Regional Oral History Office University of California the Bancroft Library Berkeley, California

Regional Oral History Office University of California The Bancroft Library Berkeley, California

Robert M. Crane

KAISER PERMANENTE MEDICAL CARE ORAL HISTORY PROJECT II

YEAR 4 THEME: GOVERNMENT RELATIONS

Interviews conducted by Martin Meeker in 2010

Copyright © 2010 by The Regents of the University of California Since 1954 the Regional Oral History Office has been interviewing leading participants in or well-placed witnesses to major events in the development of Northern California, the West, and the nation. Oral History is a method of collecting historical information through tape-recorded interviews between a narrator with firsthand knowledge of historically significant events and a well-informed interviewer, with the goal of preserving substantive additions to the historical record. The tape recording is transcribed, lightly edited for continuity and clarity, and reviewed by the interviewee. The corrected manuscript is bound with photographs and illustrative materials and placed in The Bancroft Library at the University of California, Berkeley, and in other research collections for scholarly use. Because it is primary material, oral history is not intended to present the final, verified, or complete narrative of events. It is a spoken account, offered by the interviewee in response to questioning, and as such it is reflective, partisan, deeply involved, and irreplaceable.

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All uses of this manuscript are covered by a legal agreement between The Regents of the University of California and Robert M. Crane, dated August 13, 2010. The manuscript is thereby made available for research purposes. All literary rights in the manuscript, including the right to publish, are reserved to The Bancroft Library of the University of California, Berkeley. Excerpts up to 1000 words from this interview may be quoted for publication without seeking permission as long as the use is non-commercial and properly cited.

Requests for permission to quote for publication should be addressed to The Bancroft Library, Head of Public Services, Mail Code 6000, University of California, Berkeley, 94720-6000, and should follow instructions available online at http://bancroft.berkeley.edu/ROHO/collections/cite.html

It is recommended that this oral history be cited as follows:

Robert M. Crane, “Kaiser Permanente, Year 4: Government Relations” conducted by Martin Meeker in 2010, Regional Oral History Office, The Bancroft Library, University of California, Berkeley, 2010.

Table of Contents—Robert M. Crane

Interview 1: June 15, 2010

[Audio File 1]— 1

Childhood in Hazelton, PA with Presbyterian minister father and homemaker mother—extracurricular activities in sports and student leadership—early interest in hospital administration—attending College of Wooster 1965-1969—political awareness and activism on campus, thoughts on undergrad years at a small school—studying economics, independent work on health insurance—non-profit orientation of health insurance in 1960s—enters Cornell MBA program in health administration in 1969—overview of curriculum: emphasis on policy— development of legislation, health planning agencies, Regional Medical Programs in 1960s-1970s—changing study focus to health policy on realizing the growing role of federal government in health care—work with Harry Becker, learning about New York politics of neighborhood health centers, Medicaid, HealthPAC program—following policy ambitions, applying for management intern program of then Department of Health, Education and Welfare, move to Washington, D.C. in 1971—federal government recruitment of “best and brightest” for public service in 1970s—work at the Health Services Mental Health Administration— sitting on review boards to fund early prepaid group practice plans, HMO Act of 1973 extends federal government control over local health laws—concerns about competition with already-established delivery systems in the community—1970s favorable attitudes toward federal role in health care system—1972 assignment to San Francisco office of HEW, work for Bob Brook shapes future career, fosters interest in community planning and West Coast

[Audio File 2] 20

Job at Comprehensive Health Planning Services—1974 states required to develop certificate of need programs, relationship to Medicare—work developing and managing assessment program for community health agencies, providing technical assistance—handling the politics of establishing an ideal population to hospital ratio—thoughts on “extreme federalism” of 1970s health policy, recurrent themes in health care reform—motives for reform action: cost control, increasing access, improving efficiency—impact of HMO Act of 1972 on work at HEW: meeting and working with Gordon MacLeod, Bill McCloud, Frank Seubold—1975 or 1976 four months in Baltimore at the Maryland State Hospital Cost Review Commission—1976 temporary position and then job offer with the US House of Representatives Health Subcommittee of the Energy and Commerce Committee—apolitical nature of lobbying jobs—involvement in 1978 HMO Act amendments—Kaiser’s persuasive argument to secure exemption from certificate of need laws—thoughts on the lobbying process—more on the fate of cost containment legislation [Audio File 3] 38

Decision to leave D.C. in 1979: seeking novelty, Regan era tipped power balance toward state, New York State recruitment—move to Albany for four years— overview of work: overseeing planning and evaluation for state health department—comparing federal and state level HMO qualifications— coordinating with D.C. office, New York’s “all payer” state status—year at Kennedy School and transition to heading Office of Health Systems Management—comparing work on federal and state level: academic vs operational—New York insulation from 1980s ethos of deregulation—managing political challenges to State Health Department authority—issues of substandard care, politics of troubled hospital issues—decision to move from public to private sector—1983 Kaiser’s Bob Erickson offers Crane job with legal department— learning the Kaiser approach to government relations: “…our currency really is our reputation, which gets generated by our members day in, day out.”—visiting medical centers in California—culture and growth of government relations office during Crane’s five-year tenure—importance of the 1982 Tax Equity and Fiscal Responsibility Act, administering implementation of risk contracting— differences in how Northern and Southern California implemented changes— Medicare and Baby Boomer issues

[Audio File 4] 55

Advantages of increasing share of funding from Medicare: allows life-long relationships with members and greater flexibility in multi-specialty practice— ensuring a balance in Medicare funding and spending—the question of overpayment, 95% of average cost figure—predicting adaptation to health care reform legislation—1985 geographic expansion to North Carolina and Georgia— contract lobbyists with region-specific experience such as Harper Gaston— breaking down the managed health care crisis of the 1990s: emergence of for- profit competitors in 1980s, 1986 amendments allow alterations in community rating structure—mid 1990s Kaiser attracts physicians with greater flexibility than HMOs—PR and government relations use HEDIS results to address image challenges—evolution of professional standard review organizations—working as a team with Bob Erickson, Richard Froh and Joe Criscione—politics of developing policy—Kaiser’s ongoing support for federal and state interactions to increase access to health insurance coverage—regulatory and scope of practice issues—Dave Lawrence establishes Institute for Health Policy in 1999, thoughts on shifting Kaiser’s government relations into a more aggressive role—Crane’s experience makes him ideally suited to run Institute

[Audio File 5] 70

Ensuring that the Institute for Health Policy worked in a synergistic way with government relations—analyzing and developing a white paper on the IOM report To Err is Human on patient safety—more controversial work: healthy eating campaign at odds with marketing interests with Pepsi et al—philosophy on keeping the Institute relevant: link, leverage and lead—collaboration with Robert Wood Johnson Foundation, the Commonwealth Fund, Milbank Memorial Fund and Kaiser Family Foundation—Institute impact on patient safety and health care delivery system matters—connecting points between government relations and legislation: IT, encouraging evidence based medicine—proactive policy work: advocating for protection of voluntary reporting—closing thoughts on the positive influence of the Institute

Interview #1: June 15, 2010 Begin Audio File 1 06-15-2010.mp3

01-00:00:00 Meeker: Okay. So today is the 14th of June 2010. This is Martin Meeker interviewing Robert Crane. Or Bob Crane?

01-00:00:16 Crane: Either one is fine.

01-00:00:16 Meeker: Okay. For the Kaiser Permanente Oral History Project. This is year four, focusing on government relations. And as I mentioned, the way in which we get these things started is I’ll first ask you to state your name and place and date of birth and then just tell me a little bit about the circumstances into which you were born.

01-00:00:35 Crane: Okay. I’m Bob Crane or Robert Crane. I was born in Philadelphia, Philadelphia. Grew up in the anthracite coal region of that state, which is the northeast part of the state. And actually spent my whole childhood in a town called Hazelton, Pennsylvania. My father was a minister. I have two older sisters, so I was the youngest of the family and had a relatively normal childhood.

01-00:01:19 Meeker: So your father was a minister. What denomination?

01-00:01:22 Crane: Presbyterian.

01-00:01:22 Meeker: Presbyterian. In that town of Hazelton, where did Presbyterian fit in?

01-00:01:29 Crane: It was a small slice of a town which was quite ethnically diverse, although not terribly culturally diverse. Most of the people who lived in Hazelton had come from families who were settled there to work in the mines, which were no longer active. So a very large Catholic population, middle European, Polish, Italian, Irish community.

01-00:02:05 Meeker: Was your mother a homemaker?

01-00:02:07 Crane: She was.

01-00:02:08 Meeker: Yes. And you said that you were raised in Hazelton. How many people roughly?

01-00:02:13 Crane: About 40,000 people.

01-00:02:15 Meeker: Okay. Forty thousand.

01-00:02:17 Crane: The general area.

01-00:02:18 Meeker: Good sized small town.

01-00:02:19 Crane: Yes.

01-00:02:20 Meeker: And you stayed there, it sounds like, until when? The end of high school or thereabouts?

01-00:02:25 Crane: Yes. When I went off to college.

01-00:02:26 Meeker: Okay. Maybe tell me a little bit about your upbringing and going to elementary school and what were some of the things that interested you? What were your pursuits going through high school?

01-00:02:39 Crane: Played a little basketball. I was actually quite active in leadership roles. Captain of the Safety Patrol, president of my senior class, active in governance activities in both junior and senior high school. That seemed to be an attraction.

01-00:02:57 Meeker: Do you know why it was an attraction?

01-00:03:00 Crane: I did it well.

01-00:03:01 Meeker: You did it well. Okay. A lot of times leadership roles in student government comes from leadership amongst a group of friends. Is that where it came from for you?

01-00:03:13 Crane: Yes. It just was something I was interested in doing. And interestingly enough, I’m not sure there was a family propulsion. In some cases those roles are forced on children, if you will, and in this case it was something that I just enjoyed and ended up excelling at.

01-00:03:35 Meeker: Did you have any interest in going into the ministry at all?

01-00:03:38 Crane: No. No. I actually, in a very unusual way, decided I wanted to be a hospital administrator when I was in junior high school.

01-00:03:49 Meeker: Okay. Tell me about that. That is very unusual. It’s not a conventional occupation for a child to desire.

01-00:03:54 Crane: I was actually interested in health care, helping people, medicine. I didn’t have the desire to deal with the sciences and the long training period for a medical degree and so stumbled upon this career in hospital administration that seemed to link my talents in organization, management, development activities with the field of medicine. I would add that I didn’t quite know all the details of hospital administration at the time but it seemed like a useful way to combine interests and the kind of outcomes that I wanted. And I didn’t waver from that until I got to graduate school. So I actually, in college, chose a major that would support that, economics. I chose an independent study project that was on national health insurance. I spent my summers working in the emergency room in a hospital. So I was pretty goal oriented.

01-00:05:06 Meeker: It sounds like. And I wonder, when you were growing up, say in junior high school, did your family have friends in the medical field?

01-00:05:15 Crane: Well, we had a family physician but that wasn’t the propulsion. It was more kind of what medicine and health care does for people as a pursuit. It’s a good profession.

01-00:05:30 Meeker: So there wasn’t anyone in your family who was ill and had a—

01-00:05:34 Crane: No.

01-00:05:34 Meeker: Okay. Interesting. So this early interest in working in hospitals. You graduated high school and you’re applying for college. Or you’re applying for college and then graduate high school. Where were your interests in going? I see you went to the College of Wooster. Did that have a program that maybe lent itself to hospital administration?

01-00:06:02 Crane: Well, I looked at a number of schools that were closer than the College of Wooster. Gettysburg. My father went to Lafayette College, so those were schools that I looked at. But I actually chose Wooster, one, because it was church related. It was a Presbyterian school and that sounded like a good idea. And then secondly, it was a distance enough away from home that there would be a significant break. That is, I didn’t want to be in a college situation where coming home on weekends was an option really. I wanted to have this be a transition. It worked out very well.

01-00:06:45 Meeker: And so you enrolled, it looks like, about 1965 in college?

01-00:06:49 Crane: Correct. Yes.

01-00:06:51 Meeker: And so obviously this period of 1965 to 1969 on college campuses has a reputation for a great deal of political activism and cultural tumult. What was campus life like on the College of Wooster, being at a Presbyterian school and so forth?

01-00:07:10 Crane: Well, it’s a relatively small school, 2,000 people, so I had about 500 people in my class. Social concerns were a big issue on campus. I suppose the height of what you’re talking about was the massacre at Kent State, which was within an hour from where Wooster was. Students were actually shot by the National Guard during a demonstration. I think that caused additional focus and concern about the war in Vietnam which was going on in a very significant way toward the end of the time that I was there. I graduated in 1969.

01-00:08:06 Meeker: So were you involved in any formal organizations agitating against the war or for civil rights or anything like that?

01-00:08:13 Crane: Not at Wooster. But I did get involved in that at Cornell, where I went to graduate school.

01-00:08:17 Meeker: Okay. How would you describe your undergraduate experience? Kind of a small college?

01-00:08:25 Crane: Small college. One of the nice things about a small college is you can do lots of things and excel. I was very actively involved in the school newspaper on the business side. I was the business manager of the school newspaper. My junior and senior years I spent as a dorm resident for freshmen. Junior resident and then I managed a dorm as a senior resident. Most of my colleagues were in a local fraternity, living in a fraternity, but this was something that I wanted to do. Again, it was kind of like a leadership role. I had to work some. I worked in the language lab and some other jobs on campus to pay the bills. Had a great experience, actually.

01-00:09:15 Meeker: Did you participate in student government at all?

01-00:09:22 Crane: Student government was not a big deal. There was a fairly sizeable local fraternity program but there wasn’t much government to participate in.

