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Kaiser Permanente's Chairman Retires : * Health: Chief Executive David M. Lawrence will succeed James A. Vohs, who helped the HMO become the nation's largest and perhaps most admired.

March 06, 1992|SUSAN MOFFAT | TIMES STAFF WRITER

James A. Vohs, who led Kaiser Permanente from a pioneering health maintenance organization to America's largest--and perhaps most admired--private health plan, retired Thursday as chairman of the HMO's board.

David M. Lawrence, who last year succeeded Vohs as chief executive, was named to the additional post of chairman. A medical doctor, he joined Kaiser in 1981 as vice president and area medical director of the Northwest Permanente Medical Group in Portland, Ore.

Lawrence inherits the leadership of a nonprofit giant that is envied by its for-profit rivals for its successful management and dominant market presence.

As the national health care debate focuses new attention on the efficiencies of HMOs, Kaiser is looked at by many as a model, and industry analysts say it is positioned to take advantage of just about any reformed system that emerges.

But Kaiser faces some of the same problems of other health care providers under the current system. It is feeling increasing pressure from employers to keep rates down at a time when it is embarking on an ambitious, five-year, billion-dollar-a-year capital investment plan, experts say.

In a recent revolt by California state employee health benefits managers against a Kaiser rate hike, the state froze new Kaiser enrollments by its employees, highlighting the new, tougher environment in which Kaiser--and all HMOs--are operating.

"Competition will get even keener," predicted Vohs, who will remain on the HMO's board.

The career of the 63-year-old Vohs parallels the phenomenal growth of the HMO industry. He joined the labor relations department of Kaiser Industries, the giant Oakland-based steel and shipbuilding conglomerate, in 1952 straight out of UC Berkeley, after working a summer job in the company mail room.

Kaiser Permanente, based in Oakland, had started as the in-house medical service of the company. It was opened up to the public after unions demanded that workers laid off after the end of the World War II industrial push be able to continue getting care through the Kaiser system.

As head of the Southern California region in the 1960s, Vohs helped build Kaiser's presence in Los Angeles, where it cares for 14% of the population. Through the '70s, when HMOs were boosted by Nixon Administration policies, and the '80s, when many competitors entered the booming HMO market, Kaiser continued to grow and prosper.

Vohs "was one of the earliest visionaries of the HMO industry and built Kaiser into an institution that unquestionably gave its consumers value for their health care dollar," said Vivian Wohl, an analyst at Robertson Stephens.

Under Vohs' leadership, Kaiser expanded its West Coast and Hawaii operations to 13 additional states. Membership grew from 2.2 million in 1970 to 6.6 million in 1992.

With 1991 revenue of $9.83 billion and 75,000 employees, Kaiser, although a nonprofit, has revenue comparable to some of America's largest corporations, such as Lockheed, Coca-Cola and Monsanto.

Vohs is also chairman of the board of directors of the Federal Reserve Bank of San Francisco.

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