to get away from the HMO term and create brand logo myths far
from the truth. One false image is that "Kaiser Permanente"
judged by the IRS to be non-profit. A second false image is
the physicians are salaried and independent of bean counters.
one newspaper in the country wishes to investigate either concept,
because the Kaiser Family Foundation contributes money directly to
reporters, National Public Radio, etc. And Kaiser Permanente
ads in almost all newspapers in their care regions.
But the ad approach does pull the IRS in due
to IRS silence on both
issues. Certainly it is not for lack of knowledge
by the IRS.
The IRS knows full well that it never gets any Form 990 for Kaiser
because it is not a business entity. And the IRS has had
with the physician profit systems - even creating special letters - to
know that salaries are only a part of the physicians' income."
Charles Phillips, MD
TO PHYSICIANS IN THE PERMANENTE
GROUP by Morris F. Collen, M.D.
The Permanente Medical
Group, Inc. August 1985
Health Program, 0ffice
of Technology Assessment
Washington, DC 20510
From Item 3.
ALTERNATIVE PAYMENT PLANS TO TPMG
PHYSICIANS - 3-1-10
SENIOR PHYSICIANS IN A CORPORATION (TPMG, Inc.,
1982- ) - 3-3-12
In 1982, TPMG became incorporated in order
to implement an IRS qualified
retirement program with protected pension funds, and to better protect
its physicians' personal assets from seizure from lawsuits against
The articles of incorporation were carefully drafted so as to impact
as little as possible in its internal organization and operation and in
its relations with the Health Plan and Hospitals.
The hoped for result was that TPMG
physicians would continue to perform
as they did in the partnership but for them to have greater personal
In 1998 Kaiser wrote to the IRS ((LTR
9810005.html)) to get special permission to hold the
package under the Kaiser non-taxed umbrella (501)(c)(3) to be released
to the Permanente physicians as they retired. Done in this
Permanente would not be taxed as the money accrued.
This is called a grantor
trust. This was a change from Permanente
simply billing for such payouts as they occurred. (It also
my question of why Southern California Kaiser Permanente Group chose
rather than following the corporate approach of Northern California
Permanente Medical Group or TPMG, Inc.) ...... -
Dr. Charles Phillps
Page 25 of IRS form Form
990 year 2002 - Reserve for Physician Retirement Plans - End
- $1,417,880,304 Why the Kaiser Foundation Health Plan is allowed to
the Permanente physicians retirement fund other than for the sole
of not paying any taxes on it is unknown to us. The IRS has
us that it is not a IRS matter but rather a Labor Department
The Department of Labor informs us that this is an ERISA matter which
overseen by The Department of Labor. The
Employee Retirement Income Security Act of 1974 (ERISA), a
law that sets minimum standards for pension plans in private industry.
to reveal incentives for physicians
Kaiser Permanente will make public financial incentives it offers
and will not resume a program that offered call-center clerks bonuses
limit patient appointments with doctors.
disputes truth of Kaiser Permanente ads
"Clearly, there is a cookbook for medicine at Kaiser that was concealed
from the public," said Jamie Court, executive director of the consumer
group, which is based in Santa Monica. - Jamie Court
Kaiser Thrive Campaign
also information at:
The Kaiser threefold organization spends an average of $50,000,000
a year on advertising, as it cannot count on any good word of mouth
from its marginalized patients; the is direct advertising that even
in the Olympics in 2004 - basically eat broccoli and fruit and stay
Kaiser Uses 990
Non-profit images with for profit physicians obscured;
"The Permanente Medical Groups accept
responsibility of professional
care of Health Plan members; are responsible for their own physician
selection and staffing; and are legally separate entities independent
Health Plan and Hospitals"
A little chart showing where the money
clearly showing the Kaiser Permanente Money Trail - originally prepared
by California Nurses Association
While Kaiser no longer conducts business in some of the regions listed
on this chart the information is still relevant.
and the Permanente often claim that physicians
have no stock interest in the company.
Asked Questions About Kaiser
"As of 2002, approximately 95 percent of
physician compensation was paid in salary."
Look Benevolent (no KP stocks);
"Because Permanente physicians are compensated primarily through their
CEO of Kaiser recently said that Kaiser has a ''mission
not a stock dividend, which distinguishes Kaiser from the for-profits.
Kaiser's mission is to deliver affordable, quality care."
Permanente Medical Group Clearly Has Stock
From the Permanente Articles of Incorporation
3 year “path to shareholdership”
Vote at 2 years and at 3 years
Financial “buy in” - 2 “shares” of stock issues to TPMG, Inc.