01-00:09:41 Meeker: Okay. You say a fairly sizeable local fraternity program. Is this a multi- campus program, national system?

01-00:09:47 Crane: No. Basically, these were Wooster only fraternities that developed. There were eight of them.

01-00:09:55 Meeker: So that wasn’t part of the national Greek system or something?

01-00:09:57 Crane: No, it was not. No, no.

01-00:09:59 Meeker: Interesting. Largely social clubs and connections?

01-00:10:03 Crane: Yes, yes. And living opportunity.

01-00:10:08 Meeker: The College of Wooster, was that co-ed?

01-00:10:11 Crane: Yes.

01-00:10:12 Meeker: Okay. And so you were dating throughout college, as well?

01-00:10:16 Crane: Um-hmm.

01-00:10:16 Meeker: Yes. And also studying economics, right?

01-00:10:22 Crane: Yes.

01-00:10:22 Meeker: What was their economics program there like? What did you get out of that particular education?

01-00:10:29 Crane: Well, my interest in economics was the closest I could come to kind of business administration. But it was a very broad based program. A review of micro and macro economics and the role that economics plays in society and analysis of issues and trends. That said, I had a very broad and liberal education. It’s a liberal arts school. I focused on a range of other interesting issues; history, art. I didn’t spend much time with music.

01-00:11:11 Meeker: Was there any part of your education that focused on health care at all? The health care sector?

01-00:11:17 Crane: The only part was one which I created. Wooster has a somewhat unusual requirement that you, in your senior year, or junior or senior year, carry out an independent study. So that requires you to develop a junior level of what a thesis would be in a graduate level. So one selects a topic, an issue, and in this case I selected health insurance and used it as an opportunity of dig into what the current system was, the pressures for change and that type of thing.

01-00:12:07 Meeker: So this was late 1960s and health insurance at that point in time, of course, was dominated by indemnity insurers.

01-00:12:14 Crane: Correct.

01-00:12:17 Meeker: Was that your focus of your research?

01-00:12:20 Crane: Almost exclusively. It was more descriptive of what was. Medicare had passed four years earlier or three years earlier. Medicare and Medicaid were developing and so it was really kind of a descriptive review of that, as well as the identification of some of the issues of change. It was a very different world than currently we live in today.

01-00:12:44 Meeker: Well, you also start to see, I know with Blue Cross and Blue Shield, right, that when they first started out, from what I understand, at least in California, they were sort of nonprofit oriented and then they become more profit motivated as the years go on. And there’s arguably a social question around profit versus nonprofit in health care. Did you start to come across any of these sorts of debates and issues?

01-00:13:18 Crane: I think this was before much of that had taken place. Blue Cross Blue Shield was the dominant provider of health insurance, the big indemnity companies were not players. The Cigna, United. Well, United wasn’t even in existence then. So they didn’t have a footprint. So you might have had these specialty companies that served the individual marketplace or sold cancer insurance. I don’t even know if those were in place then. But it was really a world that was dominated by Blue Cross Blue Shield. Almost, I’d say, at that point they were all nonprofit organizations.

01-00:14:00 Meeker: Yes. The reason I ask is I’m thinking about this context of the 1960s and you said it was kind of a somewhat socially engaged campus. I’m wondering if, when you’re looking at the business of health insurance, if you encounter or on your own start to develop a perspective on the relationship of the social mission of providing medical care to people in comparison to the business of health care delivery systems.

01-00:14:37 Crane: If I were to do that analysis today, that would be front and center. Then it wasn’t. It just wasn’t an issue.

01-00:14:42 Meeker: Okay. Did you come across any of the sort of outlier delivery systems, like prepaid group practice plans or anything like that?

01-00:14:53 Crane: Yes. And actually, the “Commission on the Cost of Medical Care,” which had its origins back in the thirties was one of the things I looked at which underscored not only the coverage issues and cost issues but also the organization and delivery issues. The kind of recommendation in that report really underscored the potential for good that the organization or the delivery

system could bring. I grew up in a town where individual practice was the norm. I did have some exposure to a group practice in Geisinger in Danville, Pennsylvania, which was not that far from where I lived. And I had the opportunity to get care there once. I’m not sure that it registered as being terribly different, although it is clearly registered as being organized and additional capabilities than what I had been used to.

In the town in which I grew up, the politics in health were between a Catholic run hospital and the public hospital that was actually operated by the state, which was somewhat unusual. So the notion of investor owned health care just wasn’t on people’s radar screen. At least wasn’t on mine.

01-00:16:40 Meeker: What would have been the town hospitals were located in?

01-00:16:43 Crane: Hazelton.

01-00:16:42 Meeker: Oh, so they were in Hazelton, as well?

01-00:16:44 Crane: Yes. Both were in Hazelton.

01-00:16:46 Meeker: Okay. What was the nearest sort of metropolis to that that had been—

01-00:16:49 Crane: Philadelphia.

01-00:16:50 Meeker: Philadelphia. Okay. So you graduate college 1969 and then you move on to Cornell for your master’s of business administration. I see that there’s a concentration in health administration for that. MBA programs are usually two years. So it sounds like you went directly from your undergraduate to your graduate school?

01-00:17:14 Crane: That’s correct. Yes.

01-00:17:16 Meeker: When you graduated, were you looking forward to graduating college? What sort of options were you exploring?

01-00:17:24 Crane: Well, I basically wanted to go on to graduate school. I looked at the University of Chicago and I looked at Cornell, both of which had hospital

programs which were associated with business schools, which was what I wanted. And I chose Cornell in large part because it was in the east and my thinking was I wanted to work in the east as opposed to the Midwest. And with alumni networks and all the other kinds of things, one often gravitates to living in the place where you go to school. At least that’s not unusual. I didn’t particularly want to end up in the Chicago area.

01-00:18:06 Meeker: Okay. What else was it about the program that attracted you?

01-00:18:11 Crane: I got financial aid. The Cornell program had both a business and a public administration school and the school had been awarded federal grant money to provide fellowships in training and hospital administration. So that substantially reduced the financial burden of going to graduate school.

01-00:18:40 Meeker: So it was clear here that when you enrolled you were interested in going into the business side of medical care. Hospital administration.

01-00:18:47 Crane: Very clear. Right, right.

01-00:18:51 Meeker: Can you describe the master’s program, maybe in general terms and then more specifically how the education was helping prepare students for a career in hospital administration?

01-00:19:00 Crane: Yes. Well, it had a strong general business orientation. So accounting, finance, organizational theory. Those types of issues. Statistics, business statistics. Well over half of the training was just regular business classes with other business students.

01-00:19:26 Meeker: Did they take a case study approach at all or—

01-00:19:28 Crane: Not a big one. No. We did have some. The organizational theory, maybe, but not in finance or marketing or some of those other areas. The hospital administration program, which was called the Sloan Institute for Hospital Administration after Alfred P. Sloan, who gave some money to establish this in the fifties, had then a dedicated faculty around folks who were interested in health care issues. One of the things which characterized that school was a strong orientation of the faculty to the policy environment in which health care operates, as opposed to how to run the dietary department. I got very little of that. Most of the students who actually got that did it through a summer

internship, which was required. Then some of the second year classes enabled you to focus more on kind of management issues. But the general issues of management, leadership, positioning your institution, business strategy, all of those things, were part of the curriculum. The director of the program was an individual whose name was Roger Battistella. And he had particularly a strong interest in health policy issues.

Now, this was the early seventies and Richard Nixon was President and there was quite a bit of activity at the federal level involvement in health care. In 1967, there were some pieces of legislation that started programs like comprehensive health planning, which set up a network around the country of health planning agencies. Regional medical programs.

01-00:21:39 Meeker: Health planning. Does that mean around communities determining whether hospitals are going to be given authority to be constructed or not?

01-00:21:44 Crane: That’s exactly right. Right. It was a way to rationalize the system, recognizing that hospitals were expensive assets. There had been a previously federally supported health planning activity that was associated with the Hill-Burton Program, which was a federal program over the 1950s which put a lot of money into building hospitals. So after the war, there was a decision made that our hospital infrastructure needed rehabilitation, augmentation. I think there was a great pull to build hospitals in rural areas as the country was growing and expanding and this provided a lot of money to do that. In urban areas, it created metropolitan planning councils which enabled other than those who were dedicating their lives to health care to give some perspective about did we need three hospitals or four. This was an era of voluntary planning. It was kind of the good voluntary sector approach to this. Local government might have been involved, so you might have county commissioners on these councils to tie into the local political mechanism. But in ’67 there was passed a series of legislation which led to a series of grants to create really a network of these organizations around the country. And then I think in 1972 some impetus was given to these organizations to actually review capital expenditures for Medicare and Medicare reimbursement was conditioned on getting a positive review of a new hospital or a large piece of capital equipment, etcetera.

So I was in graduate school during the period where these things were starting to develop. The world view that a Cornell graduate student had was, “Wow, the federal government is going to be a big player in health care.” We just had Medicare, we have them doing planning. The Regional Medical Program provided gratnt dollars to expand technology from tightly managed urban teaching hospitals out. It was almost a plan to defuse technology, which was growing at that time. And then this was a time also when the National Center for Health Services Research was developed. The first foray of the federal

government into research on the health care delivery system as opposed to research related to basic science and biomedical research. So one was left with the feeling that the federal government was going to be a big player in this milieu.

01-00:25:30 Meeker: Not to mention that by the time you graduated in’ 71 there was already a new movement for national health insurance, both on the left by Kennedy and on the right, if you will, by Nixon.

01-00:25:42 Crane: That’s right. Yes. So I actually kind of abandoned my interest in institutional management. Abandoned may be too strong a word. I certainly put that on the sideline and got, as a result of the faculty at Cornell and the times, an interest in health policy. So, for example, the summer internship that I chose was to work with a professor whose name was Harry Becker at the School of Medicine at the Albert Einstein College of Medicine, who was really a kind of policy provocateur. He was very active in city politics in New York City. Most of us went to the city to do our internships.

01-00:26:48 Meeker: Associated with the medical center there?

01-00:26:50 Crane: Broadly. He had a base in the medical center but he was a player in New York overall and so you got an insight into union politics, city politics. Lindsay was the mayor at that time. There were a bunch of activist physicians who were very active in New York politics. Oliver Fein, and some others, they started an organization called HealthPAC, which was advocating for patient rights and care for all. And then there was a clear focus. And the professor that I worked with was very connected to those types of activities. So that ended up strengthening my interest and broadening it and deepening it, because I didn’t know that much about New York politics then.

01-00:27:55 Meeker: What was the nature of your work with Harry Becker?

01-00:27:58 Crane: I dug into local issues. There might have been some proposals to close a hospital or expand Medicaid in the city. It was all kind of the social policy of medicine kinds of issues. And I wrote some papers. Just spent a lot of time just hanging with him. It was very interesting because he’s involved in a lot of different activities.

01-00:28:28 Meeker: There’s the politics of health care specifically, Medicaid and you mentioned this HealthPAC program. Also during this time you’re seeing the emergence of a lot of neighborhood focus to health centers—

01-00:28:42 Crane: Neighborhood health centers were a very prominent development in that period.

01-00:28:45 Meeker: Funded by war on poverty funds and so forth. What about some of the larger political issues that are going on in the day. Were you plugging into any of those?

01-00:28:56 Crane: Well, as I think back on it, the political issues were around extending coverage. That was a big one. But then a fair amount around developing this infrastructure and thinking of the cottage industry of health care in a slightly more organized way. That was what health planning was all about. That’s what the Regional Medical Programs were all about. That’s what the research from the National Center for Health Services Research was all about. Their first director was a physician whose name was Paul Sanazaro and I think he was university based. But they had a whole program around does access effect outcomes. Does coverage? And then starting to look at some of the ways in which services were delivered and how that made a difference.

01-00:30:03 Meeker: Did you participate in any of the thinking about restructuring health care education, particularly trying to advocate for greater education of primary care physicians as opposed to specialists or was that more a medical school sort of function that was a bit separate from the policy area of it?

01-00:30:22 Crane: I was aware of it but I didn’t do much work in it.

01-00:30:24 Meeker: Okay. All right. I’ve interviewed a few other people who were active during this period of time, particularly in some of the community health center movements and they talked about both the—I don’t know if joy is the right word—but sort of the inspiration, but also some of the frustration of working in and around some of those organizations because you’re doing work that the community very much needs and the community responds mostly positively to the work that you’re doing but then this is also during the period of time there’s an intense political radicalization that makes that work a lot more difficult because the kind of political discourse that exists. Did you ever encounter this situation?

01-00:31:20 Crane: Well, in broad streams for certain New York City. Most of the people who were attracted to that kind of activity were on the liberal side of the political spectrum and there was a fair amount of concerns from the establishment about those kinds of activities. There’s no question about that. Locally, the Haight-Ashbury Medical Clinic probably personified a lot of the issues that were on the most liberal side of the issue. And I had an opportunity to understand some of the dynamics around neighborhood health centers, feeding opportunities or outreach opportunities for the major medical schools in New York. I think I had probably more an orientation to some of the medical school politics, because that’s pretty fierce in a place like New York City, between the medical schools and the teaching hospitals, etcetera. Their relationships with the Health and Hospitals Corporation, which I think was just getting started. Lindsay took the eighteen or so municipal hospitals and really tried to organize it in a more businesslike way and tried to now get Medicaid dollars for the funding of that to share. And so there was a whole lot of change that was going on with respect to the hospital system, which in New York was the primary care provider for the poor in New York City. There was a network of neighborhood health centers, some of which were started as outreaches or outposts for the medical schools, as well as the public hospitals in New York.

