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Curing the U.S. Healthcare System
Kaiser Permanente President Bernard Tyson Offers Model for Reform

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By Tim Akin

With the landmark Affordable Care Act upheld by the Supreme Court as healthcare spending skyrockets to more than $2.7 trillion this year—nearly 18 percent of the U.S. GDP—medical costs are big pocketbook issues for government, businesses, and both insured and uninsured Americans.

Despite investing more per capita on health care than any other nation in the world—nearly $5,000 per person per year—the outcomes don’t match up. The U.S. ranks 27th out of 30 industrialized nations for life expectancy at 77 years; lags behind 40 other nations in infant mortality rates; and is in the middle of the pack with mortality due to heart disease at 106 deaths per 10,000 people, according to the Kaiser Family Foundation.

Kaiser Permanente President and COO Bernard J. Tyson calls it an “inefficient, broken” system based on “perverse incentives” that “cripples innovation” and wastes $800 billion annually on health care that “doesn’t make us healthier.”

Appearing as a Dean’s Distinguished Speaker in San Francisco in January, Tyson presented an eye-opening overview of the nation’s lopsided healthcare distribution system, in which 80 percent is spent on 20 percent of the population for end- of-life care, chronic illness and acute care.

Headquartered across the bay in Oakland, Kaiser Permanente is the nation’s largest nonprofit integrated network, serving more than 9 million members in nine states and the District of Columbia. Tyson oversees more than 48,000 nurses, 37 hospitals, and 600 other medical buildings, partnering with more than 16,000 physicians.

Iconic industrialist and shipbuilder Henry J. Kaiser founded Kaiser Permanente in 1945 to provide affordable and high-quality medical care for his companies’ workers and their families. “More than 60 years later, we are still trying to carry forward that mission—it’s in our DNA,” Tyson said.

“We work very hard on prevention and early detection,” Tyson said. “Investing upstream helps our members and is much more efficient.”

Tyson said Kaiser Permanente’s market-leading stake in cutting-edge technology and data analysis are key to “connected care” that includes 24/7 access to electronic healthcare records, registries that track care gaps and one of the world’s largest online medical libraries. Attracting management talent is crucial, Tyson said. Kaiser Permanente is a top employer of UC Davis MBA alumni and part-time MBA students, and its Sacramento Service Area has supported the School as a Business Partner for more than 16 years.

“Health care in America is performed on the back of a disjointed, disconnected paper system—that’s a dangerous proposition for the American people,” Tyson said, holding up his iPhone to unveil the latest technological leap for Kaiser Permanente members. “We’re now in the app business: your medical records go with you wherever you are.”

Tyson said ingenuity and innovation focused on quality, accessibility and affordability of health care are necessary for meaningful reform. “We can get there in several years if we re-engineer care, make care safer, connect care, re-price care, computerize care data and regulate a few key pieces of care,” he said.

Tyson outlined Kaiser Permanente’s three principles of reform: universal coverage, care delivery reform and a focus on prevention and community health.

“We are big enough to serve as a case study for the rest of the country,” said Tyson, sharing a slide with a ringing endorsement from President Obama: “…if we could actually get our health-care system across the board to hit the efficiency levels of a Kaiser Permanente…we actually would have solved our problems.”

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