Former Kaiser Permanente CEO George Halvorson has written on THCB on and off over the years, most notably last year with his proposal for Medicare Advantage for All post-COVID. This month he was given a lifetime achievement award by HIMSS and we are running his acceptance speech in two parts. We ran part one last week, and here’s part two– Matthew Holt

We also initially have an important and continuously improving sense of the epigenetic processes that exist in all of us to develop our own responses to the world we are in at a biological level, and we should be able to use that information to improve our health and our care.

That is extremely relevant to you because it is very much a systems and coding issue to bring epigenetics into care delivery and care systems.

The magnificent, wonderful, and extremely powerful new CRISPR tool kit actually used computer like coding approaches and created a vaccine for Covid that explicitly triggered our body’s immune responses exactly as our epigenetics are naturally programmed and coded to do for other vaccine approaches.

We will be able to use that set of tools to improve our responses to cancer and multiple other diseases in a growing variety of important ways. We actually now can choose to evolve as a species because that particular tool actually allows us to change our genetic code in very channeled and intentional ways. That capability and reality is hugely important — and we will now be able to use those new tools in a growing range of ways.

We should be able to stabilize or reduce the amount of money we spend on care when we put these full sets of tools in place.

However — we also do need to become better and smarter buyers of care to make that full set of enhancements happen.

Every economic system on the planet does what it is paid to do. Care is not an exception to that reality.

That full connectivity level and organized team care for patients will only happen if we decide as a nation to stop buying all care by the piece — and if we move to paying for total care for our patients to teams of appropriately supported caregivers who are rewarded financially for continuous improvement.

Care sites everywhere in the world do what they are paid to do. They also do not do things they are not paid to do. They function as businesses everywhere, so they do what every business does in every industry and they give their customer exactly what the customer pays for.

No business in any industry uses any other model.

With that reality in mind — we all need to understand the fact that we Americans buy care very badly.

We actually have the most primitive payment model in the world for most of our care — because we only pay for most care by the piece and because the functional reality is that buying care only by the piece actually rewards bad care and it rewards care failures because care failures create more pieces of care, and that creates high levels of cash flow for business sites for care in our country.

We spent trillions of dollars on care and the approach we use now rewards bad outcomes and the way we buy care actually does not pay caregivers more when care gets better.

It creates tons of cash flow and it triggers growing profits when care is bad.

Think about what that would mean if we used it in any other industry.

The car industry would probably function very differently in the design of cars if the people who bought cars had to pay twice as much to the car builder when the car crashed, and if the people who bought cars had to pay double to the car builder when they died in a car accident.

Think about it. Would you want to fly on an airline if the airline company actually got to double the fee if they took you to the wrong airport?

Some people in politics and in our government strongly support that piece-work purchasing model for care in our country, but tend to do it for sadly dysfunctional and for very poorly informed reasons.

Our politics tend to reinforce that bad piece-work purchasing model that triggers trillions of dollars in cash flow to care sites — and most people in those settings don’t even know that is happening or understand that any alternative ways of buying care exist.

Politics on both sides of the aisle has created and sustained much of that problem of buying care only by the piece. Our current caregivers who literally receive trillions of dollars in cash flow for all those care deficiencies and care delivery flaws have people in both political parties who strongly and sometimes fiercely resist any models of payment that can actually create accountability or improve care.

Classic Medicare fee-for-service payment does not have one single quality standard because it is far too hard to measure quality when you only pay by the piece. Medicare Advantage has a couple dozen quality measures and even pays slightly more when quality is better, but standard Medicare fee-for-service does not have a single measurement — much less any quality incentives for any piece of care.

Too many insurance models echo the Medicare approach.

We could transform that entire system and we could get immediate access to better and to continuously improving care if we just started buying care with clearly designed purchasing expectation specifications by the patient as a package and not by the piece — and then imposed incredibly, continuously improving, and well-designed performance expectations about team care, about brilliant diagnosis, and about major reductions in care deficiencies to the expectations for the product.

We need to very intentionally become a competent buyer of care — not just a dysfunctional cash-rich direct payer for care with no specifications or expectations for the actual care that is paid for.

We need to buy care better to have all of those wonderful new systems and tools used on our patients. You know exactly what the problems are — because many people in this room support those care sites now.

So let’s do better.

Buying care by the month for each patient instead of by the piece transforms that cash flow deficiency — but the people who do our health care policies for both parties in every state tend to favor approaches that do not make actual care improvement a goal or a priority, because the current massive cash flow for care goes to people who support them in maintaining that approach.

So we spend more than anyone in the world on care by a wide margin, and we get poor and uncoordinated care for far too many of our patients, and we have growing levels of care expenses that make many businesses in the care business extremely rich and financially successful.