01-00:33:32 Meeker: So when you’re winding up your master’s program in ’71, had you established an agenda of the work that, regardless of what job you might end up with, what your sort of agenda for engaging with the system as it was. And perhaps the way in which you wanted to change it.

01-00:33:34 Crane: Yes. My agenda was pretty clear at that point. And that was to learn more about the government piece of this agenda. I decided that whatever I did in health care, the federal government was going to be a shaper of it. At that point my view was when I get back to running a hospital or institutional management, having the opportunity to understand what’s happening within the broader political environment and within the government system was a good thing to do. And that led me to apply to the management intern program of what was then the Department of Health, Education and Welfare. It was a competitive process and that ended up taking me to Washington in 1971.

01-00:34:51 Meeker: Well, tell me a little bit about that. So what did you anticipate that this position would allow you to do? What sort of work did you think you would be doing?

01-00:35:00 Crane: Well, let me say something about the environment first. This was a time when public service was seen as something good to do. It was probably the high

point of that over the last forty years. Even with Richard Nixon—I’m not sure where this was on his radar screen. We’ve had presidents who have kind of run against the bureaucracy in Washington, many of them. In this case, the government had a strategy to reach out and try to bring into its fold some of the best and the brightest and that’s what these management intern programs were attempting to do.

Elliot Richardson was the Secretary of Health and Human Services. Hugely respected individual. And he personified this notion. And even on the Republican side, Rockefeller was the governor of New York during some of this period, also had a strong belief that public service was a good thing to do and that we needed talented people. And so the environment which led me to look at this was one in which they were actively recruiting people to spend some time in the government. And that made it easy to do. And the management intern program that I joined was a year in length. It gave one an opportunity to pursue up to four different assignments. So you got a lens into the Department of Health and Human Services at this point, or one of its sub- agencies where I had my focus, which was called Health Services and Mental Health Administration, HSMHA, and without actually having to make a decision of what you wanted to do for the rest of your life, kind of kick the tires and get experience about is this the place you want to be. And I didn’t expect it to be a place that I stayed for more than a couple of years.

And I had some terrific experiences. I had an assignment with the National Institutes of Mental Health. I had an assignment with the office administrator of the Health Services Mental Health Administration and one of his deputy administrators. And in that role I got my first experience with HMOs. This was prior to the HMO Act in 1973, so it was 1972, early part of ’72. And there was already a policy interest in trying to create more and better organization at the national level. So Nixon used money that had been appropriated to the Regional Medical Programs and funded some planning grants for organizations that wanted to be what they called Health Maintenance Organizations (HMOs). Paul Ellwood named them HMOs.

01-00:38:31 Meeker: HMOs at this point in time would have basically fit within the model of prepaid group practice plans.

01-00:38:36 Crane: Yes. Right. And, in fact, those words might have been more actively used. There were clearly two models of HMOs that had been developed and most of the development was here in California. You had Kaiser Permanente and you had the individual practice model, which was designed as the independent doctors competitive answer to Kaiser Permanente and the other things that were going on here. So I don’t know when the first legislation was introduced. It was passed in ’73. But I had the opportunity to sit on the review committees for the first round of grants to start this movement, which was then codified in

legislation called Health Maintenance Organizations Act of 1973. So I was in on the ground floor, if you will.

01-00:39:42 Meeker: When you’re reviewing these applications, what were you charged with? What were some of the key variables in the application that made for an application that would appear to be headed for success and one that—

01-00:40:00 Crane: Well, I think that there were real defined criteria and I don’t recall them all. But things that would have been prominent would be issues around kind of market size. Do you have a marketplace that is sizeable enough that you can grow, something that will work here.

01-00:40:23 Meeker: Critical mass.

01-00:40:24 Crane: Critical mass, yes. Community support. Often challenging because these organizations were potentially taking on the rest of the system. But at that point, the view was you wanted organizations to be collaborating for success as opposed to creating a foreign element in the community that wouldn’t win. So the nature of the physicians, support from the county medical society, are the local hospitals willing to participate and what is their stake in the organization. So there are a whole range of organizational dynamics.

01-00:41:13 Meeker: Well, that’s an interesting point because if memory serves, one of the tangible things the HMO Act actually accomplished was to assert federal preemption over local and state laws that somehow overly restricted what was described pejoratively as corporate medicine. There were some places that HMOs simply could not exist because of laws that state legislators had established. So it sounds to me like there was the desire amongst the federal government to promote this alternative method of delivery, yet maybe before the act had passed there was some reluctance to force it onto communities that had already rejected the model.

01-00:42:04 Crane: Well, I think initially they were using grant money which was not appropriated for the purpose that you’re using it, which is what the Nixon Administration was actually doing here. They may have been able to reprogram it. However those words are used. But this was not appropriated to do this work.

01-00:42:26 Meeker: Did you know what it was appropriated for?

01-00:42:28 Crane: For the Regional Medical Programs. It was part of this effort to expand the purposes of that act. I think of it in terms of technology. I think the rationalization might very well have been this is expanding the organizational frameworks to communities. And so therefore I’m sure it had Office of General Counsel approval to do this within the broad aspects of current legislation. And, in fact, they may have even gotten encouragement from some of the Congressional committees because this was something the Democratic legislature at the time seemed to be supportive of. But if your perspective is starting something like that, you don’t want to do it with a lot of controversy. You want to bet on the sure horses. And so cohesiveness of the players within the delivery system so you have a chance of doing this was one of the factors. A third issue of key significance was the financial feasibility. How much money was being put into this locally? Did you have a business plan that made some sense and so you’ll be examining that. You might have gotten some nod from the state health department. Did that make sense? If there was a local planning agency. For example, there were strong agencies in a number of different towns, some of which might have stymied the development of these because they, in some places, were kind of organized by the status quo. So it would be kind of balancing all of those factors, having weights for all of them and then making judgments about how competitively a given application met these criteria.

01-00:44:33 Meeker: It’s interesting. When you were looking at surrounding communities and the degree to which there was support or not, was the presence of an established HMO contributed an attribute or a drawback? Was there fear that established HMOs wouldn’t warrant additional competition or was it seen as sort of a federal stamp for approval on that particular model and that maybe the established HMOs would be happy to have another practice there.

01-00:45:09 Crane: That’s a great question and I don’t know the answer because I don’t recall the dynamic. So the real manifestation of that question would be if somebody in Kaiser’s backyard had proposed starting an IPA or something like that, how would that be looked upon? I don’t recall an issue. One of the factors around the acceptability of the concept of the geographic area would have been met because there already was a presence. But I think a bigger driver during this period of time was really to create these entities where there was not, because I don’t think people were thinking about HMO to HMO competition as much as creating the HMO seed, which would then alter the way in which the rest of the delivery system around that HMO might react. Just as you could argue the delivery system here in California has responded to Kaiser Permanente.

01-00:46:13 Meeker: I ask that because you get to the 1980s and 1990s, especially the 1990s. HMO vs. HMO competition, particularly a more traditional model HMO like Kaiser

was and then some of the-for profit managed care organizations, the IPAs and so forth. That starts to become a huge concern within this organization about competition. And not just about competition on the local level but sort of national market share was one of the ways in which it was talked about. But I’ve had the opportunity to read through some of the KaiPerm minutes from the 1970s when the HMO Act is just getting passed and the amendments are just getting passed and there’s a real sort of evangelical fervor amongst people in Kaiser Permanente to actually loan out executives to spread the word about this model of delivery. What I didn’t see in any of the minutes was a consideration or a concern for establishing what might be future competitor organizations. And so that’s why I bring this up: Was from someone on the inside approving these applications and trying to find the ideal places for these to be established. Was there ever any concern about HMO vs. HMO competition?

01-00:47:34 Crane: Yes. In those early days, no, I don’t think there was. Just to jump ahead and reinforce your view about how the early leaders of Kaiser Permanente underscored this issue. I think there was a political calculus that a bigger footprint of organizations like us would help our legitimacy and since we had so much talent, we were the large organization, sharing that with others— there was a period in our time in which we had an organization which we called KPAS, Kaiser Permanente Advisory Services, in which it was a unit of KP. This was actually defunct when I joined the program or nearly so. The Kaiser Family Foundation provided some money to help support this, as well. It was very much, as you say, almost a missionary zeal to sell this to places and consult with others to develop it. I’m not sure that any of that was in our backyard but in Detroit and Cleveland.

And as it turned out—again, I had a story here—but those consultations did end up creating units of Kaiser Permanente at some point and it did create organizations that were successful on their own. There was a period, and I don’t know exactly what the year was, in which, between that work and the Act itself, there were well over 500 HMOs around the country. You could say that the act worked, initially, from that point of view. A lot of change. It was far from the words that Elliot Richardson once proclaimed, or maybe even Richard Nixon himself in a State of the Union saying that our view is that ninety percent of the medical care in the United States would be delivered by these organizations.

01-00:49:44 Meeker: In ten years or something like that.

01-00:49:46 Crane: Yes, yes, Close to it. Close to that. But it was a very different time. There was no question about it. The thing that’s striking about it compared to today is the view that the federal government could and should play this type of a role

within the system. Now, I’m sure that wasn’t universally held. But when you had a Republican president leading this type of charge, it’s a very different political dynamic than we have facing us today.

01-00:50:24 Meeker: During the Nixon presidency, there was also some discussion that the HMO Act was kind of meant to a certain degree as a stop gap measure to prevent further federal incursion into the health care sector through national health care insurance or single payer universal coverage model.

01-00:50:49 Crane: On the delivery side I think that that’s right, because basically it played well, and, in fact, was really a vehicle to promote competition, which is juxtaposed to a regulatory or federally controlled process. I’m sure during that period of time folks were looking at the NHS, some with horror and some with admiration, I’m sure, and say, “Well, you certainly don’t want to go in that direction,” and so this was a viable alternative. I don’t know if it was a stop gap but it was certainly viable alternative to try. And so you could dress it up in free market clothes even though there was a lot of priming of the pump from the federal government and rules for the federal government to do it.

01-00:51:38 Meeker: Yes. It’s interesting, because it did pass with a lot of support from Republicans, who bought this notion that it was, in essence, the federal government encouraging a free market solution as an alternative to a national health services model. From what I understand, Kennedy actually was opposed to it because he was an advocate of the single payer system and thought that this would have actually got in the way of something like that from eventually being enacted. I wonder if these kinds of debates were something that you had encountered when you were an intern or when you were just sort of getting started in Washington.

01-00:52:26 Crane: Those were clearly going on but they were at a totally different level than I was working at. Might have been reading something about it in The Washington Post but wouldn’t have had much direct relationship with it.

01-00:52:40 Meeker: But what about you and your colleagues. I imagine that young people in DC kind of working in the policy sphere, I’m sure that you’re sort of having conversations and debates with your colleagues, your local, same level, interlevel colleagues.

01-00:52:55 Crane: Yes.

01-00:52:56 Meeker: Were these some of the issues that you were wrestling with, do you remember, at the time?

01-00:53:00 Crane: Interestingly, no. And the reason I say that is that I was relatively unusual in my own class, who were thinking about the federal government as a career, learning how the nits and grits worked within kind of the management. In this particular process, if one of my colleagues had been involved, their interest might have focused on grants management as opposed to the policy of discussion that we’re having. And it just is a function of kind of where I was coming from, my background. I don’t know that there was anyone else who actually had been trained at the master’s level, at least in the health care administration. They were bright people. Might have been graduate school, might have been undergraduate who were really trying to see—and this was really the purpose of the program—a federal career.

01-00:54:03 Meeker: And that was never your intention?

01-00:54:05 Crane: No.

01-00:54:06 Meeker: Well, it eventually, for a period of seven or eight years, right, it in fact becomes reality. So how is it that you moved from this intern position into more of a career track at that point?

01-00:54:19 Crane: Well, my next to last assignment was in the San Francisco regional office. So I spent time across the Bay here working in the health planning program.

01-00:54:41 Meeker: So the San Francisco office of HEW?

01-00:54:43 Crane: Yes. I worked directly for the person who is responsible for this cluster of activities, his name was Bob Brook, in San Francisco. And that was career shaping from a number of points of view. One is that it increased my interest in community planning, which then was a big piece of my other federal work, and it also exposed me to the West Coast and to the Bay Area, which, when I had an opportunity to think about joining Kaiser, was a smaller step than it might have been for a lot of people who grew up in the East.

01-00:55:34 Meeker: So this is the ’75 to ’76 period of time?

01-00:55:38 Crane: When I was in the San Francisco office it would have been ’72.

01-00:55:40 Meeker: Oh, ’72. Okay. All right.

01-00:55:43 Crane: Right. Early in ’72. And then I went back and I actually ended up working for the health planning program for a number of years.

01-00:55:56 Meeker: Oh, I see. So the last piece of your internship is in San Francisco and then you started working.

01-00:56:02 Crane: Right, right.

Begin Audio File 2 06-15-2010.mp3

02-00:00:02 Meeker: So you finished your internship year in San Francisco and it sounds like you did have some interaction with Kaiser Permanente here.

02-00:00:21 Crane: Not really.

02-00:00:21 Meeker: Not really?

02-00:00:21 Crane: No, I didn’t. I had very little. Although there was an office. I’m trying to think if it was active at this time. There was an Office of Health Maintenance Organizations either about this time or a little after, which I did have some interaction with. A guy by the name of Allan Harris was the head of that office.

02-00:00:50 Meeker: Was that a local or a national office?

02-00:00:52 Crane: It was a regional office associated with the HMO program. So this is probably after ’72.

02-00:01:01 Meeker: After ’73.

