Kaiser Permanente and Our Current Healthcare System

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Healthcare sales every part of this product by the piece it's a piece work system, and because it's a piece work system, if you change any piece, you lose revenue. Every other industry sales a product that's a package so what we've done is we've created a very bad business model, and that this business model cripples continuous improvement.

No industry ever reengineers against its own self interest. So we need to change where we buy care, it's silly to buy care in a way that pays for screw ups, pays for mistakes, it pays for bad care. We have to change where we buy care, we have to start buying care by the package. It's clearly a circular system, we wait until someone is sick, and then we trigger the fee schedule and we start paying, we pay $2.7 trillion every year in care for pieces of care, and if we transform that and start paying for packages of care, start paying for the total care, then we will have safer care, better care, better care outcomes, and cheaper care.

Kaiser Permanente is vertically integrated. We have all of the pieces, we have the hospitals, we have clinics, we have labs, we have pharmacies, we're actually bigger than 35 states in 140 countries, so we take care of a large population of patients with our own caregivers, and because we have that model, we've been able to computerize pretty much every aspect of care.

The difference between us and everyone else is cash wealth, we get paid an entire lump sum to take care of the entire patient, so we can therefore use that money to take care of the entire patient. Everybody else in healthcare just get paid by the piece. It's a horrible horrible financial model.

It is hard to imagine a more perverse financial model than the one we use for healthcare and every industry follows this financial model. So why do we have what we have? We have what we have because that's what we pay for. We get exactly what we pay for and if we want to get something else, we have to pay for something else.

We believe that the future is going to be connected, that there's is going to be four sites of care, and one of the sites of care is going to be the internet and our goal is to be the best user of that fourth site of care. I don't think we even come close to the full potential of using technology to solve problems.

I think we need to go further down this path. I think we need to have in home monitor. I think we don't need to have all the technology in the hospital, we are on the cusp of a golden age of health care and if we use all these tools well, focus on the patient and free ourselves from the tyranny of the pre-schedule, we will be able to do some really wonderful things and it's going to be [xx], the doctors are really going to like practicing in that environment.