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Kaiser Permanente CEO Tyson on the future of healthcare

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Kaiser Permanente CEO Bernard J. Tyson
Kaiser
Permanente CEO Bernard J. Tyson speaks on a panel in
2015.

Reuters

  • The lines around what defines a healthcare company have
    been changing drastically with a slew of mega-merger deals like
    CVS’s proposed combination with Aetna and Cigna’s deal with
    Express Scripts. 
  • The bets CVS and others are making is that the future
    of healthcare won’t be in the hospital any more. It’ll be at
    pharmacies, or other places you frequent every day and then
    eventually, simply in your home.
  • The future of healthcare is the home, Kaiser Permanente
    CEO Bernard J. Tyson told Business Insider. 

The boundaries of the healthcare business are changing.

Healthcare companies have started to move into new lines of
business, with pharmacies buying health insurers, health insurers
acquiring medical practices, and hospitals getting into the

generic drug business.
No two combinations look exactly the
same.

It’s part of a push by healthcare companies to both cut costs and
gain more control over patients. At the same time,
large tech companies are eyeing
 ways to
disrupt healthcare, and the industry faces new kinds of
medications with high costs. 

But for some companies, like Kaiser Permanente, they’ve
encapsulated seemingly different aspects of the industry and had
them under one roof for decades now. The
nonprofit healthcare company has been around since the 1940s
and has both a health plan and a hospital, and members see the
doctors Kaiser Permanente employs in network. The
company’s model 
is
a favorite of Berkshire Hathaway vice chairman Charlie
Munger
 and others who
see it as the future of healthcare in the US.

Bernard J. Tyson, the CEO of Kaiser Permanente, sees these
changes as moving toward a system where companies have more
control over how healthcare gets paid for.

“Everyone is vying for what I call their piece of the
dollar,” Tyson said. “As you start to see the integrations,
vertical and horizontal, what you are seeing are the economics
behind it saying, ‘I want to own more and more of that dollar, so
then I can influence more and more of the health system around
it.'”

As part of that, companies are getting creative to stay
competitive. 

“I think when you look at this inflection point that we’re at,
you have some big bets or bold moves,” he said. 

For example,
the CVS-Aetna merger would combine a 
health-insurance
business,
retail pharmacies, and a pharmacy benefit manager,
which negotiates prescription-drug prices with
drugmakers. This gives CVS a lot more control over how
people access and pay for healthcare, with the aim of making
pharmacies the “new
front doors of healthcare
” instead of going to the doctor’s
office or hospital. 

Kaiser Permanente, for its part, has been running urgent
care clinics out of Target locations in southern California,
which its members can use. 

“We know there’s some benefit to it,” Tyson said. “The
difference with ours is that it’s connected to a whole healthcare
system.”

Eventually, though, he sees it going further than the pharmacy
and into the home itself. 

“The future is the home, and the home of the future is going to
be not just a place called a home. It’s also going to be a
medical site,” Tyson said. “The whole shift thinking about what’s
the ecosystem around individuals in their own setting is the
significant difference that we are going to see over the next
decade.” 

For example, Kaiser’s managed to make a procedure like a hip
replacement just a one night stay in a hospital, versus the one
to four days you might typically see. But through Kaiser,
patients get sent home after surgery with nurses and physical
therapists.

“Seeing other health systems doing things that we are doing or
have done, or are starting to change, for us is a breath of fresh
air for the entire industry,” Tyson said. 

What’s keeping people from becoming Kaiser

Because Kaiser Permanente is both the insurer and the firm
caring for those covered by that insurance, it’s organized to
keep its members healthy. Members pay monthly premiums, which in
turn cover their healthcare that they use within Kaiser
Permanente’s network. The healthier its members stay, the less
Kaiser Permanente has to ultimately spend on the more costly
aspects of healthcare, like emergency room visits.

That’s not exactly the case with other parts of the health
system. Along the way, it seems as if these integrations are
trying to take cues from Kaiser Permanente. As Tyson sees it,
there are a few hurdles that stand in their way.

The first: deep investment. 

“We go deep, we’re not shallow,” Tyson said. “There are
investments that we make in our communities around the
country.”

The second is the network of doctors and caretakers that
Kaiser Permanente employs. Tyson said the company gives them the
freedom to practice medicine without having to abide by whatever
a health plan will reimburse for. Pulling that team together
isn’t easy. 
 

“That’s not magic, that’s hard work to make that work together
and make sure there’s great harmony going on, which we do,” Tyson
said.

And lastly, Kaiser Permanente isn’t based on a fee-for-service
model in which doctors are paid by health insurers based on how
many visits they have. So unlike companies like health insurers
or hospital providers, Kaiser Permanente doesn’t have to
fundamentally change the way it’s structured. 

“We don’t see where we have to flip the switch,” Tyson said. “We
get paid to do what is in the best interest of the members who
pay us to keep them as healthy as possible.”

See also: 


Business Insider Intelligence Exclusive FREE Report: The 5 Ways AI Will Change U.S. Healthcare


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