02-00:01:02 Crane: ’72, ’73.

02-00:01:04 Meeker: When did you first encounter Kaiser Permanente and learn about their particular model of delivery?

02-00:01:08 Crane: Probably graduate school, just as a kind of educational opportunity.

02-00:01:15 Meeker: Did you learn anything about any of the other plans? The New York plan, perhaps Puget Sound?

02-00:01:21 Crane: Group Health Association in Washington. HIP would have been on the radar screen. Group Health Cooperative. Those plans were known.

02-00:01:31 Meeker: Well-known. Okay. So your internship ends and it sounds like you were offered a position in the same department?

02-00:01:39 Crane: Yes. I joined the Comprehensive Health Planning Services, which was the entity that was running this network of state and local planning agencies. So fundamentally the structure was federal grants to communities to start planning processes. And the planning processes must be multidisciplinary, multi kind of factorial within the community, lots of representation and its roles, at least initially, were voluntary planning but then they became the entities when amendments were added, and I’m not sure what year this was, to create at the state level certificate of need programs.

02-00:02:26 Meeker: It was ’74.

02-00:02:27 Crane: ’74. Okay. You had capital expenditure review in ’72, which was related to Medicare and then in ’74 state agencies were required to develop certificate of need programs.

02-00:02:46 Meeker: And the certificate of need program was contingent upon receiving Medicare funding, yes?

02-00:02:51 Crane: The capital expenditure review was and I think certificate of need program was contingent on getting the federal money to run the state health planning agency.

02-00:03:03 Meeker: Okay, right. One of my areas of confusion around some of these is the overlap between the HMO Act and Medicare and facilities planning and certificate of need and Medicare and—

02-00:03:17 Crane: Well, the first foray was Medicare saying we need mechanisms to assure that the things that we’re paying for, because we’re the big payer, and so you had state agencies who were doing this review of capital expenditures and hospitals wanted the review because they wanted the Medicare revenue. There were a whole class of things which might not have been relevant to Medicare beneficiaries or might not have been capital expenditures in the way in which they were defined, which led to this desire to have the certificate of need law put in place and the whole range of criteria related to that.

So I was part of the governmental agency charged with implementing the local planning activity as well as certificate of need work at the state level.

02-00:04:18 Meeker: That does seem to be one of the most interesting developments coming out of first the emergence of the federal employees’ health benefits program. It looks like ’59, ’60, sometime about then. And then Medicare in ’65 because all of a sudden you start to have the federal government dumping millions, if not billions of dollars, into this particular sector of the economy. And as a result, they’re going to want to make sure that they’re getting what they paid for. Hence additional regulations. And so certificate of need, health facilities planning, some stuff around the HMO Act, professional standard review organizations, which becomes a huge deal. When you’re involved in this, is there a sense that the federal government is, when you’re working for it, saying, “Listen, we’re throwing all this money into this sector of the economy now. You need to start figuring out ways that there is no waste, fraud and abuse,” and the way in which it’s talked about.

02-00:05:22 Crane: Well, and that, in fact, as more federal dollars are going to supporting the system, we need to make sure there’s a system there that makes some sense from an economic point of view. That’s the issue.

02-00:05:34 Meeker: To what extent were you involved in at least some level of determining what are the best practices that the government can do to make sure that it is making a logical investment in this sector of the economy?

02-00:05:56 Crane: Well, the philosophy here was that those decisions should be made locally and that the federal role really was to support financially and with technical assistance—I was involved with both pieces of that—an infrastructure that could help make those decisions wisely. And so the agency that I worked for and the role that I played there had to do with providing these agencies with technical assistance, how to do this properly, and that went all the way from structure to planning tools and techniques.

02-00:06:45 Meeker: What were some of these tools and techniques that were developed?

02-00:06:49 Crane: Well, there are a couple of things that we did. I was very actively involved in developing and managing an assessment program for these agencies. This followed some initial work in which the definition of what these agencies were supposed to do was set forth. And one of the major things they were to do was to set forth a comprehensive plan that covered the facilities and services within their area to identify where there were overlaps, duplications, and/or community needs. So you had, for almost every major metropolitan area in the country, a comprehensive health plan which this community oriented board would put together; hours of meetings and processes that would go into those. And so some of the tools related to that were, well, how do you do an assessment of the community and how do you count beds and resources and what kinds of relationships would you expect between health care resources and population served.

So, for example, during this period of time, I think the US bed to population ratio was four to a thousand or something like that. And there was a lot of debate. Is that the right number? We looked at Kaiser Permanente and the number was hugely smaller. He looked at some other countries and it was quite different. And so that developed a debate around, well, how should you be using your health care facility capability or stock, if you will, and that got to raise questions at the community level around length of stay and admission rates and a whole range of other things. And so some of these tools were putting together guidance on what the knowledge base on those issues was so that each agency didn’t have to—we had 200 and some agencies around the country. You didn’t want each one of them reinventing the wheel. And so part of the federal role that I was involved in was how do you package this stuff to make sense? We created, as I say, an assessment program when teams from planning agencies other than those who are being assessed would come in with a set of criteria and kind of kick the tires. It was kind of an accreditation thing at a pretty rudimentary level.

I was involved in issuing contracts to entities to provide technical assistance locally. We created four different technical centers, one of which was here in the Bay Area. Joe Hatey, who used to run the Public Health Institute was,

during his career, a health planning agency exec for this area in East Bay or perhaps with San Francisco, as well, and then he actually took on the role of developing this center of expertise, which had some Berkeley affiliations, I believe, back in the seventies. And so this was an example of really trying to get people who are actively involved in the practice, providing some of the support, and so he developed a staff and ran seminars about how to do this. I was involved in developing a planning methods branch within this federal agency. I was the branch chief for a period of time. And that had, as its responsibility, really looking at, in a very detailed way, planning methods. So we would involve our four technical assistant centers and say, “Okay, what’s the very best way to carry out facility planning or activity?”

02-00:11:27 Meeker: It’s a fascinating topic and also, I imagine, a supremely complex methodology to come up with of, for instance, just determining what is the ideal or the preferred population to bed ratio in a community. And it’s one that I imagine that well intentioned experts outside of any influence of economic self-interest or political position would have difficulty coming to a decision. And then you throw in economic self-interest. So, for instance, you have a for profit community hospital or something like that that sees that the more beds that it has and the more patients that fill those beds, the higher the salaries of the physicians who are part of a medical group are going to be and the higher the income of the hospital itself will be. And so there’s an economic interest in some delivery systems filling the beds and in Kaiser there was an economic self-interest in limiting the length of stay and so forth because that would keep people out of the hospital and therefore keep the system healthier. And then I’m sure that along with the economic self-interest you’re going to have PACs and political influence and so forth. How did you sort of balance the sort of intellectual methodology that you were developing around trying to answer a question like this with what must have been kind of external pressure?

02-00:13:12 Crane: Yes. Well, I think it’s fair to say at the federal level what our role was is to seek out approaches. Not necessarily establishing one, although there was a big national debate on the bed to population ratio. It was a huge issue over a period of time. But more it was—

02-00:13:35 Meeker: Was there a national ideal established for that?

02-00:13:38 Crane: There was at one point. I don’t really remember the circumstances. But there were in national planning documents we should be moving toward this and I don’t remember whether it was—

02-00:13:50 Meeker: But they allowed state and localities to actually determine that was going to be.

02-00:13:56 Crane: That’s right. And it’s quite complicated because a bed is not a bed. You’ve got a filled bed, you’ve got a bed in service, you’ve got a mental health bed. It’s very complicated. And so at the federal level we had at least the wisdom to know that these things really needed to be worked locally and that our job really was to aggregate the tools to make it easier. It’s kind of like you deliver the tool kit. We actually had things like that. And then the local planning agencies would use or not use, as the case may be. It wasn’t something that they were required to do. They were required to do certain things from the organizational point of view and the production of the plan and having certain things in the plan. But now they actually got to that. We wanted these plans to be owned by communities because at some point in this process the plan was going to serve the purpose of enabling that local planning agency and the state agency to say yes or no about projects, about certificate of need projects. And so you wanted to have the plan be able to serve that purpose. And if there wasn’t some ownership in it, you didn’t have a system that was going to work.

02-00:15:19 Meeker: Well, this also provides a somewhat complicating view of the period of extreme federalism that you’re describing where the federal government is expanding its control over state and localities, and yet here you are working in DC, or at least in regional offices of the federal government, recognizing that imposition from DC is not going to actually solve the issues that we need to have solved.

02-00:15:52 Crane: Well, it’s a kind of a stimulus role. It’s true. And I guess I wouldn’t necessarily have characterized federalism the way that you did, but you’re probably right. It was a high point of federal activity within the system, at least, as we looked in the rear view mirror. But I think it was tempered because we have a federalist system. The states are in a very strong place within our system of government and I think there was a recognition of the importance of the state role. The governor’s made it very clear that some of the things that federal agencies did or were asking or wanted were not something that they wanted to do, because you had a whole spectrum of state political perspectives. And so you had commissioners of health and you had heads of state planning agencies. So it was lots of spirited discussion for sure.

And the system kind of fell on its own weight, I guess you would say, eventually, in recognition that perhaps there was an overreach during some of that period of time given the evolution of politics.

02-00:17:17 Meeker: From your own perspective, was that a conclusion that you reached or not?

02-00:17:24 Crane: Well, I actually think that the certificate of need process did have an important potential. But it played an important role. In some cases, local politics just use it as a stamp for things which would have otherwise happened. But it created some hurdles that people had to justify their acts as opposed to a system where the competitive milieu does that. It’s a different model. I think we’ve swung in the other direction and said, “Well, economics and other things are going to require us to assure that we’re delivering a service that’s useful and value added, etcetera.

02-00:18:20 Meeker: Sort of neo-liberalism. The free market will determine what is viable and what isn’t.

02-00:18:24 Crane: Well, that’s right. I think it is interesting to think about with the Federal share of revenue to the health care system now exceeding fifty percent and potentially exceeding it by a substantial amount more with the subsidies that exchanges will get. In the search for the right mechanism in the United States to manage cost, whether some of the approaches that were tried in the seventies won’t resurface as tools that are important to use. It’ll be interesting to see.

02-00:19:04 Meeker: So, for example, what do you think from the 1970s we might see again?

02-00:19:10 Crane: There’s talk in some circles in Washington that certificate of need should be brought back. That some mechanism for capital control is warranted. These are not major discussions. I ran into those discussions in Washington. When you’re looking at the potential concern about how health care is going to eat up the US economy, whether there are some additional needed strictures and/or if you look at the current health reform legislation, there are major tools in there for transparency around price and other things to really make a market work. And we’re kind of in the middle of not having a market that really works for us and not having a regulatory system that works for us. And I think there’s going to have to be pressure to reconcile that ambiguity. That the political forces on the right and the left will battle it out just as they tried to do with health care reform.

02-00:20:31 Meeker: It’s interesting. During this period of time in which you were working of HEW—I’ve interviewed a variety of people who were active in their careers during that period of time about some of the efforts at health reform and

everything, from the HMO Act to certificate of need and some more local initiatives. One of my main questions has been about what is motivating all of this action? Was it kind of a social mission to expand care to those who were uninsured in the United States? Was it concern about inflation in the health care sector and trying to control costs? Was it the federal government spending more money in the sector, seeking to better spend the money that it was spending? Or something of all of the above? And very few people have said that cost control was really an issue. Although you kind of go back in the literature and you definitely see concern about cost control. Nixon, of course, had his price controls and wage controls in the 1970s. Was cost control something that you were thinking about when you were doing this planning work?

02-00:21:54 Crane: Absolutely. It was front and center, although I would say in terms of your trifecta or your trio, it really was all of the above. There was an attempt to try to create some balance. There was also a real developing understanding of how little we knew about what worked and what didn’t. And this was a period in which, I mentioned earlier, the National Center for Health Services Research really had significant—it always has been modest. It was growing. It was searching for answers in a whole range of areas. And there was a part of the federal government under Medicare. There was an evaluation unit under Medicare that was very active in looking at how Medicare dollars were spent and doing pilots around how the payment might be changed in ways to promote efficiency. The whole HMO Act was oriented toward an approach to cost management and efficiency within the delivery system. So cost was a front burner issue. In fact, it ended up in a crescendo during the Carter Cost Containment Debate, which I was involved in when I was on the Hill, in a very, very high profile way. Cost was clearly a driver.

02-00:23:37 Meeker: Can you sort of unpack that a little for me? Tell me a bit about the Carter cost containment debate and the role that you played in it.

02-00:23:43 Crane: Well, we’ll be out of sequence, if that’s fine.

02-00:24:10 Meeker: Well, let’s just asterisk that for a follow-up.

02-00:24:13 Crane: Make sure we come back to it, yes.

02-00:24:14 Meeker: Yes. And I want you to make sure that we have everything that you think is worthwhile covered. But my next question around this period of time, of

course, is the HMO Act does get passed and how does that impact the work that you’re doing at HEW?

02-00:24:30 Crane: Well, the HMO Act was passed. Basically they staffed up and I actually had quite a bit of interaction with the people who ran the initial office. Gordon K. MacLeod, M.D., a physician from the University of Pittsburgh was the first director. And actually, I had gotten to know him because he had been on loan to the department when we did these grants before the act had passed. And several others. Bill McCloud, Frank H. Seubold, and others, who were some of the early leaders in the development of getting HMOs off the ground.

02-00:25:08 Meeker: Did you have any interaction with GHAA?

