Kaiser Permanente seeks replacement as CEO Bernard Tyson dies suddenly at 60

Health care provider Kaiser Permanente said Sunday its chairman and CEO, Bernard J. Tyson, has died unexpectedly at the age of 60.

Tyson was the first African American to head Kaiser Permanente as CEO when he took that position in 2013 after filling a number of roles over three decades at the company.

No other details were provided in the company’s announcement, which said that Tyson died in his sleep early Sunday.

Tyson is survived by his wife, Denise Bradley-Tyson, and three sons, Bernard J. Tyson Jr., Alexander and Charles.

The board of directors has named Executive Vice President Gregory Adams as interim chairman and CEO.

Tyson’s death comes at an especially sensitive moment for the health system.

Kaiser reached a contract settlement with 85,000 workers, averting a threatened strike, just weeks ago. And it was facing a five-day walkout by some 4,000 mental health clinicians starting today. The walkout by members of the National Union of Healthcare Workers was postponed, union officials said Sunday, in observance of Tyson’s passing. A new date was not announced.

Both disputes placed the system’s 20-year reputation for collaborative labor relations in doubt.

As it happens, Tyson “was a Kaiser executive who helped establish the labor-management partnership,” says Sal Rosselli, president of the National Union of Healthcare Workers. In that period, the mid- to late 1990s, Rosselli was associated with United Healthcare Workers West, an affiliate of the Service Employees International Union.

“We truly worked together to make Kaiser the best place to receive and give medical care,” Rosselli told me. “There was true collaboration to establish an appropriate balance of power between labor and management.”

The recent labor issues have turned partially on questions of how Kaiser deploys its massive resources. The system reported net income of $2.5 billion on operating revenue of $79.7 billion last year, compared with net income of $3.8 billion the year before - a decline it attributed partially to “volatility in the investment markets.”

The system also reported reserves of $31.6 billion, a metric relevant to its role as a health insurer, in 2017.

Those figures have turned the spotlight on Kaiser’s spending, which includes construction of a new $900-million headquarters building, on which ground is to be broken in Oakland next year. The system also has made a bid reported to be $295 million for naming rights to the district around the Golden State Warriors’ new basketball arena in San Francisco. (The location would be called “Thrive City,” a reference to Kaiser’s advertising catchword, “Thrive.”)

And the system is planning to open its own medical school next year in Pasadena, waiving all tuition for the first five classes of students.

The medical school plan “suggests how well they’re doing,” says Anthony Wright, executive director of the consumer group Health Access California. “They’re looking not just at next year’s returns, but at educating future generations. But as much as that is probably a very good investment in the future of California’s health care system, it’s also fair for the people who’ve been paying premiums to Kaiser to say, where does that money come from?”

A three-decade veteran of Kaiser management, Tyson presided over an appreciable increase in the Kaiser system’s enrollment and financial strength since becoming CEO in 2013 and chairman a year later. The organization grew from 9.1 million members and annual revenue of $53 billion in 2013 to 12.3 million members and $79.7 billion in revenue at the end of 2018.

Tyson’s posts placed him at the center of a health care economy undergoing wrenching change. His voice was important. In 2017, when several for-profit insurers such as Aetna were bailing out on the Affordable Care Act, Tyson made clear that Kaiser was intent on continuing to participate in the ACA’s exchanges.

Yet in recent years a pioneering labor-management partnership reached at Kaiser in the mid-1990s, which is often given credit for dramatic improvements in Kaiser’s patient treatment and financial strength, has begun to fray.

Tyson’s own compensation, which reached $16 million in 2017, the latest year reported, became a flashpoint in the recent labor conflict with the SEIU-UHW, which had threatened to call some 37,000 members out on strike if a contract had not been reached by Oct. 1. A tentative contract was reached on Sept. 25, covering 85,000 employees.

The current dispute with clinicians concerns Kaiser’s mental health services, which the union says lag far behind services for patients needing physical treatment. The union says mental health services are chronically understaffed, resulting in appointments being deferred for as long as two to four months for enrollees requiring prompt treatment.

“Our union has demonstrated to them that their mental health system is broken,” Rosselli says. “We’re trying to help them understand that they should collaborate with their mental health clinicians to do the same thing we accomplished in the late ‘90s on the medical side.”

Kaiser asserts that it has increased its staff of mental health therapists by 30% since 2015, a period in which patient enrollment increased by 23%, “despite a nationwide shortage of mental health care professionals.”

The system’s shortcomings in mental health services have been documented in the past. The state Department of Managed Health Care fined Kaiser $4 million in 2013 for “serious deficiencies in providing access to mental health services,” including wait times for appointments that exceeded state standards.

Rosselli faults Tyson for failing to take the issue in hand. “He listened to people who were in denial about the mental health system being broken and inaccessible,” he says.

Tyson, who worked at Kaiser Permanente for more than 30 years in roles including hospital administrator and chief operating officer, had been on Time magazine’s list of the world’s most influential people and one of the “Health Care 50.”

Executive Committee Chair Edward Pei called Tyson “an exceptional colleague, a passionate leader and an honorable man.”

“We will greatly miss him,” Pei said in the company’s news release. He added that the board “has full confidence in Greg Adams’ ability to lead Kaiser Permanente through this unexpected transition.”

Tyson also was on the boards of the American Heart Association and Salesforce. He was a member of the American Academy of Arts and Sciences, and deputy chairman of the Americas of the International Federation of Health Plans.

A native of the San Francisco Bay area, Tyson received a bachelor’s degree in health service management and an MBA in health service administration from Golden Gate University in San Francisco.

While at Kaiser Permanente, he was a member of the Bay Area Council, a business-led public policy organization advocating for a strong economy for area residents.

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Michael Hiltzik of the Los Angeles Times contributed to this report.