George Halvorson Transcript

[00:00:01.230] Announcer:

America’s healthcare system is almost unanimously viewed as being unaffordable, dysfunctional and severely in need of transformation, APG President and CEO Don Crane talks with leading healthcare executives, physicians and other visionaries to explore solutions to lower costs and improving quality of care by accelerating the movement toward value-based care models and away from fee-for-service. Want to be inspired by our nation’s foremost thought leaders in healthcare? Then this show is for you. Here’s your host, Don Crane.

[00:00:35.670] Don Crane:

I had a chance to speak the other day with George Halvorson, the former CEO of Kaiser Permanente and one of the nation’s most respected healthcare thought leaders. Among other things, George is one of the co-authors of the Better Care Plan, a proposal urging that the public option being discussed by the Biden administration be structured to be capitation exclusive. It’s hard to imagine a more dramatic and potentially successful boost to the value movement than a new congressionally-designed program that is built solely on capitation.

I wanted to hear his thoughts on the value movement, of course, but more than that, I wanted to hear his thoughts about amending the American healthcare cost trend in other, perhaps more readily achievable ways, including a nascent campaign to address one of the less well-known facets of social determinants, namely the campaign to motivate parents to read to their infant children. Not a payment model, not a care delivery model. This infant reading program is rooted in neurobiology and isn’t an entirely innovative and cost-effective approach to population health. It deserves much, much more attention and support. Take a listen.


Good morning, George Halvorson, great to have you with us today.

[00:02:01.070] George Halvorson:

My pleasure.

[00:02:02.480] Don Crane:

Good. I cannot really, hardly imagine anyone with a better set of qualifications for this conversation. I mean, ever so briefly, looking at your pretty amazing resume and hitting the high points, you were the Chair and CEO of Kaiser Permanente from 2002 to early 2014. Prior to that, you served as the CEO of Health Partners, a completely governed health plan and care system in Minnesota for roughly 17 years. And you chaired the American Association of Health Insurance Plans,

I think three times…must be a glutton for punishment or something. And very importantly, and we’ll get to this as well, you were the immediate past chair of the first five commission for Children and Families for the state of California, which does such interesting work, and we’ll get to that. And then finally, you’ve written I can’t keep track, George, it looks to me like about a dozen or more books on healthcare and related social issues.

So indeed, you’re well prepared for this conversation and it’s really good to have you with us. Well, let me dive on into it if I can. So, you know, always in the forefront of our thinking here at APG, for advocacy and other purposes, is really the status of what we refer to as the value movement, right? So, this is the movement away from fee-for-service to almost any payment methodology other than fee-for-service. But most particularly, the sort of destination we envision is what we use…the word we use is capitation. One could call it health budget…risk is often a word used. But where I want to go initially is just to get your take on the status of this value movement nationally. So, let me start with that question. How do you think the value movement is doing in America today?

[00:03:59.240] George Halvorson:

Well, I think we’re directionally very correct right now. We’re moving in a lot of good directions.

And I think people have a sense that we buy care badly when we buy it by the piece and that we really ought to have a more sophisticated, directional competent purchasing model for care. But it’s hard to get there for a number of reasons. One of them is that the current healthcare system generates over three trillion dollars in revenue, and that’s immensely successful as a generator of cash. And so, when the current system does well, thrives and prospers with that massive cash flow, it’s very, very hard to get people to convert to a different cash flow and any economic system does what it’s paid to do.

The only way we’re going to get the system to transform itself is to use the right kinds of purchasing tools to get there. And so, we’re going to have to start buying care by…both by the package and by the month and not by the piece. As long as we buy care, by the piece, you’ve got a strong incentive to increase the number of pieces. You have a strong incentive to optimize the price on each piece. You get a strong incentive when you buy the piece to never reengineer care in any way that actually illuminates any pieces.

And so, every other industry works really hard to engineer, reengineer, and reduce the number of expenses and moving parts in the system. And healthcare doesn’t do that because all of those bumps in the road generate revenue for somebody. And if we can do three scans for the same patient, that’s much more profitable than just doing one scan for a patient. And so, it’s actually real easy to engineer care on things like scans, to reduce the number of scans significantly and to do the right number of scans for every patient. But when each scan is done by a different care site and each care site benefits financially from doing the scan, that reengineered process doesn’t happen. And so, if we want care to be reengineered, if we want care to be optimal, if we want care to focus on the right outcomes and best practices and continuous improvement, we have to change the cash flow to do that. And the easiest way of changing that cash flow is actually capitation. And capitation is when you pay by the month for the patient. It’s basically a voucher-by-the-month capitation model.