02-00:25:11 Crane: Not much at this point. A considerable amount later but not a huge amount at this point. We were kind of sister agencies planning HMOs. The issue of certificate of need and how it affected the HMO Act was one of the issues that was on the table. I recall doing some work with that office. I don’t recall exactly the conditions. But I knew those folks reasonably well. I mentioned the people in the San Francisco regional office that were involved in the HMO.

02-00:26:02 Meeker: So the Office of Health Maintenance Organizations, where was that located?

02-00:26:05 Crane: It was in Rockland, Maryland.

02-00:26:06 Meeker: But I mean bureaucratically.

02-00:26:09 Crane: Well, it was in the Department of Health, Education and Welfare. The agencies go through changes just to go through changes. There was a Health Services and Mental Health Administration that got parsed into several other agencies, which actually may exist today. One was the Health Resources Administration and one was the health services administration. The Office of HMOs and the Comprehensive Health Planning Service where I was working were in the Health Resources Administration at this point.

02-00:26:46 Meeker: Okay. So when you talk about a sister organization, you’re talking about when you’re working for the comprehensive health planning service.

02-00:26:51 Crane: Yes, right. There were two sister bureaus.

02-00:26:55 Meeker: Within HEW?

02-00:26:56 Crane: Right.

02-00:26:58 Meeker: Okay. So basically it sounds like as they’re trying to implement the act and get health care providers qualified as HMOs, they’re working with your office around planning initiatives.

02-00:27:11 Crane: Well, for example, what guidance should we be giving to health planning agencies about these organizations? Should they have a section in the to plan locally about alternative delivery systems and how these things should be looked at and what can the planning agency do. Because the planning agencies were “control agencies” in some ways, but most of their identity was really in, “Let’s develop the health systems and services within our community to better serve our residents.” And so this issue of role—so I wouldn’t be surprised if during these periods there was an expectation that the grant applications that might have come in to be reviewed by the Office of Health Maintenance Organizations needed to have some planning agency input locally. You had this mechanism there and you wouldn’t want to be putting money into a community when the community said, “We don’t want or need it,” or whatever, or if you did, you wanted to know that that’s what you were doing. So that would be the type of relationships. It was a pretty symbiotic kind of work environment.

02-00:28:26 Meeker: And so then you continue to work within HEW but you become acting chief of the Health Systems Planning Branch?

02-00:28:37 Crane: It was a health methods branch. And then I was asked whether I wanted to be in the departments, the Department of HEW’s Executive Development Program. And I said, “Sure.” And that was a program that was very loosely structured. It was an attempt to identify people who were in a Department unrelated to the management intern program who had potential. Let’s give them an opportunity to have a growth experience. So I consider myself double lucky. I had the management intern growth experience and now someone was coming to offer me this other opportunity.

So they said, “Well, what would you like to do?” And this was 1975, I think, or six. I’m not sure exactly. And I said, “Well, there’s all this noise about cost

containment. And the rate of inflation was kind of going crazy and certificate of need, which I had had a lot of experience with, was working but it was clear that it was not adequate to tame the beast of cost increases. And several states had developed cost review commissions or cost review rate setting agencies. New York had one or was playing with it. Maryland had one. The State of Washington had one. These were independent state efforts which governors and legislators said, “This is ridiculous. We cannot take seven, eight, nine, ten, twelve percent increases in our hospital costs.” It was primarily hospital orientation. So they created mechanisms which, for all intents and purposes, made the hospital industry a public utility, because, at least in the states that I’m familiar with, Maryland, New York, etcetera, when you say you’re going to control the rates of the private sector entity and you don’t provide adequate rates, then you have businesses going under. And so I asked whether or not I could spend some time at a relatively young Maryland State Hospital Cost Review Commission. An economist by the name of Hal Cohen was the executive director and it just seemed like, “Okay, I’ve had this planning experience. I’ve played around with HMOs a little bit, although that wasn’t even prominent in my thinking at the time.” But rate review. The states that were doing anything on the cutting edge were playing with this kind of rate setting mechanism. And so I spent four months in Baltimore just learning what they were doing and reviewing hospital rate submissions and going to commission meetings and things like that. Got a really good sense about some of the opportunities and the pitfalls of moving in this sphere.

02-00:32:48 Meeker: How were they establishing hospital rates?

02-00:32:52 Crane: Well, the state law required that they provide the hospital with enough revenue to stay solvent. This was not a squeeze out your life thing. So it was a budget review which really kicked the tires and said, “And why are you so much higher than another hospital?” And you had a group of analysts, some pretty talented analysts and economists in that particular office who just went to work on those budgets. You’d have hearings and you’d have a CEO of a hospital and the board chair coming in kind of having to justify their budget. A process that doesn’t occur in most hospitals today. And then the commission itself would approve the rate of increase. And actually, that process in Maryland still goes on I think pretty much unchanged. It’s one of the few states that still has that kind of a mechanism.

02-00:33:58 Meeker: Do you know if the overall costs for the health care sector in Maryland are any lower?

02-00:34:03 Crane: I don’t know. But it’s interesting that the hospital industry has become quite comfortable with this approach, because it creates predictability when the

rates are set. Then all payers must pay them. So you don’t have to worry about negotiating with the Aetna’s, the Kaiser’s, unless under unusual circumstances. And so it was a challenge. It was probably very painful initially but I’d say that the hospital industry—I don’t know. I’m too far away from it to know exactly what it’s like today. But there was a period in which the executive found this to be a world in which they could live comfortably.

02-00:34:51 Meeker: When you were there for a few months, what sort of percentage savings on an annual basis were they accepting?

02-00:34:59 Crane: I don’t recall. But they basically were getting a couple of percentages. That would be my off the top.

02-00:35:07 Meeker: Like not an overall reduction but a decrease in the increase?

02-00:35:11 Crane: All dealing with the increase, yes. Yes. You’re not going to change the base a huge amount. So in Maryland you had the certificate of need agency, you had the cost review commission, and of course, they interacted because if I’m in the certificate of need business and I approve a new hospital or I approve a new wing or even the equipment, there needs to be some connection to the cost review commission because those capital dollars are going to flow into operating dollars in the next year. So there was, in Maryland, some dialogue between those two regulators about does this make sense. You had two kind of sets of lenses working on the costs. I think the costs in Maryland compare favorably to those in the nation. Again, I haven’t looked at it in a long time.

02-00:36:03 Meeker: And so this was just a brief assignment in this period of time and then you go back to—

02-00:36:08 Crane: So then I went back and they said, “Well, what do you want to do next?” And I said, “Well, I’d certainly be interested in working on the Hill.” So I worked out an assignment and actually worked on some planning legislation. They were interested in me on the Hill because of two things. One is I had health planning experience and I actually worked on some planning legislation that was going through. This would have been ’76. And then they were really interested that I had worked at the Maryland Health Services Cost Review Commission because the President, in this case Jimmy Carter, was contemplating legislation that would put federal cost controls on the health care system. Two parts. The proposal was to create a set of expenditure limits on hospitals. So operating cost limits. And a proposal to put an expenditure limit on certificate of need approvals within a state. So a lid on operations and

a lid on capital. And it was quite a robust debate. Joe Califano was the secretary. He took this challenge on with relish. Karen Davis was his deputy for planning and evaluation. And to make a long story short, I never went back to the department. After my three or four months on the Hill, they offered me a job to stay with what was the Health Subcommittee of the Energy and Commerce Committee of the US House of Representatives. I started on the professional staff of the full committee and then was offered a job on the professional staff of the subcommittee. And the chair of that subcommittee was a congressman from Florida. Paul Rogers had been the chair for some period of time.

02-00:38:43 Meeker: So all of these positions you’ve had in DC are professional staff positions and not political appointment positions.

02-00:38:50 Crane: Correct. Yes. Right. No one ever asked me whether I was a Republican or a Democrat.

02-00:38:55 Meeker: That’s interesting. The whole time you were at HEW that wasn’t a concern or an issue?

02-00:38:59 Crane: Not a bit.

02-00:39:02 Meeker: Did you feel like when you were working for Nixon that you had to kind of try to remain apolitical, in a sense, or—?

02-00:39:15 Crane: Well, I think the bureaucracy generally does. I might have even been a registered Independent at the time, because it didn’t really matter. You didn’t have to have a party. And I probably thought at the time to be successful at this you need to be able to understand both parts of the political spectrum and deal with them. I was actually kind of surprised that it was not a litmus test when I went to work for Democratic subcommittees or a chair. Harley Staggers was the chair of the full committee at the time. But it never came up.

02-00:39:48 Meeker: And so when you’re working for the Health subcommittee, what’s the nature of your work with them?

02-00:39:55 Crane: Some oversight work in terms of legislation that was on the books and then looking at the legislation. The Health subcommittee was an authorizing committee, so it had to authorize or reauthorize legislation. So I was involved

in authorization and amendments to the planning act. I was involved in similar work with the National Health Services Corps, with the National Center for Health Services Research and Development. I was responsible for managing in the House the HMO Act amendments of 1978. I might have been involved in the ’76 amendments but certainly was the primary staff person on the ’78 amendments.

02-00:40:47 Meeker: Well, the ’76 amendments for the HMO Act were the major change that, from what I understand, came out as a result of the Institute of Medicine 1974 report that, in essence, removed a lot of the barriers for qualification and allowed HMOs to become more competitive in the health care marketplace. What were the ’78, ’79 amendments about?

02-00:41:12 Crane: I may be wrong about this but I believe the ’78 amendments included a range of other technical issues, one of which was quite important to Kaiser Permanente, and that was federal requirement that state certificate of need laws consider special needs of circumstances of HMOs in their approval process.

02-00:41:45 Meeker: Interesting. Because this would have been the period of time that Kaiser in California was lobbying Jerry Brown to, in essence, get an exemption from state certificate of need review. And so was this in essence them taking their program to DC? To the federal level to make sure that it is—

02-00:42:05 Crane: I wasn’t necessarily fully aware of what they were doing in California but the Kaiser position in Washington was we have a responsibility to care for our population. They have hospitals and they need other acute care facilities. Without the special needs in circumstances language, are held hostage to the demands of other institutions. Where they, without our own facilities, would need to hospitalize our patients. Without the ability to have this leverage, it’s not a fair fight. And they made it quite persuasively.

02-00:42:56 Meeker: What do you mean by that?

02-00:42:58 Crane: Well, they brought good evidence that it was a problem. They made sense. This was a time when I was working for the committee staff where I was lobbied by Kaiser.

02-00:43:16 Meeker: Had you been lobbied by Kaiser when you were working at HEW?

02-00:43:20 Crane: No, this was really my first Kaiser Permanente interaction. I got to know the Washington office staff. John Iglehart was head of the Washington office during this period of time. Medical group leaders. Jack Smillie was actively involved. Bob Erickson, Jim Lane. I interacted with all of them. And I was extremely impressed with the way in which they carried out their representational work.

02-00:44:00 Meeker: Can you compare their approach to lobbying in comparison to Aetna’s or a hospital organization?

02-00:44:10 Crane: Well, it would have been more the hospitals, yes.

02-00:44:12 Meeker: What was the big hospital trade association at that point?

02-00:44:15 Crane: Well, AHA and the Federation of American Hospitals was the for profit organization. What impressed me about Kaiser was they brought good facts to the table, they had solutions thought out and well articulated and were able to support them with the facts and, in most cases, their arguments were associated with the public interest as opposed to this is just something we want because it’s good for us.

02-00:45:02 Meeker: How were you able to define public interest?

02-00:45:05 Crane: Well, in this case, the way that I was able to see it, both in the way it was presented and also was, was that I could understand that it wasn’t in the public interest to not allow Kaiser to expand because it was clear from the data that they had a more efficient delivery system. It wasn’t in the public interest to force them to go to Alta Bates and pay twice the rate. It just didn’t make sense.

02-00:45:37 Meeker: And pass the expense on to their consumers as well as the federal government.

02-00:45:39 Crane: Right. And with this structure of certificate of need that we had put in place, that this was kind of a situation that needed some adjustment. And the solution was not exemption, although they might have been advocating that at one point. I am not sure. But the solution that we ended up in, amending the planning act was—and they readily supported this, as I recall—this notion of, okay, well, let’s put some special criteria that states have in place to make

decisions with respect to organized delivery systems. Some special needs. Consider their special needs and the circumstances of the planning area and whether this makes sense. And so it made lots of good sense. You could have argued for an exemption, I suppose, too, but at the national level that was a little harder for people to agree to. I told this to Congressman Rogers, which didn’t know them well. But Henry Waxman was on the committee and then Henry took over the committee. I worked for Henry, Congressman Waxman, for a period of time, as well. He knew Kaiser very well. He had known them because he was a state legislator. They had worked with Assemblyman Waxman and Congressman Waxman.

02-00:47:12 Meeker: I’m wondering if you could describe actually the lobbying process from the vantage point of someone who was approached by trade associations and corporations.

02-00:47:23 Crane: Well, generally, you basically bring a group of people who are from a district, hopefully a district of a member of your committee, and they present their case. That may get staffs interest. They may have approached the member first and the member asks you to meet with them. And so it’s really an information exchange process more than anything else.

02-00:47:59 Meeker: I ask because, for someone who’s never been involved in it, right, it is a somewhat opaque process and, of course, there’s a lot of sort of suspicion and methodology built around K Street, for instance, and the way in which lobbying happens. I’m asking for clarification because it seems pretty obvious, reasonably obvious, how politicians themselves are lobbied. I’m sure that they booked their calendar in response to a constituent in my district, how powerful are they, have they been supportive in the past, have they not been supportive in the past. Is this an issue that I’m personally associated with or not. Those kinds of political calculations that one would expect a politician to make. But I wonder about a professional staff person and how they determine what is a good use of their time and who they want to speak with.

