Going (for) broke

Healthcare will bankrupt us, if we fail to focus on patients, says former Kaiser Permanente CEO George Halvorson

Ten years ago, the Journal of Healthcare Contracting visited with then-Kaiser Permanente CEO George Halvorson following the publication of his book (with co-author George Isham) Epidemic of Care: A Call for Safer, Better and More Accountable Health Care. Today, though retired from Kaiser Permanente, Halvorson continues to call for a better, more efficient healthcare system.


George Halvorson joined Kaiser Permanente in 2002 after serving as CEO of Minneapolis, Minn.-based Health Partners, a vertically integrated IDN linked to a financing system. Ten years ago, he spoke with the Journal of Healthcare Contracting about the shortcomings of the U.S. healthcare system, particularly its inability to use data to ensure high-quality, consistent, and safe care. To read the words of that interview today is to appreciate his prescience. Some excerpts from the 2004 interview:

  • “The key to making disease management a major market force is to have buyers use [their] purchasing power to select and use organizations that manage disease. We’re counting on that happening. We’re focusing our resources on Kaiser Permanente HealthConnect, our new electronic care support information system. [KP HealthConnect] may well be the most important clinical tool we’ve ever implemented…. It will replace our paper-based medical records with electronic medical records, thereby improving the quality of our care, providing consistent and better coordination of care, and increasing our research capabilities.”
  • “As more and more get involved and educated about the problems surrounding the American healthcare industry, we think the answer will be obvious: that healthcare needs to be re-engineered. Once that conclusion has been reached, the next step in the process will be to computerize the entire system, providing complete and timely information, and making the system interactive for both doctors and patients.”
  • Without good data, the quality marketplace is limited to using rough surrogates of process measurement – usually not at consumer-useful levels. With good, solid computerized medical data, buyers and consumers will finally be able to make quality-based purchases of care.”
  • “It’s time for an Industrial Revolution for healthcare. We’re the only industry that attempts to improve quality by micro-managing various pieces of the process entirely out of context with the others. That’s why an automated medical record is critically important to create a true quality-based marketplace. At the same time, it will be only as helpful as the people who use it.”

Follow the dollars
Though retired from Kaiser Permanente, Halvorson remains a loud voice in the healthcare discussion, as evidenced by his newest book, published in 2013, Don’t Let Health Care Bankrupt America: Strategies for Financial Survival. He strongly believes – as he did 10 years ago — that electronic medical records can help providers offer high-quality, preventive, integrated care, at a lower cost. And he speaks from experience, having implemented such a system at Kaiser Permanente.

“We obviously cannot afford the cost trajectory we are on now,” he writes. It’s true that U.S. healthcare produces its share of miracles in patients’ lives every day. “[But] it isn’t right for care costs and health care expenses to financially destroy the lives that have been personally saved by the care.” As it is, healthcare costs are sucking money from other essential services – e.g., infrastructure, public safety, education, etc., not to mention patient’s personal savings, he points out.

As he did 10 years ago, Halvorson bemoans the disconnect between the cost of care and the quality of care. Patients and payers in the United States pay more for prescription drugs, CT scans and hospital stays than those in any other country, but they don’t necessarily get better health as a result. “We need to stop pretending that all care is good care and that all American care is automatically the best care,” he writes. America needs to change the current healthcare business model, that is, fee-for-service, “so that we can buy what we want to buy in care delivery and spend less money in the process.”

Fee-for-service “pays well for underperformance and it actually penalizes best care in far too many ways,” he says. “Cutting the number of strokes in half is great for patients, but that reduction in strokes creates massive revenue losses for the care sites who treat stroke patients.” In other words, caring for sick people is more profitable than keeping them healthy, that is, preventing illness. And that kind of business model leads to overuse of resources – and a sicker population.

Turning the ship around

“Care today is focused far too often on the business needs of caregivers,” writes Halvorson. Hence, the overuse and duplication of services, often to the detriment of the patient. What’s needed, instead, is to place the patient at the center of the care delivery system. A re-engineered healthcare system would:

  • Allow caregivers to profit from doing “intelligent care redesign” rather than providing more care on a piecework basis.
  • Ensure that all the patient’s data is in the caregiver’s hands whenever and wherever that patient presents for care. Contrast that to today, where data is care-site-centered, not patient-centered.
  • Encourage data-supported team care, particularly important for patients with comorbidities and chronic conditions (possibly only with automated medical records, not paper-based records.)
  •  Give caregivers quick access – on an electronic basis – to the latest information on medical science. (“There is literally no systematic approach that can be used for knowledge sharing about important new scientific discoveries for care sites across the planet today,” he says.)
  • Reward healthcare providers for providing better quality.
  • Give patients easy-to-interpret information about the safety record and quality-of-care record for every hospital in the country, as well as prices.
  • Make the patient’s home the third site of care, using at-home care support tools, and data and video links.

In short, “We clearly need to make a few well designed and strategically skillful changes in the way we buy care to get the care we want to buy,” says Halvorson. And we need to start where the need is greatest – patients with chronic conditions and comorbidities, where 75 percent of the country’s healthcare dollars are spent. Patients with comorbidities are “at the top of the opportunity list for both better care and lower cost care.” What’s more, “prevention needs to be a key strategy and a major component of our cost reduction agenda.”