And the reason that it easiest is because it’s very easy to keep track of, and it’s very easy to handle the cash flow, and it’s very easy for the care sites to figure out what their next month is going to be and what reengineering they should do when they’ve got that kind of a dependable cash flow. Quite a few programs have been trying to reengineer care at the pieces into…by basically pieces of care in packages and buying care in packages is a good idea. It’s better than buying care entirely by the piece. But it’s extremely difficult. It’s very, very hard to figure out what your package price should be for a diabetic because a diabetic with comorbidities is a different care experience and challenge than a diabetic with no comorbidities. And so, the question is, how do you create a package price for diabetic? How do you create a package price for any of the other chronic conditions, something like hips? It’s really easy to figure out what the package price ought to be for hip. And that market can get very competitive very quickly and make a lot of sense. But when you’re talking about total mobility and try to factor that into something, you pay for, hard to do outside of capitation. But if you pay by the month, and if you create standards and measurements of quality, then in that context you can not only pay by the month, but you can know that the care is high quality. And in that model increasingly in today’s market, doing it well involves having the consumer involved in being judgmental and discerning and informed and empowered relative to the care sites that they go to for the packages. And so, we need to get better at that and make better purchasing decisions. But it can be done, I think.

[00:09:31.400] Don Crane:

So, completely, completely agree. I mean, we at APG here, we are fervent, almost religious believers in the virtues of capitation and the evils of fee-for-service. And so, we’re hard at work trying to make that movement happen across the country. But the question is, how are we doing? And so, a little backdrop on that…you know, Sylvia Burwell, our then-secretary of HHS, a number of years ago, laid out targets by which we would be measured in terms of the proliferation of value-based payment models and care.

And we’ve not met those targets. And the ACA is now 11 years old and MACRA is now six years old. There are those and some I know you were sort of admiring the list of some of the other interviewees on this podcast that preceded you.

[00:10:23.480] George Halvorson:

Yeah, excellent choices.

[00:10:24.920] Don Crane:

Well, there’s a couple or three that have grown, I guess the word would be pessimistic, and have actually used the words the incumbents won’t do it. So, this is code for saying that the major players, the major stakeholders in American healthcare are not moving to value. And I think he and they point to the progress we’ve seen thus far being far slower than targeted and imagined. And I think maybe including a little deeper analysis as to whether it’s in their interest or not, etc., etc. So indeed, there is all of the difficulty to which you refer in making the move. But are you optimistic, pessimistic, etc.? I mean, how do you think the value movement is doing?

[00:11:16.400] George Halvorson:

I think it’s extremely difficult to move to value as a standalone factor because we can’t figure it out. We do not know what the value should be for a heart patient, congestive heart failure patient, in any way that allows us to create a functional cash flow and then channel it to only the pieces of care that are relevant to a congestive heart failure patient. That’s just too many moving parts, way too complex, too hard to do, and nobody can do the actuarial work to make that valid. And even if you do the actuarial work to make it valid, the minute you make it retrospective, you screw up a big part of your leverage. And you screw up a big part of your leverage because care systems need to be able to plan in advance. They need to know what next year’s cash flow is going to be and what next year’s income level is going to be so that they can engineer, reengineer around that. And if you’re doing congestive heart failure patients as kind of a chunk of the population, there’s too many variables that you have to get straight on to make that the optimal leverage needs to be.

But, you can…you mentioned capitation at the beginning…because the easiest way to deal with that is just to pay a capitation to a care system that has enough parts in it, a health plan, that has enough parts in it so that they can provide all of the care for all of the conditions, for all of the patients and capitate them and then let them do the engineering that does the right thing for congestive heart failure patients. And for congestive heart failure patients there’s wonderful things that could be done. You can actually cut the number of crises by two thirds by doing early interventions, identifying which patients are going down the path, what their lives are all about. You can measure things in their homes. I mean, congestive heart failure patients, people set scales. The best care systems put scales into people’s homes so they can actually monitor whether or not the person has gained even a small amount of weight. And of course, one day that’s a trigger.

I mean, there’s some really good things you can do. When that’s included in a total capitation. You can do it and it makes sense and it gets funded. But when you try to carve it out of a value-based care, separate agenda, it doesn’t make any sense and it’s way too hard to do. So, I think some of those programs are well-intentioned, but I am very pessimistic about them succeeding at that level. But I’m extremely optimistic about capitation coming to a good place, and I think that the Medicare Advantage plan, in approach, is showing in Medicare that you can actually get much, much better care, better team care, better connected care, better care planning by having Medicare Advantage vouchers, in effect, paid every month. So, don’t we have to use the right version of that in the partial versions of for value-based or not likely to work because there are too many moving parts, too complex and the actuarial validity of each cash flow is questionable. So, I’m positive on the one side, negative, pessimistic on the other.