02-00:49:02 Crane: Well, I was there for three years and I honestly have to say that when it got down to the professional staff, we dealt with the professional issues. And the two committee chairmen that I worked with never gave me any indication that I should deal with it otherwise. I should see what the issues were, identify problems, where they were. If light or lens needed to be used with that issue, then I would organize a hearing for the committee, bring in a range of other witnesses so that you can get multiple points of view. Or if you had come to a conclusion based on your work that—and this is where, I suppose, the power of the professional staff is—a certain conclusion makes sense, then you

organize a hearing to make sure that’s what comes across so that the members really see that this is a problem.

I don’t think we had a hearing on this particular issue. We might have, actually. Maybe we did. But you would have people who would have been able to tell you the horror stories of not being able to build hospitals in a given area because the planning agency had turned you down and what have you. So you tried to bring in information, maybe a graphic. Often committee hearings can be organized to be graphic to make a point. And then the process really goes from hearing to writing a bill. So the professional staff sits down with the Office of Legislative Counsel, which are lawyers who are expert drafters. They know the current statute, they’re able to draft language that goes into those. We would spend hours and days. The cost containment legislation I probably spent weeks with legislative counsel trying to figure out how the policy that you’re trying to do gets expressed in words to carry it out so that it does that and nothing else. I actually became quite good at it, even in three years, working with these people who are wordsmiths. And I was not a lawyer. Most of the people who work on the professional staff—many of the people who work on professional staff on the Hill are lawyers. It’s a great training because words do matter and that’s part of what lawyers are trained to understand, to do and to construct. So then you get a bill and you have a specific hearing on the bill. The first hearing I was talking about was more kind of informational, trying to really understand the problem. A hearing on the bill, you’d have people for it and against it, testifying before, in most cases, a subcommittee. The Health subcommittee, not the full committee. Although sometimes—we had mark up of a bill such as the cost containment legislation in front of the full committee.

02-00:52:18 Meeker: So as this process is moving along, as a staff person are you constantly interacting with the lobbyist and the trade associations?

02-00:52:27 Crane: Sure.

02-00:52:29 Meeker: So its not something that happens only at the beginning of the process?

02-00:52:29 Crane: It’s a very interactive process and you’re interacting with the staff, the personal staff of all the members on your committee who are getting pushed, maybe, on this issue or that issue. Had a very close relationship, interactive relationship with, for example, Henry Waxman’s staff and the Republicans on the committee. We had an interesting committee in that the senior Republican person, when Chairman Rogers was the chair, was a physician from the South. Tim Lee Carter. Dr. Carter. And unlike the environment today, these two senior people on the committee worked together. And when the senior people

on the committee work together, their staffs can work together. And so we’d sit down together with the minority staff and work through issues. Say, “Okay, well, what’s the best way to do this?” That is largely gone in today’s environment. It was a much nicer environment to work on the Hill. You understood what the minority needed. You tried to make that work for them, because if you could have Doc Carter and some minority votes as well as the Democratic votes on this committee you had a bill that was going to pass the House, because you had Doc Carter standing up for it. So most of our bills passed the House.

02-00:54:13 Meeker: What was the fate of the cost containment legislation?

02-00:54:19 Crane: That was long protracted and very high profile. The hospital industry was fighting this tooth and nail. To make a long story short, with these controls being poised, it may have gone down in one of the houses. I don’t know. But one of the things that occurred as a result of the Carter initiative was the creation of what was called the voluntary effort. The AHA and the Federation agreed that they would apply voluntary restraint in the raising of hospital rates. And, in fact, it worked for a couple of years. And I’m not sure whether the commitment to the voluntary effort was what sunk the legislation or it would have sunk anyway. I don’t know. Because you talk about the hype of federalism—

02-00:55:21 Meeker: Sure, sure.

02-00:55:22 Crane: This was really a big deal. And it’s probably the biggest challenge the hospital industry has had in Washington.

02-00:55:35 Meeker: Do you recall Kaiser Permanente lobbying around this issue?

02-00:55:40 Crane: I don’t specifically recall. I’m sure they were involved in the milieu but this was really the hospital associations. I do recall the California Hospital Association being actively involved.

02-00:56:03 Meeker: So since you had been involved in this effort on the state level in Maryland and I assume that you took an active role in crafting the national legislation.

02-00:56:15 Crane: Well, the Department was really in the driver’s seat. This was the Department’s bill. The Congress was kind of taking the barrage from the

Administration to pass it and everyone else against it. It was big time politics and our role really was to try to make the policy make some sense. We’d have drafting sessions and people from the department might have been a part of those, people from Karen Davis’s office and others.

02-00:56:47 Meeker: I guess whether or not you’re involved in this, it seemed like it was an issue that you were somewhat associated with and I wonder the extent to which you got sort of personally invested in legislation. How do you maintain sort of the professional staff distance, particularly in relation to topics that you have a great deal of knowledge and experience with.

02-00:57:10 Crane: Well, you get sucked into them, for sure. Let’s say the National Health Service Corps. I didn’t spend a lot of time with that but I spent a little. You know how the program works. You’re dealing with the docs who are out there kind of delivering care to people. You know that it makes a difference in people’s lives. You have a reauthorization bill and you want it to be reauthorized. In terms of this proposal from President Carter, I think you’re really trying to weigh the different goods that you’re trying to do. Yes, we do have a cost problem but is this the right solution? And some staff members might have been for it. I actually tried to kind of weigh the issues. Fundamentally it wasn’t my job to make those cuts. It was my Member. The committee chair who’s made the cuts. I would make a recommendation. That was my job to say, “Okay, well, I think the department is really overreaching on this issue,” or, “What we’re hearing from the lobbyists is this just won’t work. It’s just not feasible.” Or “State government doesn’t want to take on this role.” The National Governors Association, the National Association of Counties, we dealt with them all. It’s a fascinating milieu, it really is. I feel very privileged to have had that opportunity. It was great.

Begin Audio File 3 06-15-2010.mp3

03-00:00:00 Meeker: In the last tape we were continuing our discussion on your work on the subcommittee on Health and the Environment. We were talking about the process of lobbying and legislation creation. We also talked, to a certain extent, about the work on the cost containment legislation. Is there anything else that you’d like to cover about that particular period of your career?

03-00:00:41 Crane: I think that was a good summary.

03-00:00:43 Meeker: Okay. And so I know on the phone that we had discussed a little bit about your reasons for leaving Washington at that point in time, which would have

been about 1979. But what was leading up to your decision to leave Washington after being there for about seven or eight years?

03-00:01:06 Crane: Well, as I indicated earlier, I never went to Washington for a career. It was a way to get some insights into how the national and the federal government effected health care. Although I did get a strong interest in health policy. I guess there were three factors to me leaving. One was that some of the legislation I had managed, I had managed a couple of times. I like to do new things, as opposed to just redo things I’d done before. So that’s kind of point one. Point two is that President Reagan was elected and President Reagan was elected and seemed pretty resolute in transferring the balance of power and responsibility for government action from the federal government to the state.

03-00:02:09 Meeker: Well, you left in ’79, correct?

03-00:02:10 Crane: Um-hmm.

03-00:02:12 Meeker: He wasn’t elected until November of 1980. Was this writing on the wall?

03-00:02:19 Crane: I guess that’s right. It was more writing on the wall. It was a year before. I left a year before. But it was pretty clear to me. And it may have been kind of what happened with the federal cost containment legislation. It’s kind of a very enervating experience, that the states were likely to be where the action was. Maybe it was great insight and anticipation. And then, actually, the third reason was I was recruited by New York State. Basically a mutual colleague suggested I might enjoy that. Obviously, the experience I had was relevant to them and I had gone to school in New York. I’d never lived in Albany but I was recruited by Governor Carey’s staff to join the state health department in New York.

03-00:03:28 Meeker: So this position was in Albany? It wasn’t in New York City?

03-00:03:31 Crane: It was in Albany, yes. I had several positions while I was there, one of which did have an office in New York City, as well, but the job was really in Albany.

03-00:03:41 Meeker: Yes. So you were in New York State for about four years, correct?

03-00:03:46 Crane: Um-hmm.

03-00:03:46 Meeker: Maybe you can give an overview of some of the work that you were doing there.

03-00:03:50 Crane: Yes. Well, I was in charge of planning and evaluation within the health department. The health department under the commissioner had two major operating units: the Office of Public Health, which focused on what most health departments do, really, and then the Office of Health Systems Management, which was the regulatory agency of the state. And actually, I guess I started in the Office of Health Systems Management, now that I’m thinking about it, which was the regulatory agency. New York at the time had a very sweeping set of rules over the health care system. And the Office of Health Systems Management carried those rules out. So the office ran the certificate of need program, so nothing new got really going without its approval. Was responsible for rate setting for hospitals and long-term care facilities. And this links back to my comment on rate setting. You put yourself in a position of being responsible for the viability of the hospital. Well, there were situations in New York in which there were a variety of inner city marginal hospitals. Sydenham, Harlem Hospital, etcetera, and part of the dynamics was going on was to whether or not those hospitals should survive. Very highly pitched activity because no subcommunity within a large city like that likes to lose their hospital. And then the third leg of the stool really is overseeing quality. We had a six, seven hundred person hospital/nursing home surveillance staff within the Office of Health Systems Management which made sure that all the hospital code was being enforced, that quality of care was adequate, all of the things that happened. A lot of that emphasis was in nursing homes, which was a key concern. So large agency, very active.

With respect to my current role, or Kaiser Permanente, the office also oversaw the HMOs. HMOs were authorized under the New York State law and were regulated, both getting their initial operating permit and then making sure that they adequately carried out their care responsibilities. The Department of Insurance, a sister agency, had responsibility for rates and solvency and stuff like that, although a lot of that was shared with HMOs, unlike regular insurers.

03-00:06:55 Meeker: So the difference between HMO qualification on a national level is quite a bit different than HMO licensing on a state level, yes?

03-00:07:05 Crane: Yes. Because at the state level, you’re really concerned with day to day operations as opposed to kind of macro structure and functioning.

03-00:07:16 Meeker: The state level also deals with the financial viability of the insurance element of it, correct?

03-00:07:19 Crane: Correct, right.

03-00:07:21 Meeker: Funding of it.

03-00:07:22 Crane: Right.

03-00:07:22 Meeker: Where as on the federal level the HMO Act is meeting, in essence, the federal definition of what an HMO does so that you get the federal seal of approval.

03-00:07:37 Crane: Right. It may be financial support. In the initial years it was loan guarantees and grants. And then the seal of approval, which for the initial years of the HMO Act was important, because if you didn’t have that, then you couldn’t go to employers or employers couldn’t use you to exercise their responsibility under the Act, which was to offer one of each type of HMO, if you have more than twenty-five employees in any geographic area. So in some ways the federal thing was a seal of good housekeeping, whereas the state role—and each state carries out this slightly differently. California there’s a whole department focused on this. But in New York it was just one of an area of activities. And the state health department and the Office of Health Systems Management had similar roles with respect to primary care facilities. It’s a very involved process, given New York State law.

So I actually started there in a planning and evaluation role, and I also played a role, for the governor, of being the coordinator of health issues across his cabinet with respect to the New York State Washington office, which did representational work for the State of New York. Most states have a Washington presence. And my role, and the part of the reason I was attractive to the Carey Administration was my experience in Washington and being able to deal with three or four different health agencies. You had mental health, you had the Department of Social Services that did all the Medicaid and related issues, the Department of Health, which had responsibility for dealing with the planning parts of the government, and Medicare. One of the things that New York had at this period of time was a waiver from Medicare which allowed it to set the payment rates for hospitals. So it was an “all payer” state. That is, it set the rates for Medicare, it set the rates for Aetna, Blue Cross and everyone else so that the revenue was adequate. Maryland had the same situation. You can’t really have Medicare paying on a different kind of crazy structure. What you have to do as a state rate review agency is to assure that

it’s not going to “cost” the government in the aggregate anymore. But what you do is you want to make sure that the hospital or the long-term care facility is faced with a uniform set of financial incentives and structures as opposed to kind of begging and borrowing.

03-00:10:55 Meeker: Did this kind of regulation result in a less expensive Medicare system in New York?

03-00:11:02 Crane: I believe so. And it certainly gave the hospital a more unified set of incentives—not uncontroversial. So I spent some of my time in Washington, not that much, and some of my time at a council of people from different health agencies in which we identified state policy issues that were important to New York and I helped translate those for the Washington office.

03-00:11:35 Meeker: So were you also then working with trade associations and provider lobbyists and so forth in Albany?

03-00:11:44 Crane: Not as much, no. Maybe other states, other governors office. Worked with the National Governors Association.

03-00:11:53 Meeker: In what fashion?

03-00:11:55 Crane: Well, if we had something we really wanted to do, we wanted to ensure that the NGA was pushing our issues, too, so that the Congress got stereo as opposed to just New York banging the drum. New York’s a big state. It’s the biggest state close to the capital. New York had influential members. Moynihan, who was chair of the welfare committee and the finance. He was actively involved in the finance committee, which is a very important committee. We had Charlie Rangel on the Ways and Means Committee. So had some interaction with the delegation from New York as a result of that role.

In my four years in New York I played that kind of role in the department. I played a planning and evaluation role at the department level. I had an opportunity to spend a semester at the Kennedy School in their state and federal officials program. Then, when I came back from the Kennedy School, I was asked to head the Office of Health Systems Management. So I took over the regulatory agency that I had worked on for a year in response to the commissioner’s desire. That was a big job.

