Some of the biggest health plans signed onto a new statement Monday from the CEO group Business Roundtable, including market giants CVS Health, Anthem and Cigna, suggesting companies should look beyond just the needs of their shareholders.
Kaiser Permanente CEO Bernard Tyson is one of 11 executives in the group who declined to sign the statement from the organization, which represents the country's most powerful chief executives.
For decades, Business Roundtable has endorsed the notion that companies should hold shareholders' interests above all else. This new guiding statement pledging to balance the needs of all stakeholders, including customers, employees, suppliers, communities and shareholders represents a sea change for the coalition.
It's unclear what, if any, long-term impact the statement will have. But it includes signatures from 181 of the 192 current members of the Business Roundtable. Other CEOs decided not to sign because they are transitioning between leaders or currently have an interim chief executive, among other reasons.
A number of healthcare CEOs signed the statement: CVS' Larry Merlo, Anthem's Gail Boudreaux, Cigna's David Cordani and Walgreens' Stefano Pessina along with the chief executives of market entrants Apple, Amazon and J.P. Morgan.
Notably, Business Roundtable does not include any for-profit health systems and, since only members were asked to sign, none are represented on the pledge.
Insurers have been directly in the line of fire from Democrats running for president in the 2020 election, most of which are pushing some version of "Medicare for All," or a public payer expansion.
Sens. Bernie Sanders, I-Vt., and Elizabeth Warren, D-Mass., support the creation of a government-run insurance program and the elimination of private insurance entirely, while a smattering of other candidates (including Sanders' Medicare for All bill co-sponsors Sens. Cory Booker of New Jersey, Kamala Harris of California and Kirsten Gillibrand of New York) advocate a more watered-down version that would still eat into insurers' profits.
"The answer is to get rid of the profiteering of the drug companies and the insurance companies, move to Medicare for All," Sanders said during the July Democratic debate in Detroit.
"Here's the bottom line: If [J.P. Morgan CEO Jamie] Dimon and the Business Roundtable are serious about their statement, we need to see real action," Warren, D-Mass., said on Twitter.
For Kaiser's part, Tyson also did not sign the previous Business Roundtable "shareholder primacy" statement saying the needs of shareholders must come first when Kaiser joined the coalition several years ago to support its economic growth and affordable care and coverage initiatives.
The integrated health system said Tyson declined to sign given Kaiser is a 501(c)(3), not a publicly-traded company, according to a Kaiser spokesperson. Kaiser's business structure is singular: its health plans and hospitals are nonprofit, but its physician practices, called Permanente Medical Groups, are physician-owned and for-profit.
Tyson's salary spiked from $6 million in 2015 to $16 million in 2017, according to an analysis conducted by the worker group Coalition of Kaiser Permanente Unions. The labor group also found Kaiser had 36 executives making over $1 million a year, compared to only three at the Blue Cross Blue Shield Association and three at St. Jude's Children's Research Hospital.
"It is troubling that the current corporate culture at Kaiser is more like a for-profit corporation," the group concluded.
Sanders in particular has lanced nonprofit payers for high executive salaries in the past. In March, the 2020 candidate took to Facebook to decry the 2018 pay of Michigan Anthem Blue Cross Blue Shield's CEO: $19 million, while "790,000 Michigan residents go without health care and many more can't afford to use the insurance they have," Sanders said.
Oakland, California-based Kaiser is highly rated for care quality and patient satisfaction due to an emphasis on preventive care and paying its doctors a salary, instead of on a fee-for-service basis. But the integrated healthcare company's faced a slew of troubles recently, especially from advocacy groups and unions accusing Kaiser of having unfair labor practices due to a focus on high margins in recent years.
"We weighed in on this pledge, wholeheartedly support it and only did not sign it because we are a not-for-profit and do not have shareholders," Tyson said in a statement Monday.
Kaiser is one of the largest not-for-profits in the U.S., with its health plan and hospitals roping in a combined $2.5 billion in net income on almost $80 billion in operating revenues in 2018.
But "we don't have shareholders. We can't pledge to maximize shareholder value," John Nelson, Kaiser's VP of Communications, told Healthcare Dive. "That's it — that's the only reason we couldn't sign onto the pledge as it's currently written."
Earlier this month, Kaiser workers in California voted overwhelmingly to approve a strike that could draw more than 80,000 employees across the nation, which organizers claim could make it one of the biggest strikes in recent U.S. history. Employees are also protesting unfair labor practices and refusals to bargain in good faith, according the union coalition.
And, though Tyson decided not to sign, he did release a statement Monday saying: "Together as a country, we are moving the direction of the work we all do from maximizing shareholder value at any cost, to agreeing that companies have a bigger purpose. This is a major step forward in corporate America" — a step Kaiser says it's already taken.
Samantha Liss contributed reporting.