[00:15:05.090] Don Crane:

Well, I can tell you I don’t like bundles and episodes and I agree with you on that. But I think we’ve seen the accuracy of your reaction to them. Frankly, many of them have not succeeded, particularly those that are not mandatory and voluntary…

[00:15:21.410] George Halvorson:

…but extremely well intentioned. Yeah, the intentions of the people putting those together were extremely high. And unfortunately, we had a couple of healthcare economists who wrote some documents encouraging people to think in that path, and they seem to make so much sense, and they talked about creating a new healthcare marketplace where your congestive heart failure patients could be competing with each other or the care systems across various care sites. And that sounds like it makes sense. And so, it actually stirred a lot of people down some challenging paths. But when you actually try to make that approach work in the real world, it’s impossible.

[00:16:07.160] Don Crane:

Yeah, no, I completely agree. So, let me shift off to the Biden administration and its agenda. We’ve been looking at the tea leaves and trying to discern just where and what the Biden administration will do and really with it, Congress. So, my question to you now is, what do you see in the agenda of the Biden administration or perhaps the agenda in Congress as it’s starting to kind of materialize as we talk about infrastructure bills. What do you see that you like? What do you see that you don’t like?

[00:16:43.640] George Halvorson:

Well, for starters, I really like the fact that they are taking some of the best features of Obamacare, the Affordable Care Act, and they are strengthening them and reinforcing them and continuing to make them work. The very, very best thing to, in my value set, that the Affordable Care Act did was expand Medicaid. Expanding Medicaid was brilliant. It was wonderful, it was needed, it was long overdue. We’re the only country in the world that doesn’t provide healthcare to our poor people, low-income people. And that Medicaid expansion went directly at those patients and people, millions of patients who would not have had decent care and equitable care in the last decade have gotten it because of that expansion so Medicaid expansion is absolutely wonderful and strengthening that and continuing to expand that.  The fact that some of the states have not taken advantage of it I think is really sad. And the people in those states are not happy about that. But the sort of political reasons, some of them haven’t expanded. But when I look at the Biden administration right off the top, they get that and they are strengthening Medicaid and they’re getting more money into the Medicaid business. And they really understand that these are our neediest people in many ways who really, really, really should have good care. And one of the things we’ve done, because the Affordable Care Act is we now have great Medicaid oversight. We have really good decade ago, some of the Medicaid programs were not any place you would want your grandmother to go to or your child. They have done some…NCQA standards have been applied. They have done purchasing again, capitation-like models buying care by the month, but they have cut the number of asthma crises in half. They cut the number of complications in half. They did some really good stuff on the Medicaid care delivery side. So that piece of American healthcare has gotten much, much better. And it is central to the Affordable Care Act. And the Biden people get that it’s really the right thing to do to go down the path. Second thing they’re doing is they’re strengthening the exchanges. And the exchanges they’re making the coverage in the exchanges more affordable. And that’s really a smart thing to do because the exchanges have some pretty good plans and they need to make the benefits better. They need to move off the weakest benefit. And I think they need to steer a little more toward the higher benefits. But they, I think, have a good sense that that mechanism is in place. And frankly, the exchanges…that is how Switzerland and the Netherlands and Germany buy care. If you’re in Switzerland, you go, if you were an unemployed person, you must pay part of your paycheck… every paycheck…for healthcare. And you use that to buy a health plan. Nope, there’s not one person in Switzerland who has government coverage. None. Everybody has a capitated health plan and the health plans compete with each other. I chaired the International Federation of Health Plans for a decade. I worked with the plans of those countries, visited Swiss plants. There’s astonishingly good market-sensitive plans and they are…so, from back to your question about Biden…the fact that they are strengthening our…that part of our American healthcare is going to get more people with insurance and do it in a way that looks just like what they do in the Netherlands.

That’s a good thing. So, on the quality side, I think they’re early…they haven’t…they need to look at early childhood development. Now that we understand genetics and epigenetics and we understand that it’s actually a biological process in that each of us is born with an epigenetic template and that epigenetic template plays out based on the experiences we have. So, we know that the kids who get brain stimulation in the first three years of life build billions and trillions of neuron connections, and we also know epigenetically that children who don’t get that experience fall behind and the brain changes at four…epigenetic programing, again, the brain changes at four and after four you can’t build those connections with any volume at all. And so, the kids will fall behind by four. So, we have massive learning gaps in our schools, huge learning gaps in our schools. And what we need to do is close a learning gap, but we can’t close in 15 years because the epigenetic process only allows us to close them in 15 months. So, we need to invest in all of the kids in our schools. And one of the things I keep saying is we’ve got these massive wealth gaps and income gaps in America where the average white family has a net worth of two hundred thousand and the average African American and Hispanic family, about twenty thousand. We’re not going to change those gaps if we have 60 percent of the kids in those populations coming out of school unable to read. And that’s where we are today and that shouldn’t happen. We should be getting that down to 20 percent who can’t read, but we can only do that if we go upstream and help all the kids. So, it’s a process approach. Well, let me come back…