That brings me back to why I am receiving this award.

Why did we actually do better systems at Kaiser Permanente than the rest of the world has?

Cash flow matters.

Kaiser Permanente is paid by the month for every patient, and they tend to have better care teams, better diagnosis, better treatment plans, better patient connectivity and better care data, because being paid by the month rewards and funds all of those approaches and tools.

The exact Kaiser model isn’t needed everywhere. But buying care by the patient and not by the piece is needed everywhere.

What is needed for our country is to have our major payers buy all care from well-organized plans and buy it by the month and not by the piece — and to have clear and continuously improving expectations about care outcomes, team care, data availability for care, and linkages to care.

The systems people at HIMSS know exactly what would happen if we started looking at the total processes of care, and not just the pieces of care in our system designs.

The golden age for care systems would be accelerated and reinforced and enabled and funded if we changed our payment model for care, and very high numbers of caregivers would love it because they really do not like delivering less than optimal care. They would prefer to be rewarded for saving lives rather than rewarded for failures in care.

We also need to teach everyone the realities of our epigenetic programming for key areas of development for each child born in our country.

Epigenetics — not genetics — determine a huge portion of the wealth gaps and the painful income gaps and even some of the incarceration gaps we see in our country today.

The first two years of life have huge epigenetic impact on each and every child and the people who run the education system for our country tend to be completely oblivious of that reality. It isn’t even on their radar screens—and they will not fix our schools until they put that science right in the center of the screen in each community and setting.

The children who get brain stimulation from simple direct contact with adults in those first two years have billions and trillions of neuron connections happening in their brains that strengthen the brain of each child and that last for life.

The children who do not get those interactions in that first two-year time frame actually do not have a similar opportunity to catch up with neuron connections later in life because the epigenetic reality is that the brain for each child from each group actually changes at age 4.

After age 4, life changes for every child. People don’t know that, but it is true. Systems people who do process thinking need to look hard at that information and understand what it means for all of us.

The brains physically purge themselves of neuron connections at age 4.

There is no functional way to catch up for each child who is behind at age 15 — because the epigenetic process needed to make the neuron connections for each child ended much earlier. We need to help every child from every group at 15 months and we cannot wait until 15 years have passed and have our high schools do that heavy lifting, because that opportunity is gone by that time.

Learning readiness at age 4 is needed for our schools in America to succeed.

Nothing else actually can succeed for those massive areas of failure.

We need success for our children.

We have major learning gaps in our schools. In many schools, fewer than 60 percent of the students can read. In a number of major school systems, only 15 to 20 percent of the children can do basic math.

We currently have massive wealth gaps and we have massive earning gaps in America that have deep roots in a wide range of inter group realities.

We know that the average African American family and the average Hispanic family has a net worth, after Covid, of roughly $20,000 per family — and we know that the average Euro-American family now has a net worth of $200,000.

That is hugely inequitable and it is painful — but we now know that our epigenetic realities are extremely relevant to that process because we know from sheer practicality that we will not close those earning gaps or close those massive wealth gaps when a majority of the people at the low end of the gap cannot read.

Closing those wealth gaps for people who cannot read is wishful and hopeful thinking that verges on pure magical thinking

We know that reading to children in the first two years of life has a huge impact and that neurons connect by the billion when that happens.

We know that 60 percent of the Hispanic children in a California study who had books in their homes in those first years were learning ready at kindergarten — and the Hispanic children in the homes with books learned to read in high school, compared to less than 40 percent of those children being learning ready in the homes with no books.

We also know that a majority of the children in our Medicaid families in America do not have a single book.

The majority of births in America this year will be in Medicaid homes. That actually gives us a major opportunity. We can easily afford to put the right books into all of those homes and we can have Medicaid support that process.

If we really believe that Black Lives Matter — then we need to build on the epigenetic realities that exist for every child, and we need to get adequate numbers of books into those homes.

The WIC program for low-income children in Los Angeles got books into Medicaid homes and they had up to 70 percent of those children learning ready at age 4.

We need to help kids everywhere.

We need optimal systems everywhere as well.

We are on the cusp of a golden age for health care systems. We will not take full advantage of that golden age if we continue to buy care badly and if we continue to have far too many children on the wrong trajectories for their lives.

So, thank you for this award.

Let’s use this opportunity to build the right systems for both payment models for care and support models for our children going forward from here, because it clearly is the right thing to do — and doing the right thing is clearly the right thing to do.

George Halvorson is Chair and CEO of the Institute for InterGroup Understanding and was CEO of Kaiser Permanente from 2002-14. The full transcript of this speech can be found here.