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Bernard Tyson: Workers will share in healthcare costs, but cost shifting is not sustainable

By | September 18 th,  2014 | chairman, Furst Group, Healthcare, Top 25 Minority Executives in Healthcare, executive, Modern Healthcare, Bernard J. Tyson, Blog, CEO, diversity, Gen KP, healthcare costs, Kaiser Permanente, leadership, millennials, Vision 2025 | Add A Comment

 

One in a series of profiles of Modern Healthcare’s Top 25 Minority Executives in Healthcare (sponsored by Furst Group)

 

At a recent New York Times conference on healthcare, Kaiser Permanente Chairman and CEO Bernard J. Tyson drew applause when he said that healthcare costs can’t continue to be shifted onto the backs of American workers, who have seen few wage increases in the last 20 years.

 

It’s one thing when a consumer activist or patient advocate makes a bold statement like that; it’s quite another when the words come from one of the most powerful healthcare executives in the country. In a conversation the following week, he elaborated on that point.

 

“You have the American people seeing the cost of living going up every year and seeing the cost of healthcare going up three or four times the cost of inflation,” Tyson said. “They see no real wage increases and then they get stuck with the added cost that’s been shifting to them from employers and insurers.

 

“That is not a long-term solution.”

 

What does seem to be working is the Kaiser Permanente business model, in which the organization serves as both health plan and healthcare provider, with capitation helping to fund the delivery of care and hospitals viewed as expense centers rather than revenue generators.

 

“One of the moral obligations that I believe I have as a leader in the healthcare industry is to bring a lot of transparency as to why I believe our model is the best way to go,” Tyson says. “It’s a system that doesn’t pay for volume, that isn’t motivating people to produce more of something in order to get paid. What we have been able to do for almost 70 years is align the incentives of the financing mechanism with the hearts and minds of physicians and other caregivers who continually sign up to do the right thing.”

 


The healthcare industry has recently gone through a period where many hospitals were building new patient towers that executives needed to fill with inpatients to pay for. Readmission penalties have changed the rules. Now, consciously or unconsciously, a growing number of U.S. healthcare organizations seem to be emulating Kaiser Permanente as they acquire or create their own health plans in the reform era.

 

“In our system of care,” Tyson says, “you have the caregiver team all working together with aligned incentives where the physician is not making any more or less if he decides that the patient needs to be in a hospital or the patient needs to be at home with a nurse.”

 

Healthcare removed from the high-volume, fee-for-service environment has always been the goal at Kaiser Permanente, Tyson says.

 

“It’s in the DNA – it’s how the organization was built,” he says. “In his early years, Henry J. Kaiser’s mother died. He believed that she died prematurely because they were poor and couldn’t afford the right healthcare. Of all the businesses he created and all he did in his life, it’s pretty interesting that this organization is the standing legacy that continues to carry his name forward into the future.”

 

The future at Kaiser Permanente can be held in the palm of your hand, if that palm is holding a smartphone. The organization has invested heavily in information technology with the autonomy its capitation model has allowed.
“We are,” Tyson says simply, “the alternative to the mainstream delivery system that you see out there. We get a lot of people who come in to look at how we run our hospital systems.”

 

When a Kaiser Permanente member has to enter the hospital, whether through the emergency department or a planned admission, his or her electronic medical records are available 24/7 online throughout the system. That’s not a goal; it’s a present-day reality.

 

“It expedites getting to a diagnosis, and then determining what the treatment is,” Tyson says. “In the outside world, you can end up in the emergency department 12 to 24 hours before they figure out what’s going on. In our world, within 45 minutes or an hour, you can be in a hospital bed and we’re starting treatment. The whole point is to manage the quality of care and the logistics of care.”

 

With EMRs already in place at Kaiser Permanente, Tyson has the freedom to look down the road to make sure the organization is still a health care leader 10 years from now. To that end, he’s taken a particular interest in the younger employees who are part of his workforce, which numbers about 200,000.

 

“I have a particular interest in the millennials right now,” he says. “I feel that part of my responsibility is to make sure that the future generation of leaders is in the pipeline, contributing in very different ways than what I went through 30 years ago when I was growing up in KP.”

 

Gen KP, as the millennial group is called, has direct access to Tyson – no hierarchy. And Vision 2025, Kaiser Permanente’s future planning project, includes contributions from the organization’s future leaders. “I will tell you that having the millennials as part of that thought process is making us think very differently about the future. It’s refreshing.”

 

Looking more broadly, Tyson, who took the helm of Kaiser Permanente in 2013, hopes to make a wider impact in making healthcare more affordable and eliminating disparities in the U.S.

 

“I strongly believe that healthcare is unaffordable in large part because it’s siloed, and it’s running off the wrong chassis,” he says. “I would love to continue to contribute to the affordability agenda in this country.”

 

Like his comments about shifting healthcare costs, Tyson’s perspective on the topic leans toward an empathy for American workers.

 

“I think everyone breathing in this country should have the same equal rights and a level playing field for the ability to pursue life, liberty and happiness,” he says. “And the question I ask myself is, what is the role that healthcare can play in allowing people a good chance of doing that? We continue to have health disparities in this country; it isn’t a level playing field.”

 

Tyson said the changes brought by the Affordable Care Act can make a real difference in grading the surface of that field. “I think the elements are in place to put the pressure back on the industry in its transformation to produce higher quality care at a lower cost. And I know that’s possible.”

 

It’s a point Henry Kaiser would probably second.