[00:22:52.430] Don Crane:

I do want to talk about the epigenetics, George, but before I leave the Biden administration, I want to probe this one question a little further, which is the expansion of Medicaid, great idea. Achieving universal coverage…great idea. Use of subsidies to enable that, great idea. Our concern, and I’d like you to react to this is basically the leaky boat metaphor, which is to say, if you simply add more insured and covered people into the boat, if there’s leaks in it, the boats going to actually sink faster and Medicare trust funds, et cetera, et cetera, are going to be exhausted. So, I’m happy to hear you say you think that, at least in Medicaid, the leaky boat has been fixed, but has it been fixed enough to prevent the leaks? I’m worried about a future sinking of the boat if we don’t eliminate waste and get to capitation. Can you react to that?

[00:23:51.420] George Halvorson:

Yeah, we are basically, and a lot of the states capitating Medicaid now. I mean, they’re not capitating front level providers, but they’re basically, they have risk contracts for the Medicaid population in most settings now. And they are getting much, much, much better care because of that. They are doing preventive care. They’re doing proactive care. They’re going upstream in the care process. And the Medicaid programs are far better than they were a few years ago. And the particular care going down those paths with the NCQA quality measures are actually…I’m not worried about that particular boat being leaky in a bad way, because I think that there’s directionally correct work going on in that area.

[00:24:42.310] Don Crane:

Very good.

[00:24:42.850] George Halvorson:

And it will be spending about the right amount of money in that space. On the Medicare side, Medicare Advantage also takes us very directly down the path. And if we were…and the beauty of the Medicare Advantage plan is it is a voucher. And so, if we managed to have everybody on Medicare Advantage and if we set it up to make it a painless transition relative to people’s current caregivers, because changing caregivers tends to be the barrier that gets people down that path. We also then could control those costs totally and we would reengineer care much, much, much more effectively in the right directions.

And we are, I mean, healthcare is on the cusp of a golden, golden age. We now understand the epigenetics. We can…

[00:25:45.260] Don Crane:

Let me interrupt you, George. Tell me about the Better Care Plan. I don’t want…we’re going to have limited time.

[00:25:49.270] George Halvorson:

Oh, sure.

[00:25:49.690] Don Crane:

It’s really important. You have all co-authored a proposal that apparently has fallen on deaf ears, but it’s an important one that I’d like you to describe. What is the Better Care Plan? And we’ll talk about the deaf ears in a minute.

[00:26:03.160] George Halvorson:

Yeah, well, half a dozen of us, kind of a fun group…Steve Shortell…I think you know who the characters are. It’s a sort of kind of economists and wonks who have been working… the basic premise of the Better Care Plan is that whatever version that we go down the road for healthcare reform in this country and if there’s a public option, if there is any expansion of the government programs…that you must incorporate into the whatever option you pick, better care. We identify better care as being team care, database care, care where the complete data about the care is available to the patient in real time. And patients could take the data and tie it to their Fitbit data and come up with care algorithms and all of those kinds of things. But it’s an informed care data reinforce care. And we basically call it the Better Care Plan because we think that the government has been leaving out care improvement from their equations, focusing on financial and insurance issues and leaving out care delivery. And we think that’s a mistake.

[00:27:30.990] Don Crane:

So, I’ve observed that it’s built on a capitated platform exclusively. I read that as being the central part of the Better Care Plan. Am I right?

[00:27:43.000] George Halvorson:

Sort of. What we believe is that we need better care, we need better care connections, we need team care, we need all those things. And, it’s most likely to happen in the settings that are capitated. But, if you could get to those other parts and components without the capitation, that would be fine. But we do have really good way to do that. To be fair, you have to get some form of capitation to do that.

[00:28:11.490] Don Crane:

Have you had any traction with that proposal? So, I’m looking at proposals coming out, bills out of Congress now, and I haven’t seen it yet, nor have I heard the Biden administration pick up on it. Have you had any traction with that proposal?

[00:28:30.920] George Halvorson:

Very little. But I am optimistic that we are going to get more traction because there are very well-intentioned people in that continuum who are, I think, going to like the idea of making care better. And so that’s part of the conversion process over time is to get people on board with care improvement, which is why we call it the Better Care Plan. So, we are far from the end of the road on that part of the design process. And so, I think as we go forward, we will be a success if we can get people who design the next elements of current coverage to include better care as part of their thought process.