03-00:13:41 Meeker: It’s interesting. I’m wondering if you can do a bit of a comparison for me, maybe focus on an issue or two, of working in DC in two parallel offices. In the legislative branch and then also in the executive branch, and then taking that to the states. In particular, with reference to this notion that you were talking about, of this kind of shifting terrain of power between the federal government and the states. Compare the work that you did in DC to the work that you were doing in Albany, with the notion of thinking about the degree to which you were able to exert more power over the system and state versus your time in the federal government. Does that make sense?

03-00:14:32 Crane: Yes. Well, the first comment I would make is that the work in Washington is largely academic compared to the work at the state level, where you have to roll up your sleeves and get your hands dirty. The politics in New York may be worse than other environments. It’s very rough and tumble. You’ve got the world’s paper as your local paper, The New York Times, and lots of other press. So you’ve operating under kind of a microscope.

One issue that you could follow through is certificate of need. This general notion that you’re sitting and talking about planning methods and kind of how best to carry this out and then you’re looking at kind of legislative amendments, whether it’s special needs in circumstances for HMOs or expenditure caps or what have you. Largely divorced from how you would actually carry that out. And then you are in New York and you have a local health planning agency in New York City, for example, and the process by which a certificate of need was granted in New York was hearing and decision at the health system agency level, which is the local planning agency. They might have had processes in each of the bureaus because they did their planning by borough. So you have a major hospital project. One of the major teaching hospitals wants to add a whole wing. There’s a whole dynamic that goes forward there. Lots of politics locally. And the agency makes a recommendation to the state. We actually had a council that we took major recommendations to, a citizens council, so it wasn’t just the head of the agency, which I ended up being, saying yes or no. We had a buffer or an additional set of eyes and ears to help you make some decisions on this. It’s a long involved process with lots of participants.

And then you’ve got to live with the results of your decision. So if you turn down a major expansion of a teaching hospital, then you have potentially financial implications on the rate side that they were hoping to capture by an expansion of their either program base or their service base or their facility base. One of the both nice, as well as difficult aspects of the New York job was you had all the pieces. The approval of capital, the approval of revenue, operating costs and then what if they weren’t cutting it on the quality side. Well, you don’t do that without often assuring that you have adequate revenue in order to do it. So you’ve got all three points of those.

So I think the analogy of academics versus operational—it’s a level up from operational. It’s not like operating a facility and all the details there. But you felt like you were really pulling the dials of the health care system, whereas in Washington you were just painting the cloth. You were kind of creating the fabric and at a state level, you’re making decisions. And in New York you had a lot of levers because of the interaction that New York City government has with its health care system.

03-00:18:40 Meeker: And also in relation to something else that you were talking about more conceptually, and you said that one of the reasons that you left DC was that you began to see a shift away from the power in DC to dispersal of power back to the states. Kind of a rejection of federal center power of model that had really come to be in the 1960s and 1970s. Another way in which people talk about what happened in the 1980s with the Reagan Revolution was not simply a devolution of power to the states, or a dispersal of power to the states, it was a deregulatory ethos overall. So not replacing state regulation with federal regulation, but replacing regulation with deregulation. I’m sure New York was maybe an anomaly to that movement, but did you experience of this deregulatory sort of zeal when you were in New York in the 1990s?

03-00:19:54 Crane: I was sheltered in New York because of the state cocoon, if you will. New York has since gone through that, taking the cocoon off and become much less regulatory. But Governor Carey, Governor Cuomo, they carried on a pretty focused oversight and feeling it was really government’s responsibility to assure that the health care facility stock and operation met certain standards. In fact, I’m not sure that Nelson Rockefeller didn’t establish a lot of that base on which they built. Where it played out perhaps most significantly was when the state was trying to get its Medicare waiver extended and there were certain elements within the federal government, building on the themes that you just talked about, that really wondered whether we want the states to be able to manage our Medicare program and have kind of a relationship with the health care system that New York did. Because it was an outlier given what other states were doing in the United States. There’s no question about that.

03-00:21:29 Meeker: Well, based on that, then, was there much of a movement to overturn this cost containment toward hospital price setting?

03-00:21:44 Crane: There wasn’t at the state level, and part of it was the state had to have these levers in order to protect the state budget, which was Medicaid. Medicaid is a very big program in New York, very important program. Having all those pieces together were really important. They’ve moved away from it and been

able to manage fine, but at the time the mindset was its really important to kind of have everything under a single umbrella.

03-00:22:20 Meeker: What were some of the other key issues during your period in New York that are worth revisiting?

03-00:22:27 Crane: Well, the Senate was Republican during this period of time and the Assembly was Democratic and there were always kinds of challenges. The amount of authority that the State Health Department had on all kinds of fronts, and there are always kind of challenges to improve that or increase it or decrease it. This was a constant legislative issue. But my focus there was just run those very large regulatory agency. Lots of fires in that kind of a job. Quality fires , professional liability issues, licensure issues, because you did the licensing there, of facilities and individuals, which actually the OHSM didn’t do. A relatively steep learning curve for someone who had been at the academic level, if you will. That’s what made it fun. A lot to learn. It was a very taxing job.

03-00:24:06 Meeker: I assume that you probably would have had a lot more interaction at this point of time than you previously had. I’m thinking more regulatory agencies, especially something on the state like this, dealing with something like health care, which of course is an emotionally charged issue. And I don’t know much about what was going on in the 1980s in New York, but I know in California in the 1980s there were many scandals around abuse at nursing homes and that kind of stuff and it sounds like this would have been under your bailiwick there.

03-00:24:41 Crane: Yes. We had a number of situations in which care allegations and/or abuse— not so much abuse but substandard care. We had surveyors in nursing homes all the time looking at that stuff. But you’d have issues related to that. A fair segment of the industry was for profit. And that caused you to have your antennae up more than otherwise would be the case. And then there were a whole series of what I’d call troubled hospital issues, where for one reason or another occupancy was down. It was a sole community provider, whether it was part of a borough or upstate. What are the types of tools you can use from a reimbursement point of view that are within the system of reimbursement to help assure that a hospital that really needed to be there to care for a population is able to do so.

03-00:26:01 Meeker: That’s an interesting question. I’d love for you to address it. You had alluded to some questions about viability of urban hospitals, and, of course, that becomes a highly charged political issue. If you’re closing a hospital in

Harlem or something like that. And I wonder, when a hospital like that gets in trouble and then the regulatory agency comes in and does something around the cost containment or determines that quality levels are not up to the point that it can remain open, all of a sudden the onus of responsibility falls away from the hospital itself and the sort of political firestorm starts to grow around the regulatory agency. And so were there ever any instances that you were confronted with these extremely difficult choices of bowing to political pressure even though it maybe in a regulatory sense it was not the right thing to do? Not that you did that but you would have felt this kind of pressure.

03-00:27:10 Crane: I think that you put your finger on the dynamic that was very common. You had to kind of work your way through those issues. New York’s a very political place. When you have a system of eighteen municipal hospitals that a mayor, Ed Koch, was responsible for, and a mayor who was thinking about running for governor who may have not been the best friends of Mario Cuomo and the dynamics were intense on some of these issues. For some of the hospitals, really there was a good case for them closing. Those political processes make it extremely difficult. I had a deputy that spent months on Sydenham Hospital trying to work out a solution there in which the community was left with good health care services but the hospital was not the best. Ended up closing.

03-00:28:30 Meeker: Okay. So up to this point in time, your entire career is spent in the public sector. What then makes you decide that it’s time to look more in the private sector?

03-00:28:44 Crane: Well, this job was very taxing. That’s point one. I made some choices with housing. I lived in the country at a time when I had a young daughter. That is, my daughter grew from two to six years old. It was a very tough environment. We had lived in a suburban environment and thought it’d be great to live in the country but it turned out not to be a good choice. Now, I could have moved to the city, but we were also anticipating a change in governor. Now, I was not a political appointee, or if I was, it wasn’t a big P or a D or an R on your back. But I just concluded that it would be good to try something else. And if you go back to the beginning, I didn’t really select a public career as something that I really wanted to do. So I had a real desire to get back to the private sector.

I learned in a series of experiences, even going back to Cornell, that I didn’t really want to be an institutional manager. I didn’t want to run a hospital. My feeling was that just wasn’t something that I would get a lot of enjoyment out of. The degrees of freedom are limited by all kinds of outside forces, and inside forces. The outside forces I had seen up close and personal, both at the federal and state level. I had had responsibility for the HMO program. I had a

bureau chief who was responsible for it, so I wasn’t directly involved in it. And actually, Kaiser came to New York during the period of time I was in this office, I believe. In any event, it might have been before, it might have been after.

03-00:31:08 Meeker: This was a Westchester—

03-00:31:09 Crane: But Kaiser acquired the Westchester Community Health Plan at about this time. While I hadn’t had any responsibility there, the HMO part of the state was robust. It was growing. It wasn’t anything like California but I had interaction with the HMO association of New York. I liked what they were doing. I thought that that made a lot of sense. It was about this time that I got to know Jim Doherty at GHAA. I actually was offered an opportunity to look at a job in Minnesota through that connection, which didn’t work out for a variety of different reasons. And then the Kaiser opportunity came up. What was happening here at Kaiser was Jim Lane, who was in this role, who was vice-president of government relations, had been asked by Jim Vohs to take on and develop a planning department. And that left that job either to be open or open and so they were looking for candidates. To make a long story short, I was offered a job and I agreed to take it and started in June of 1983.

03-00:33:00 Meeker: And so you would have been reporting to Bob Erickson?

03-00:33:03 Crane: Yes. Bob recruited me and hired me.

03-00:33:05 Meeker: And at that point in time, was he senior VP of government relations?

03-00:33:09 Crane: He was senior VP of government relations and general counsel.

03-00:33:11 Meeker: General counsel.

03-00:33:13 Crane: He had the combined legal. So I actually joined the legal department. That’s where government relations sat.

03-00:33:22 Meeker: I wonder, during this period of time that you were working in the federal government and also in New York State, given that you already had a master’s, did you ever consider studying for a law degree?

03-00:33:40 Crane: No.

03-00:33:41 Meeker: No. All right. So you had already gotten your graduate degree and that was sort of sufficient to establish your credentials, do you think?

03-00:33:50 Crane: Yes. I didn’t really think a law degree would help me much in terms of the stuff that I wanted to do. I didn’t want to be a lawyer. I actually became an apprentice when I was working on the Hill in drafting legislation in some ways and that actually was very helpful in my Kaiser government relations work. You can read bills, you can understand them and kind of be able to pick up problems. And we had lawyers in the department.

03-00:34:21 Meeker: Well, what was your original job description for this position of VP of government relations?

03-00:34:26 Crane: Well, I was responsible for the Washington office and overseeing and supporting the government relations activities at the state level. I guess I would add generally responsible for developing the government relations or government policy setting mechanism. We had a committee that did that work but I would develop its agenda and present updates on the issues we thought should be considered.

03-00:35:09 Meeker: So the policy committee. This was a subcommittee of the KaiPerm committee? Is that the same one? Is it a kind of government relations committee?

03-00:35:18 Crane: Yes. I guess it was a subcommittee. It was regional managers, medical directors. I don’t remember who chaired it initially. Dave Lawrence chaired it for a while. But it was chaired by one of our senior managers.

03-00:35:33 Meeker: So when you first get started you had already had some experience from the legislative side working with Kaiser and getting a sense of what their government relations philosophy and goals were. How was their particular approach to government relations communicated to you, either in the interviewing process or when you got started, just to make sure there was a shared purpose of how you were going to approach government relations?

03-00:36:16 Crane: Well, I had the good sense of the approach, as I said, and I verified that was the case. The other strong sense that I got from people, both before I took the job and after, is that a key principle in being successful in government relations in Kaiser Permanente is being successful as a health care delivery organization. Because if you are serving your customers well, your chances of doing government relations well are enhanced greatly. So I viewed the motto, if there was one, and I certainly took it up and reinforced it, was we’re going to be successful in Washington or in state capitals only if we do well by our members. They are our currency. We don’t make political contributions. We’re a not for profit organization. That makes us different than a lot of the people we compete with. And so our currency really is our reputation, which gets generated by our members day in, day out.

My orientation in coming to Kaiser was I was coming here for a career. I knew Kaiser enough. I knew what it stood for. I knew what it was about that I said to myself, “This is something that I want to do for a long time.” This is kind of amusing but in one of my interviews with the executive vice- president, who is a physician whose name was Barney Rhodes, I asked him if I came into this job in government relations, whether I’d have the opportunity to do anything else. And he looked at me and his blinders were: “Here’s a doc. I know what docs do, I know what administrators do. This is a government relations guy.” And he said, “Well, it’s possible but I wouldn’t count on it.” That, in juxtaposition with all the other things I’ve done, just makes the comment a little amusing. I could have done government relations my whole career, I suppose, but I really was interested in doing some other things.

So I said to myself, “If I’m going to be back in the nation’s capital in front of Barbara Boxer, who was a congresswoman from San Rafael or George Miller, who was here and is in Contra Costa County or Pete Stark, who wasn’t the committee chair. He was just a congressperson here, I have to know what’s in their district. So I set out in that first year to visit every medical center in Northern and Southern California.

03-00:39:43 Meeker: What did you hope to discover?