Representative decision making: physician right and responsibility
to contribute to group decisions
ARRINDELL v KAISER HEALTH PLAN
Each eligible physician is allowed to purchase two
shares of CAPMG stock after twenty-four months of service, a third
share after thirty-six months, and a fourth share after forty-eight
Permanente routinely states that the
doctors are salaried employees
Brag about being Part Owners;
"I attribute Kaiser Permanente's success to the fact that
it is a physician-governed and physician-owned group.
It is a prepaid capitated system and payment
to the physicians who are directly responsible for quality patient
care and management of costs and resources. Incentives are
to encourage appropriate, cost-effective utilization while still
the best quality care. .....I consider myself, however, a
We all share in profits and loses.
states they are telling nothing but the
Permanente Medical Group
the Medical Group, we have reduced our
structure 25 percent, as it relates to inflation over the
During that period of time, we have demonstrated objectively that we
are able to improve service and quality as well.
We are in the process of restructuring delivery of health care, by
it away from individual physician and patient encounters to empanelled
multi-disciplinary teams of providers that will be accountable for
of patients 24-hours a day, seven days
Physicians and Staff of The Permanente Medical Group
July 2004 -
Membership across the Program fell by 150,000 in 2003
order to recover and grow membership, KP must improve its image among
Robert Pearl, chief executive of Kaiser, said at a private meeting that
"we chose not to provide our patients with what they desired,"
The paper's staff
reviewed Kaiser documents, including
e-mails and notes of private meetings, and found Kaiser encouraged its
doctors in Northern California to make themselves as unavailable as
to their patients in an effort to lower patient demand and costs.
"As Kaiser has gotten some $5 billion in tax
benefits in the last few
decades alone, the public deserves more than silence when it is being
At the very least the IRS could tell the overseers of the Senior
program to better review the Kaiser ads for truth. If
chooses to sleep this one through, then the government is a coenabler
equally responsible for the Wild West atmosphere it creates; and you
kill tens of thousands more people by not ordering tests than you can
a six shooter." Charles Phillips, MD
state and federal taxing agencies are also involved when the
trio at Kaiser can sell $3 billion in tax free bonds, the bond
documents ( (first series offered)(http://businesspractices.kaiserpapers.org/pdfs//bonds.pdf)
being lies as well. How about
$350,000,000 in bonds sold under the
name "Kaiser Permanente." First of all, KP can't sell bonds
only a fictitious name for the consortium of Kaiser businesses called
"Credit Group." Secondly, the lie is repeated about KP being
"For-profit enterprises may have access to capital at a lower cost or
more favorable terms than Kaiser Permanente and other nonprofit health
care systems." (page 16 - Kaiser Permanente
nonprofit grouping including the for profit physicians created a profit
of $1.5 billion in 2004; half went to the physicians for the
skill of not ordering tests. The fraud again draws in the
the bond pamphlet suggests that the IRS might change its mind
some day. The Private Letter Rulings might change. "... tax
health care providers currently are subject to an increased degree of
and enforcement activity by the IRS." So Kaiser knows that
only fool the public with the help of the IRS.
Kaiser Permanente Southern California Region, Business Plan,
1995–1997, p. 18, from Jamie Court and Frances Smith, Making a Killing:
HMOs and the Threat to Your Health, Monroe, ME: Common Courage Press,
pp. 42 and 48.
Cost Cutting Tactics
A confidential Kaiser Permanente Southern California Region Business
Plan for 1995 through 1997 reveals the mentality of corporate
in the delivery of patient services. Below are
some excerpts from the plan.
Reducing the number of patients hospitalized by more than 30 percent;
“Shifting surgical cases from inpatient to outpatient (i.e., gall
Rationing high-cost prescription drugs;
“Aligning physician bonus pay and leadership compensation to target
achievement,” (i.e., giving doctors bonuses for reducing hospital
“Implementing care paths for chest pain and stroke,” (i.e., discharging
patients early or removing them early from Intensive Care);
“Reducing staff in surgical and primary care specialties...”;
Requiring “alternatives for Skilled Nursing Facility admissions and
lengths of stay,” (i.e., moving patients into nursing homes or their
|Kaiser methods to fulfill it's
5% charity requirements.
Foundation and Hospital is a public charity with a 50% deductibility
2002 Form 990
hospitals' price lists
inflating the value of medical procedures, etc., and then providing
a prearranged cut in cost and writing it off as a charity service is
deceptive we think.
chap stick along with literature at community health care
booths staffed by volunteers is another misleading technique that we
they are using. Putting on luncheons for Seniors as a
and renting a bus to transport them is also another misleading write
2002 Form 990
Beginning page 71 - What Kaiser Foundation claims they do for the
Page 83 - specifics on Medicaid. Page 90 gives you the
the money trail on this section.
deductions may be Federal and State Funded programs on which
Kaiser accepted a legislated reimbursement lower than "list price" and
counted the difference as a charitable deduction.
over the Kaiser tax return for yourself.
Year 2002 Form 990
The Kaiser Papers