[00:29:20.650] Don Crane:

Well, you can count us among those that are interested in helping support a capital idea to be sure.

[00:29:28.060] George Halvorson:

Thank you.

[00:29:28.460] Don Crane:

To be sure.

[00:29:30.430] Announcer

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[00:29:37.840] Don Crane:

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[00:29:56.950] Announcer:

We’re back with more from APG on American Healthcare. Once again, here’s your host, APG President and CEO Don Crane.

[00:30:06.670] Don Crane:

So let me swing you to another subject that is of interest, I think, to me and to others. And that is this: As we look at the map of the United States, you see, you know, 49 states with now growing capitated integrated programs and products and experimentation and groups doing it. They do it in MA and so forth. But nowhere quite yet, like California, where over half of the population is benefiting from capitated integrated care. OK? So, this sort of picture has caused people to say, well, what’s with California? Why is California sort of the birthplace of managed care? What is it about? Is it the fruit and the nuts and the water or something? What are the elements that have caused capitated, delegated, integrated care to rise up in California in a fairly durable way, but not quite as much so elsewhere in the country? And some point to the existence of Kaiser Permanente in California, the organization that you piloted for over 10 years. And I’d like to hear your thoughts on that, because, you know, because we’ve talked the kind of question or wonderment I might have, is do we need a Kaiser Permanente in all of the other 49 states, a thriving one, to create the competitive climate, the price discipline, the lessons, whatever else, in order to create the environment for the proliferation of capitated, delegated, integrated care, as we’ve seen in California. What do you think?

[00:31:47.140] George Halvorson:

Well, I’ll speak about California first. Kaiser Permanente is a very, very, very long-term history of being in California. And the model, as you know, is completely and totally vertically integrated. We own our hospitals. We own our clinics. We own our labs, our pharmacies. We used to manufacture furniture in the past.

[00:32:12.490] Don Crane:


[00:32:13.210] George Halvorson:

Yeah. So, a lot of the hospital furniture was actually built in Kaiser factories. Henry Kaiser was an absolute genius and one of the great industrialists of the country. And he actually, there are…people argue he may have won World War Two because at the beginning of the war, the Germans figured out that they could win if they built enough U boats to sink all of our cargo ships. And they did the math and literally figured out how many cargo ships it would have to sink to orphan Europe from supplies. And they built that number of U boats and they sank that number of ships. What they didn’t count on was Henry Kaiser, who had built bridges and a bunch of other manufactured things getting into the boat business. And Henry built hundreds and hundreds of ships. And he completely…he built a completely prefabricated cargo ship. And so, the record time from the day they led, they laid the keel until the ship sailed there, rolled off into the water was four days. So, yeah, they prefabricated everything. Genius, brilliant stuff, there’s a shipyard in Oakland that has some of the old boats and it’s just really a fun thing. And they weren’t pleasure crafts. They were very, very sturdy boats. And they carried a lot of cargo. And he built them literally by the hundreds and hundreds. And he even built a couple of what he called pocket carriers. They built a couple of tiny carriers that had a couple and a couple battles in the Pacific…those pocket carriers turned out to provide necessary planes. But he basically, with those ships, made a massive difference that might have won the war and certainly made a huge positive impact. And Roosevelt at one point said that Henry was doing more than anybody in America to give us a chance to win that war.

Anyway, so, but part of what he did in his shipyards was put in a health plan. And so, the Kaiser Health Plan, just like everything else, is vertically integrated, so he hired some doctors, he built a hospital, he put in all of the right component parts. He actually went into the hospitals and engineered some of the pieces himself. One of the, he actually engineered a bassinet that could be moved more easily from room to room…a new mother…Yeah, Henry loved to invent things and loved the hospital world. But and he said at the end of the war, he said, my shipyards may not survive me, but the one thing I think that will survive forever is the Kaiser Permanente health plan because it just makes so much more sense and the care so much better. And it was. And they had, you know, one of the classic stories was when he started in one of his dams, he was building a dam and the doctors discovered that there were many, many, many people who were coming in with hand lacerations. And so, the doctor went to the worksite, took a look at the lacerations and identified the fact that people had these like three-inch nails that they were driving partway into the walls to hold the…and they were leaving part of the nails stick out. And that was actually hurting people, lacerating people. And so, the famous story said the doctor said, why don’t we do two-inch nails? So, the two-inch nails instead of three and it cut all of the injuries. That’s the Kaiser model. So, that has fed…so that flowed back into the…so, we have the teachers’ unions. We had to start the dockworker unions. A number of other unions basically supported it. So, Kaiser existed in those communities because…and this is the important thing…it had the critical mass of patients to survive. And if you don’t have a critical mass of patients, patients don’t just migrate in that direction. But if you have a ‘there there’ for them to get to…so, Kaiser has built that model…because of that model, because Kaiser was doing hospitals differently, all of the other care sites your suspicion earlier is true. Everybody has to be more effective, more efficient, more appropriately priced. And so, and when you look at how good the care is in a group setting, the temptation is there to deliver group care in other models as well.

