Exceptional Extras, March 2014

Kaiser Permanente

A medical marvel

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The past few years have been tumultuous for the health care industry, but Kaiser Permanente’s new Chairman and CEO, Bernard J. Tyson, is positive about where his company is heading.

Just south of Kaiser Permanente’s headquarters in Oakland, California, sits the Garfield Innovation Center. It’s a 37,000 sq ft warehouse in which the organization’s engineers, architects and physicians — combined with external innovation and technology experts — come together to brainstorm and bring to life new concepts in health care.

To Chairman and CEO Bernard J. Tyson, the center is reminiscent of an old James Bond movie — a secret base where inventors unveil exploding pens and ejector seats. His face lights up as he describes a recent visit.

“They were showing me the new glasses with cameras and how we’re looking at putting them into our medical practice,” he grins. He also talks about a futuristic “home” the company has built to showcase its innovations.

“When you go to the refrigerator, it monitors what you should be eating. You can pull up your whole medical team on the television and do a virtual visit. It’s just amazing.”

Tyson believes such innovations will bring healthcare up to speed with other 21st-century industries. “Right now, you can get into your automobile and know what your water pressure is, what your oil pressure is. You even can press a button and know your tire pressure,” he explains.

“Why can’t I know at any given time what my blood pressure is, what my sugar level is? How come I can’t determine whether I have too much potassium in me?” The Garfield Center is named after Sidney R. Garfield, the physician who co-founded integrated health care provider Kaiser Permanente alongside industrialist Henry J. Kaiser in 1945.

Since then, Kaiser Permanente has grown to become the largest managed care organization in the US, with 9.1 million members in eight states and the District of Columbia, more than 175,000 employees and an annual operating revenue of more than US$50b.

The organization consists of three parts: the Kaiser Foundation Health Plan, Kaiser Foundation Hospitals and Permanente Medical Groups. Overseeing it all is Tyson.


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After completing a Master of Business in Health Service Administration 30 years ago at Golden Gate University, the Bay Area native joined his local Kaiser Permanente hospital as an administrative resident. He never left.

What I signed up for was figuring out how to do good for millions of people by making high-quality care affordable.

Last summer, he became its CEO, and last December, its Chairman. “I’ve had the privilege of working all over the company,” he says.

“I’ve worked in local markets and at the national level. I’ve run hospitals, regions and divisions. I’ve worked for the health plan, the hospitals and the medical group. I was a part of the leadership when we were flying high, and then I was part of the leadership that had to lead the turnaround in the 1990s. So it’s been such a wonderful, diverse set of experiences.”

Vision and strategy

This privilege has, he says, grounded him in the fundamentals and allowed him to learn the significance of vision and strategy. He has also built strong, highly motivated teams by understanding their needs.

A career high was launching the company’s “Thrive” campaign in 2004, while he led brand strategy, but his biggest challenge was dealing with the turnaround in the 1990s, when conditions forced Kaiser Permanente to leave various markets across the country.

It was, he says, very difficult, but he argues Kaiser Permanente would not be where it is now had it not made some of those decisions. “You have to be convinced that, if you don’t do these painful things, additional painful things will happen and, at the end of the day, everyone loses.”

As a boy, Tyson wanted to be a doctor. Deep down, he says with a smile, he still does. This interest was sparked by his experience of growing up with a diabetic mother.

“My mother is still alive, and her diabetes has been managed all these years from early adulthood,” he explains. “I would say it’s because she was privileged to have access to the right care system. I saw physicians and nurses and caregivers just doing wonderful things.”

When he was 15, however, Tyson lost his grandfather, who had been a big influence in his life. “He was a locksmith, he was a minister, he was a little genius, and he was the one who got me really intrigued with reading because he told me, ‘When you read, you can go anywhere.’

“It turned out he had heart disease,” he continues. “He was having heart problems one weekend, and I knew it, but he didn’t want me to tell my mom — so I delayed making the call.

