Kaiser Permanente’s CEO Halvorson to Retire in 2013

George C. Halvorson, the chief executive officer who built Kaiser Permanente into the U.S.’s biggest nonprofit health insurer by revenue, will retire at the end of next year.

Halvorson, 65, who also served as chairman of the board at the Kaiser Foundation Hospitals and Health Plan, will leave in December 2013, the Oakland, California-based company said in a statement today. Halvorson was named CEO and chairman in 2002, Kaiser said.

Kaiser covered 9 million people last year, mostly in the western U.S., and generated $47.9 billion in revenue, according to its website. It also runs 37 hospitals and employs 17,000 physicians. The blended system of insurer and providers that Halvorson helped build is often cited as a model for how the rest of the U.S. could cut health-care costs and improve quality, said Sheryl Skolnick, a hospital analyst at CRT Capital Group LLC in Stamford, Connecticut

“When he arrived at Kaiser, it was still under-invested in technology and really only worked in one market, the San Francisco Bay area,” Skolnick said. “Now, it’s a force to be reckoned with throughout California, has caught up in technology and has a model that is widely regarded as one of the ways to solve the health-care crisis.”

Halvorson said Kaiser’s integrated system encourages teams of doctors to work together to keep patients healthy, rather than rewarding physicians for doing as many procedures as possible. The system became the template for experiments with new payment systems in the U.S. health-care overhaul law passed by Congress in 2010, he said.

“We can focus on the needs of patients and not on the opportunities to generate a bill,” Halvorson said in a telephone interview. “It’s liberating.”

The Kaiser Foundation board will “go through a process that will result in the selection of a successor,” the health system said in the statement.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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