So, yeah, California has more groups and more prepayment and the buyers like the Kaiser premium. And so, they turn to the Blues. So, the Blues there have support prepayment. So, yes, California is slightly different environment.

[00:37:38.180] Don Crane:

Well, so, fanciful question…I mean, if indeed KP is part or all of the reason that California has this pretty sophisticated capitated delegated model, I mean, should there be a discussion about funding, federal funding for the creation of mini-Kaiser Permanente’s elsewhere in the country to help create the climate, the competitive climate for the advancement of capitated care? Is that crazy talk?

[00:38:09.510] George Halvorson:

There’s an entire industry out there ready to move in that direction. All the multi-specialty care groups could become capitated. There’s some really good groups out there, vertically integrated groups that have really good care, good systems, good care, and if their cash flow is a voucher rather than a fee, they can easily, easily convert to great care. The Cleveland Clinic is partway there now with some of its business. Cleveland Clinic could easily become a Kaiser Permanente-like model. So, Kaiser, you don’t need to bring something new into Cleveland. In fact, we put something new in Cleveland and Cleveland Clinic did such a good job that it wasn’t necessary. So, the model, I think the goal needs to be to change the cash flow and then take advantage of the infrastructure that’s there rather than build it from scratch. Because it’s not…the magic of Kaiser is not that it owns clinics and has hospitals. The magic of Kaiser is that it’s prepaid and then uses that money to sustain clinics and hospitals.

[00:39:29.370] Don Crane:

So, you make complete sense. And of course, I’m in the choir here with you singing as loud as I possibly can on these very points. Let me shift here now, though, to a subject that really…I don’t think it’s gotten anywhere near enough attention. So, I’ll start by saying I think we know that something like 10 percent, if that, of our health status is determined really by medical care and that 80, 90, or some odd percent of it is determined by environmental factors, work and diet and exercise and social determinants of health. The new acronyms, SDOH is out there. And I have sort of long thought that while we need to fix the delivery system, both payment model and care model, much, much, much more should be done to really address, I guess you would call the demand side of healthcare. In other words, get the population healthier through diet, transportation, housing, and the like. And as I look at that picture, I can’t help but be drawn to the work done by you and others with respect to early childhood reading, singing, playing, and so forth, and the impact that has on their health status in subsequent years for the individual but whole communities.

And it strikes me as, probably the wrong word, motherlode, of opportunity to improve the health of the population, thus decreasing cost, et cetera, et cetera. But by doing it, not by pounding on doctors in their pay-for-performance reports, but by actually making the population healthier and doing so perhaps in novel ways. And the most interesting one to me is, frankly, this notion of the neuron development in children from ages like actually sub…negative one…I think there’s talk about singing to children while they’re in the womb. But I certainly know about reading in the first three or first five years. So, there is your launch pad. Please tell us about that, George.

[00:41:29.560] George Halvorson:

I would love to do that. Before going there…you’re exactly right. The other immediate thing we can do in a large scale, we can have a very large impact on the health of the country is to get people to walk. Walking is the single most effective thing you can do. You can cut the rate of diabetes literally in half if people walk 30 minutes a day, five days a week, the rate of diabetes in this country goes down by half.

Heart disease goes way down. Cancer cure rates go way up. The human body is designed to walk, made to walk, equipped to walk. We walk better than any creature on the planet. We don’t fly or swim very well, but we walk better than anything. And our body is designed to walk. And all the biology, the body works better when we walk. So, walking every single day has a huge positive impact. It brings down the heart disease and the diabetes major impacts.

So, that’s one thing. Second thing is, to your point, our brains develop in an epigenetic context and we’re now beginning to understand the science. We had some sense of the patterns before, but we didn’t know why. And we are now getting scientifically involved in the epigenetic programing and the epigenetic program we have actually gives us opportunities to develop in different directions. So, as we are born and we go into the world, we encounter the world, interact with the world, and the interactions we have with the world make a huge difference in our development. And, in those first couple months of life, literally first couple of months of life and first couple of years of life, if we interact with the children, we have billions and trillions of neurons connecting in the children’s brain. We have socialization and emotional security that we actually end up with epigenetic security instead of presumptive negativity. Presumptive negativity happens in too many kids. We suspended more kids for violence from kindergarten this year than we did from high school because they’re kids and it’s not the kid’s fault or the teacher’s fault.