He ended up passing away, and I held when I was growing up that I was partly responsible. It turns out I really wasn’t, but I’ve often wondered if that was indirectly why I took the path of administration.

I didn’t ever want to have to face a situation again when I thought ‘My God! This person’s life is in my hands.’” Today, Tyson is responsible for millions of lives but leaves the life-or-death decisions to “competent physicians and caregivers,” offering them the support they need to save lives without encumbering them with administration.

“What I signed up for was figuring out how to do good for millions of people by making high-quality care affordable,” he says. Tyson is optimistic about the changes his industry is experiencing. He is adamant that health care in the US can be improved and the Affordable Care Act (ACA) is making a difference.

Right now, people are guaranteed care in this country. It’s called ‘show up in the emergency department.’ I call that the back door to the health care system.

“I think health care is finally being placed under the right microscope in this country,” he explains, “and fundamental questions will continue to be asked about the value proposition. Why does it cost so much to have care? Why are there so many different results around the country? Why have we not leveraged technology in the industry much more? And why is the vast majority of the industry still found within small physician office practices and the like?

“It’s a huge opportunity for us in the industry to make care more efficient and more available. I don’t believe we are already so efficient in the industry that it’s a matter of getting a few dollars out of this and a few dollars out of that.


To learn more about the impact of health care reform, see “Health matters” in this issue of Exceptional.


I would argue we have a long way ahead of us on how to be more effective and efficient.” Tyson believes the ACA is an opportunity to give everyone coverage and access to the “front door” of the health care system.

“Right now, people are guaranteed care in this country. It’s called ‘show up in the emergency department.’ I call that the ‘back door’ to the health care system.” He believes that if patients see primary care physicians before their health concerns become critical, the cost will be significantly less to everyone involved.

Tyson also thinks the ACA will force more conversations and greater transparency. “Up until now, in many circles, it was almost considered unethical to say anything about the cost of care. In the 1980s, it got framed that if you went into a health maintenance organization, you gave up quality, but you got a lower cost. We don’t trade off cost for quality — we never did.”

If Tyson had been in charge of the ACA, he would not have changed the fundamentals. “Inside of the laws of the act, you can clearly see where compromises were made to get it passed,” he adds.

“If I had done it differently, I would have thought through where some of those inherent conflicts might be, and I would have emphasized that the act is much bigger than just coverage. It’s also intended to transform the delivery system.”

Staying competitive

Kaiser Permanente is all in. “Many of our competitors picked where they would and wouldn’t go,” he says. “We went in with a strategy that [in] every market where Kaiser Permanente is, we will be competitive and get into the ACA.

“In addition, anyone signing up for Kaiser Permanente through the ACA will get the same care as if they were an employee of a large employer. The challenge for us is how to continue to make our care affordable, competing inside of an exchange while some of our competitors are trying different things, like narrow networks and limited access to certain hospitals.”

Garfield Center is vital to the growth of his industry. Part of this is the openness that communication technology affords him. He believes in being able to connect electronically at any given moment with all of his employees.

“Why would I not want to take advantage of tapping into all the wonderful minds at Kaiser Permanente and limit myself to just a small circle?” he says, laughing. “And why would I want to muffle someone from speaking their truth to me — even if I don’t agree with them?”

The future of health care, he says, is in making the industry more consumer-friendly. Tyson wants every individual who interacts with Kaiser Permanente “not to have to step out of the 21st century to do so.”

All members are linked up to My Health Manager, the organization’s electronic health record system. In 2012, members made about 14 million e-visits, communicating with their doctors online and making appointments electronically, just as they would if they were checking in for a flight or making a bank transfer.

Tyson says this saves members and staff time and money. Gathering data from patients’ electronic records is, he believes, making health care more efficient. “What protocols worked and what didn’t? We have now learned one size does not fit all and there are other factors in how you care for diverse populations. Technology has allowed us to be much more intelligent and sophisticated in options of care treatment.”