 

Nancy Schlichting of Henry Ford reflects on the journey to quality

By | October 28 th,  2013 | 100 Most Influential People in Healthcare, Detroit, women in leadership, Macomb Hospital, Modern Healthcare, Blog, CEO, Henry Ford Health System, leadership, millennials, Nancy Schlichting, gender equity, Malcolm Baldrige, quality, Top 25 Women in Healthcare, West Bloomfield Hospital | Add A Comment

 

One in a series of profiles of Modern Healthcare’s Top 25 Women in Healthcare (sponsored by Furst Group)

 

The journey to winning the Malcolm Baldrige National Quality Award was just as important as the final destination for CEO Nancy Schlichting and the Henry Ford Health System.

 

The honor, bestowed by the office of the President of the United States, goes to a limited number of organizations each year for quality and innovation. Yet Schlichting suggested it as a goal to her team a full seven years before the system won the award in 2011. In fact, Ford didn’t merit a site visit from the Baldrige investigators until the year it won.

 

“I started bringing the Baldrige application process to our team because I wanted us to get better as an organization focusing on the important things,” says Schlichting. “The framework helps you to be a strong organization, and it forces you to become more integrated.”

 

Yet midway through those years, she and the organization had some doubts.

 

“At the same time we were going through the Baldrige process, the U.S. had its economic collapse. It was a very challenging period,” Schlichting remembers. “There were moments along the way where I think my team thought we should take a year off, but I said no because it really was more about the journey than the award.”

 

As the system persevered, Schlichting says she took another look at how Ford was presenting its story to Baldrige.

 

“I remember talking to Bob Riney (Ford’s president and chief operating officer) and said, ‘I don’t think we’re telling our story right. I don’t think people understand us. We have to include the fact that we’re in Detroit. We’re a unique safety-net organization, yet we have all these expanding suburban markets. We work differently than a lot of organizations.’ ”

 


So the application was revised. The Baldrige team was interested, and sent its team out to take a look. An exhaustive look. In all, the examiners interviewed more than 1,200 Henry Ford employees. Though Schlichting’s leadership team had put together a booklet of talking points for employees, it was pretty obvious that no amount of coaching could make an army of workers fall into step with the depth of the Baldrige visit.

 

“You can’t fake it. You can’t plan for it. That was pretty obvious,” Schlichting notes with a chuckle. “What must have come through is that we have an amazing culture and a commitment to excellence.”

 

The last couple years have brought challenges to Henry Ford as well. A planned merger with Beaumont Health System fell through earlier this year when Ford backed away after a lengthy investment of time, manpower and money.

 

“The merger was very challenging, but at the end of the day, we knew we were not aligned around culture and our values and visions of healthcare,” she says. “We had 600 people, including 10 members of our board, all working on this for a year. That was tough; I felt very responsible. But it did re-energize all of us because we realized, perhaps even more than we did before, who we are, what we stand for, and what we want to accomplish.”

 

Along with its standard of quality, Henry Ford also has gained a reputation for doing the unexpected. In Schlichting’s tenure, for example, the system has closed three hospitals over a 10-year period, yet doubled in size. As a math equation, that doesn’t make a lot of sense, but Ford made it work.

 

“We had some small hospitals that, frankly, could not get to the scale where they could be profitable,” Schlichting says. “They didn’t have the clinical strengths to compete in a very difficult marketplace. When you have hospitals that are lagging, they drag down the rest of the organization. The truth is, doing a lot of things doesn’t mean you’re doing the right things.”

 

During the same period in which the closures occurred, the system’s flagship hospital grew by 30 percent in volume in Detroit (a city that shed 30 percent of its population over the same time period) and became a destination hospital for patients worldwide, especially in cancer treatment and robotic surgery. It acquired Macomb Hospital and opened West Bloomfield Hospital. It doubled the size of its community care division and grew its ambulatory network from 23 to 30 sites.

 

But beyond numbers, Schlichting is proud of the way that Henry Ford treated the people affected by the closures in the Detroit region that has endured many economic setbacks.

 

“When we closed the hospitals, we did a better job of it each time, especially around the people. We found jobs for almost every one of those people within our system, because I did not want to lay people off at a time when unemployment in this market was over 10 percent. A lot of our employees were the sole breadwinners because their spouses had lost their jobs. The last thing we needed to do was to make their lives even more difficult.”

 

Schlichting credits her own long-term success to having good mentors. In fact, she was promoted to her first COO position when she was just 28. She’s not sure that today’s millennials could get such an opportunity in today’s market.
“Unfortunately, too many baby boomers are hanging on too long today,” she says. “It was a different time when I was coming up through the ranks. And while there certainly were a lot of older people in jobs, I think there was a greater openness to younger people.”

 

Schlichting has written forcefully about the need to provide more chances to young healthcare executives.

 

“I hear a lot of complaining from my generation about millennials, and I keep saying to them, ‘You’ve got to be kidding me! These people are fantastic,’ ” she says. “They are more community-minded, they are more interested in the urban core, they embrace diversity, they connect better with people easily and seamlessly even if it’s through different technology.”

 

She sees similar obstacles for women executives. Her work at Henry Ford has earned her many awards, including Modern Healthcare’s Top 25 Women in Healthcare and 100 Most Influential People in Healthcare, but she is impatient for gender equity to become more of a reality.

 

“I’m still disappointed in our industry,” Schlichting says. “There are a lot more women working in our health systems, but not very many women leading them. One thing I’ve tried to do is help young people and women understand what it takes to succeed. I don’t sugarcoat it.

 

“I was raised by a mom who said, ‘I don’t care what other people do; I care what you do.’ So if somebody else was getting a break that I wasn’t, I tried to focus on myself and not worry about everyone else’s career.”

 

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