The kids are there with presumptive negativity. The presumptive negativity happens in the first months of life. So, what we have to do is we have to interact with every kid in the first months of life and we have to strengthen their brain, talk to the kids, interact with the kids, read with kids. And what we know is that if we do that, we get a totally different outcome. So, in America right now, we have more people in prison than any country on the planet by a large margin. We imprison more people than anybody. And the people that we imprison are overwhelmingly dropouts. So, the 60…if you’re an African American male, there’s a racial element and there’s an educational. If you’re an African American male in your 30s, 60 percent are in jail today and 80 percent will be in jail. So, that’s 60 percent in jail today. Ten percent of the African American high school graduates are in jail. And we know with 80 percent security, by age three…  we know by age three which path they’re going down. And the reason we know by age three is because the brain changes at four and after four, it no longer builds neurons in the ways it did in the first couple of years. And so, the kids were behind at four can’t catch up. We need to help them. We need to really help them. We need to do everything we can for every child. We can’t abandon anybody. But the opportunity was there in the first couple of years in the kids that are doing well end up graduating. The kids who are graduating are half as likely to have asthma. They’re half as likely to be diabetic. There’s a whole series of direct health issues that are related. Kaiser Permanente looked at the one of the studies, looked at the health impact of being a high school dropout in the city of San Francisco. In the African American women who dropped out of high school were twice as likely to be diabetic as African American others who did not drop out of high school.

So, what we need to do is we need to help all of the kids. We need to help everybody in the first three months, the first three years, we need to put books into the homes. Over half the homes do not have…half of the Medicaid homes don’t have a single book. So, the non-Medicaid homes average 12 to 20 books per kids. That’s a huge equity issue. But when there’s no books in the home, the number of spoken words, the kids here by age five is about 5,000 spoken words. If they hear books every day, it’s 200,000 spoken words. So, the difference between 5,000 spoken words and 200,000 is huge relative to the neurons. So, what basically that does is it puts people on a different path. We need to help all of the kids. We need to help every single child, every family, get the right start. And the epigenetic impact of being in prison and dropping out of school and not being employed…all of those social determinants of health, are just ugly and relative to the direction that the kids go. And then the ACEs (Adverse Childhood Experiences) research that Kaiser Permanente did to identify the fact the adverse childhood experiences is it doesn’t have the children have had four or more adverse childhood experiences as adults are twice as likely to have cancer, three times as likely to have a heart attack. Those numbers are phenomenal. Those are all in the Kaiser Permanente system, same doctor, same care system. The only difference is the number of ACEs in the person’s life in the number of ACEs is hugely transformational.

So, we need to deal with that. California right now is taking that information in the…we have a surgeon general now who is focusing on ACEs going upstream, on ACEs prevention, and she’s doing some really good things. Dr. Burke Harris, she’s wonderful, doing some really good things to change the trajectories. The first thing you do is identify who has them. Second thing you do is try and prevent them. But preventing ACEs is really, really powerful, because when you’re literally…well, you are 12 times more likely to attempt suicide with four or more ACEs.

[00:48:18.550] Don Crane:

Yeah. So, when you use the word “we” need to do something about it, do you see a role for Kaiser Permanente and other integrated groups or do you see this as a governmental function? A blend of the two?

[00:48:34.420] George Halvorson:

All of the above. Over half the births in America this year are Medicaid births. Over half are Medicaid. And that gives us a huge opportunity. We know that over half the Medicaid homes don’t have a single book. Well, books are cheap, we can distribute the WIC program…is the nutrition program for Medicaid. In Los Angeles, we had the WIC program in addition to doing nutrition and rutabagas, also did books and they cut the learning gaps by more than half for those kids.

[00:49:07.280] Don Crane:

I’m thinking about sort of the lag between lag time, between intervention and result or absence of results. So, that’s also often been a problem just even with diabetes and so on. You know, investment and intervention today doesn’t necessarily produce dividends for a couple of years. And so that sort of lag time looks wide and broad. In other words, if we put books in every home and children are read for the first three years, so then they don’t drop out and bad things don’t happen. Boy, that just described two decades.

