KAISER PERMANENTE: Building $2B Internet Network

      Kaiser Permanente, hoping to gain a competitive advantage in an increasingly cutthroat market, has launched a $2 billion project to move all its administrative operations to the Internet. The insurer's efforts, profiled in the current issue of Business Week, include creating digital medical records, electronically linking its hospitals, clinics and physicians, and setting up customized Web sites for major clients and administrative purchasing. CEO David Lawrence hopes that building a more efficient electronic "central nervous system" will help the insurer improve quality of care while saving "tens of millions" of dollars per year. In the Northwest region, where the new network is already in place, Kaiser reports it has cut drug costs by 20% and eliminated the "vast majority" of tests repeated due to lost or illegible paperwork. Industry analysts predict that other health plans will soon be forced to follow Kaiser's example, as market pressures intensify and patients increasingly demand access to additional services and information (Gantenbein/Stepanek, 2/7).