[00:49:41.150] George Halvorson:

No, no, no. It’s…thank you for pointing that out…it’s three years. It’s three years. Our schools are full of kids who are not feeling it. We got additional staff in the kids because the kids are low. We get a return on the kids at age five that the programs completely pay for themselves in the first two years of school just in the difference in the staffing that you need in the schools. We literally suspended more kids for discipline issues in our kindergarten this year in the country than we suspended from high school. We can change that trajectory and the kids who can read are half as likely to have childhood asthma. There’s actually an immediate positive Medicaid impact. Childhood asthma is the number one cost issue for Medicaid programs for kids. And you can cut that in half, literally cut it in half, by having kids able to read. Like the interactions that they have, create the setting that has them with lower asthma. But there’s an asthma…so, this is not something that we have to wait a decade for. This is literally immediate return on both asthma and school discipline and learning. And then the kids are way ahead of the game. So, this is stunningly fast return and it happens in every kid in every life. And so, it’s one of those things where if you just tell one parent that you need to talk to your child, read with your child, interact with the child, tell a one parent who didn’t know that and they do that, that changes the entire life for that child. What else can you do?

[00:51:32.190] Don Crane:

Well, so let me…maybe we need to wrap up here. Let me ask this ridiculous question now as we think about ranking priorities, you know, given limited bandwidth and resources and the like, you know, if you had a magic wand, you’re now the monarch, you know, would you focus…and you could only pick one, make the hypothetical even harder on George…if you could only focus on sort of one thing here and not more than one, would you capitate the healthcare ecosystem, the delivery system, in order to produce all of the good things that capitation does that we’ve talked about, or would you have every child read to by parents with books in the home? In other words, which of these two, quote unquote, interventions would be better for society, do you think, if you only had the opportunity to pick one?

[00:52:24.860] George Halvorson:

I would definitely, definitely get books in the home. The impact on the children…we right now…the average African American family right now, the average white family has two hundred thousand dollars in net worth. Average African American Hispanic family is twenty thousand dollars in net worth. And massive earning gaps, wealth gaps, we are not going to change those gaps if 60 percent of the children can’t read. We can’t change it. I mean, that is such a huge…we should and do wonderful things in all of those settings on terms of the social determinants of health outcomes. But it is absolutely critical that we give every kid the right start and the kids are happier and the families are happier. There’s a joy. I’ve seen a joy in some of those settings when I see kids crying when they get their first book. Literally, “This is my book, this is my book!” and crying because it’s such a wonderful thing to have a book and they don’t have them. And so, it’s relatively inexpensive to do it, but it’s critically important so that we need to do that.

We need to fix that. We need to capitate healthcare as well. But if we could do one, I would help every kid.

[00:53:43.160] Don Crane:

I hear you loud and clear. It sounds like we have work to do here. You know, I guess another follow up question is, why is this not better known? Why has this not been better implemented? It sounds easier, cheaper, more fun, better, faster, gooder. What’s wrong with us?

[00:54:02.880] George Halvorson:

There’s huge resistance to using this information. School systems don’t use it. It’s been the neurons, the neighborhoods. Brilliant study done by the Institute of Medicine a couple of decades ago laid the groundwork for that and nobody in any legislature anywhere in the country has used it. California legislature, we’ve done it. We did parental leave and we did a couple other things using this information but pretty much every place else has not used it, in part because people don’t want to believe it.

People get really angry with me when I say that the brain changes at four and then after four, it’s really, really hard. I’ve had…I cannot tell you, I’ve had nasty letters and follow up, but people get really angry and say, you’re telling us to abandon our children and we need to love our children. And I can’t believe it’s real and unfortunately, it is real. And no, I don’t think we should abandon our children.

But I do think when a kid has presumptive negativities syndrome, we should be educating the teachers to expect it and to deal with it rather than take it personally. And then we should do everything we can not to have those kids with that syndrome. But it’s really there’s a huge resistance to it and I joke that there’s a you know, Cassandra, the curse of Cassandra, is to know the future, tell the future, and have no one believe it. And for some reason, somebody managed to affix the curse of Cassandra to brain development in children because it just keeps getting not dealt with. Yeah, so please break the curse of Cassandra.

[00:55:45.320] Don Crane:

We will do our level best, I can assure you. So, with that, George, I think we should wrap up. I’ve been…it’s just been a treat talking with you. I will do it again soon. So, in the meantime, stay well and stay safe. And thank you very, very much.

[00:56:01.580] George Halvorson:

Thank you.

[00:56:02.780] Don Crane:

As you may have observed, our annual conference this year will now be held in person December 9th through December 11th at the Marriott Marquis San Diego Marina. Please save the date and be sure to register. It will be, to say the least, an extraordinarily welcome and refreshing chance to see each other in person once again. In the meantime, stay safe and be well.

[00:56:29.450] Announcer:

Thanks for listening to APG on American Healthcare with your host, APG President and CEO Don Crane. For more information about APG and transcripts of this show, visit the APG website at APG dot org.