03-00:39:45 Crane: I wanted to know what was in these people’s districts and how our program ran. I spent a couple of weeks off and on at the Oakland Medical Center just at the department level. I wanted to know how things worked. I saw Kaiser as a health care delivery organization. We’re an insurance company, too. Most of the stuff that I dealt with was on the insurance side, for sure, the prepayment side, but I really wanted to know how this organization worked and I wanted to know the people in it. And in those visits, I did two things. I got a sense of the medical center. I got a sense of their relationship with their local member of congress. I focused on congress as opposed to state representatives, because

Joe Criscione, who was our vice-president for government relations, very ably managed the State of California activities, which is huge and in some ways bigger than the Washington activity. At least as big. And I wanted to understand the opportunities to strengthen the relationship, because ideally you’d like your congress people to know you, to have visited the medical center, to know what programs we’re doing, to understand the quality advantage that Kaiser has or other ways in which you could describe it.

03-00:41:17 Meeker: Well, how would visiting medical centers on the department level have enabled you to have more productive interactions with Congress?

03-00:41:26 Crane: Well, in San Rafael, I was able to sit down with Barbara Boxfer in her office here and talk about the medical center, what it was doing. That’s her district.

03-00:41:40 Meeker: So are these specific initiatives, technological advancements, community outreach or—

03-00:41:44 Crane: Not necessarily. I knew that there was an expansion or what have you, and more importantly, I sat down with the medical director and the administrator. I knew them. And she probably knew them. To not know the details is just not a position I want to be in. But the second thing I did was I used this as an opportunity to educate facility leaders about what the issues in Washington were, why they should care about them, what their government relations department and program at Kaiser Permanente, which is multiple levels away and they may have had a lens into it or not, was doing for them, with them and to make it clear to them that they were part of our government relations program. Back to the principle, the motto, the logo, whatever you want to call it, that our ability to represent you is only as good as you are to our members. That’s the bedrock on which we carry out our successful government relations program. So I learned, they learned. It took a lot of time but my orientation was I have a career here, so I might as well invest in the front.

03-00:43:23 Meeker: So during the five or so years that you were in government relations, how did actual offices self-evolve and change? Did you come in with a particular agenda, either by increasing the number of FTEs in a particular area or did you, in your five years in the program, institute new programmatic initiatives or something like that? What were some of the larger level changes?

03-00:43:53 Crane: Well, the real plus for me in moving into this role was things were not broken. This was an office that was working well. Jim Lane had done a great job leading it. Steve Zatkin, who was brought on to support Jim, was kind of the

second in command. We did bring in some people over time that had state level experience outside of California and that was important, and we can talk about this in a minute, because we were in the process of geographic expansion at the time, which ended up being a fairly sizable focus of my work.

I think we matured and grew. An annual government relations conference, which was already very good. My goal was to maintain and improve that, as well as the service to Regions. I considered the government relations department as a service unit. We should be evaluated by how well regional managers at that time, and their people who are responsible for government relations, did their work. And Jim Vohs was excellent about that. He got written comments on all of his reports. And that’s what he used to evaluate them. So you know who the customer is. You’re not just doing this for you or for the policy committee, although that’s important. You want the regions to see this as a value added service, because they’re paying for it. So I would say there was an evolution, hopefully an important, a continuous improvement over the period, but no dramatic changes that I can pinpoint. We did add several attorneys who had had state level experience, some of whom are still there, and others who went on to other roles in legal within the organization. Feel very proud about that. But it was managing a mature shop is the way I looked at it.

In terms of the issues that framed that period, I think there were four or five that dominated our agenda. Perhaps the most important was the implementation of the ’92 Medicare amendments that set forth what became risk contracting.

03-00:46:56 Meeker: You mean the ’82 amendments? The Tax Equity and Fiscal Responsibility Act?

03-00:46:58 Crane: I’m sorry. Eighty-two, yes. Eighty-two. Yes. Kaiser had worked long and hard. Erickson, particularly, and others in the Washington office to secure a prepaid way to get paid. And so the mechanism to pay us on a prepaid basis at ninety-five percent of the AAPCC or Adjusted Average Per Capital Cost had been put in place a year before I came. That didn’t do anything until regulations were written. And it took until 1996 to work through those regulations. So I actually put a significant amount of energy into that, educating our regions about what it was all about. We organized some conferences with others in the legal department. Judy Mears who was counsel then, and still is, played a very, very important role in the work on the legal side of this, preparing our comments about what would work and what didn’t. The process of making sure that the implementing regulations would work for us, making sure that the people who were going to have to live under this really understood it and that we understood what their needs were so that we

could reflect that back into comments was a major responsibility for ’83, ’84, ’85 until the activity was put in place.

03-00:48:42 Meeker: What you’re talking about here is a dual effort, right? Now that the legislation has been passed, it goes down to the administrators to actually figure out how to administer the changes in that.

03-00:48:55 Crane: Exactly.

03-00:48:56 Meeker: And so you’re going to be working in government relations looking outside of the organization, to DC, to the administrators, at what would have been within Medicare?

03-00:49:06 Crane: Medicare, yes. Yes.

03-00:49:08 Meeker: But then you also would have had to work within the organization itself to tell, particularly, regional managers about what’s going on, medical directors and encourage them to get on board. And I remember reading through one of the KaiPerm minutes and Erickson said, “We finally got this passed. We spent a lot of political capital getting this thing passed. We want to make sure that all of the regions participate in it.” And as it turns out, the main region, or one of the main regions in Northern California, refuses to participate in it for a period of time. I wonder if you can sort of talk about the process of trying to sell the Act and participation in the Act to people within the organization and why it was that Southern California chose to participate and Northern California didn’t and how you attempted to educate the different regions about the Act.

03-00:50:08 Crane: Yes. Well, up until that point we had been paid on a cost basis. We had cost contracts. And they were working for some of the regions. But Erickson’s point was right on, and that was having advocated for this, having kind of created a whole new section, and this was done in large part because of our advocacy, we need to now pick it up. And there were lots of detailed discussions with Northern California. The level of payment at ninety-five percent of the AAPCC is higher in Southern California than Northern California. So the economic case was different between the two regions. Well, I won’t speculate on why that is. But the cost structure is just different between north and south, and therefore the payment rate was different. Our own cost structure in medicine is different between north and south, payment rate of physicians and other things may be different. But when you look at the economic advantage—we had to give the excess back to the member. We

were able to get our capital paid for, give the excess back to the member. Positioning—

03-00:51:38 Meeker: In some fashion.

03-00:51:38 Crane: In some. Yes.

03-00:51:40 Meeker: Not as a rebate.

03-00:51:40 Crane: Lower co-payments or better benefits, creating advantage for you in the marketplace. You’re more attractive under a risk contract than you were before because you have a better value proposition for the Medicare member. In order for you to find that attractive, you have to convince yourself or you have to be convinced that growing the Medicare business is something that’s important for you to do. Northern California was capacity constrained. They didn’t have a huge amount of excess capacity. So one of the considerations was, well, what do we do if we put this rate out and we get lots of new members? Is that going to cause us to have to hospitalize members in non- Kaiser hospitals, which is not good economics. And we already had a fairly sizable market share here in the North compared to the South. They were about half of the market share in the North. So just on the face of it, there was a different case to be made. But obviously, Northern California not participating was noted. And I’m not sure I would say it was an embarrassment, but it was hard to explain after we had advocated this change.

Many discussions around the importance of growing the Medicare business. Some of them emphasized that as a multi-group specialty practice, Medicare is where our sweet spot is. People who are older have more need for multi- specialty care. You’re getting paid more for it. This is a way to continue to grow the business and to give our physicians opportunities to provide great care and to continue to develop their skills, which they can’t do, many of those specialties, with a growing pediatric population. And so there just was a synergy between Medicare.

Another area of discussion was you got the baby boomers coming through the pipeline. If we’re not able to really effectively manage this portion of our membership, what’s our future? Let’s get some experience now when it’s not quite the imperative it will be in 2010 or what have you.

So those were the issues that were discussed. There were legitimate economic, business and philosophical issues. This means doing more federal business. There were concerns, legitimate concerns, about how good the federal government is as a business partner. Those concerns have been kind of

verified, if you will, because the rules change, you don’t have any control over it. One of the things that was of concern, because in all of our other business, we put out rates and people pay them or they don’t. In this case, it’s an administered pricing system. The government’s in control.

03-00:55:49 Meeker: They don’t negotiate.

03-00:55:50 Crane: We know that swings in revenue are not good for us. We have, as an organization, a huge fixed cost. Bricks and mortar, large numbers of staff. We’re able to flex up gradually, not greatly. Our doctors come to us by and large once a year. If you have large growth in January where Medicare enrollees, what do you do from January to June when your new residents come in or what have you? So there are a whole lot of operational issues that were quite legitimate and needed to be thought through. I don’t know that it was in the ’82 Act, but one of the issues that was very important to us in getting the rules was the ability to have capacity constraints. Where you have Oakland and we’re bulging at the seams with members, we need to be able to not be open to Medicare members in that geographic area, whereas in Sacramento where we’re growing, we would be open. So a lot of the discussion that would typically go on in the legislative arena, because the complexity of these regulations went on with HCFA and staff, so they really understood what our concerns were.

03-00:57:12 Meeker: So, for instance, you have the medical director of Northern California who was Bruce Sams at that point in time and he’ll offer a whole variety of rebuttals or questions about participating in risk contracting. What is the point at which those criticisms that are coming from the medical group are clearly going to prohibit them from participating in this and then to what extent do you take those criticisms and attempt to work with the administrators of the program to accommodate some of the concerns of the medical group?

03-00:57:59 Crane: Well, you have to do both. The way that our program is structured, it takes two to tango. The medical director and the health plan hospitals director need to be in agreement for things to move forward in terms of new stuff. That’s the way that we operate. That’s what gives us our strength. That’s what assures that when we do decide to do something, we do it right, hopefully with conviction, and we’ve probably avoided some errors by being overly cautious. We’ve also missed some opportunities. I think the discussions in the North may have gone on long enough to miss opportunities but in the final analysis—and I don’t recall when Northern California actually decided to sign a risk contract—as I said earlier, there were lots of legitimate pros and cons compared to other places where it was more of a slam dunk.

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04-00:00:00 Meeker: So with the Medicare risk contracting that was developed, looking at this twenty plus years later, twenty-five years later, clearly Medicare becomes a massive part of Kaiser Permanente’s revenue stream. In recent years it’s become widely acknowledged that Kaiser Permanente had probably been overpaid and so now there’s going to be a retrenchment, kind of going back to a different reimbursement scheme. I’m a little unclear on how this works exactly. But I’m wondering at this point in time what were the discussions around allowing Medicare. You had already hinted at this. But what were the discussions around allowing Medicare to become, perhaps, a substantial revenue stream for the organization? What were the pros and cons of allowing that particular sector of the membership to grow?

04-00:01:17 Crane: Well, I articulated a couple of them and that is in order to be an effective multi-specialty group practice, particularly with some of the high specialties in the management of chronic illness, this is where it’s kind of like Willie Sutton. Why do you rob banks? That’s where the money is. This is where the opportunity for practice and substantial revenue flow is. I think twenty years later, at least I would say, this has been a good business for us. Number one, it’s allowed us to maintain relationships with members that we’ve provided their care for many years. We’ve invested in them and now it enabled us to continue to serve them. I think it’s created an opportunity for people to have comfort to join us, that they don’t need to leave us when they’re sixty-five. The national studies do show that HMOs or the prepaid plans in the aggregate have been paid more than they’re paying Medicare. Whether that’s overpayment, that’s an issue that we could debate.

04-00:02:46 Meeker: Maybe not the right word to use.

04-00:02:48 Crane: We’re being paid more than fee for service and members who select these plans are getting better benefits as a result of that and I think the economics for most of the plans participating have been positive. There was a conscious decision by Republicans to put this in place and it’s worked well. And health care reform is throttling back on those numbers. We should be able to do okay under the new system. If you recall, we advocated ninety-five percent of average costs. A lot has happened since then which makes that a more difficult proposition for us, the biggest thing of which is DRGs came into place and reduced the size of the advantage that we have had historically on hospital and hospital use. But we’re looking at developing new patents around the management of chronic care effectively, the use of the EMR and a whole range of other things. So I continue to think Medicare is a good business. It

has been a good business. The biggest concern I have had with the change in the reimbursement is that it’s done in a way that we can be planful about it, that you don’t just lop off ten percent, which would be very, very difficult because in a fixed cost operation, what do you do? You have to raise rates elsewhere and in a very competitive marketplace that’s not a good thing to do.

04-00:04:25 Meeker: And you don’t want your younger membership to be subsidizing your Medicare membership.

04-00:04:31 Crane: If you can avoid that, yes. Particularly when your competitors are not. If everybody does it, it’s fine.

04-00:04:38 Meeker: Maybe you can explain this to me. I don’t know about the overpayment language or not. I’ve heard that used. That’s why I used it. From what I understand, one of the main reasons for the ninety-five percent risk contracting to be developed had a lot to do with, again, sort of cost containment strategies and attempting to, in essence, put some control on the inflation in the health care sector. Does that match, first of all, what you know about the development of risk contracting?

04-00:05:19 Crane: Well, let’s go back to—let’s see, where are we—’82 when this was put in place.

04-00:05:28 Meeker: Yes. From what I understand, there were actually movements early in the 1970s to develop other risk contracting but it was like an eighty/twenty or something like that. It was quite a bit lower.

04-00:05:40 Crane: Right, right. Well, if you look at our historic pattern in Northern California, for example, our rates have been ten to fifteen percent, maybe even twenty percent lower than the competition. So getting paid ninety-five percent is a win for us. The formula was developed so we got our proportionate share of capital, which is the important thing for us, because we don’t make profit. We make net income which is used to facilitate the growth and replenishment of the physical plant, the investment of four billion dollars into an IT system, etcetera. So getting our proportionate capital is very important on every member. So if you’re getting that, you’re able to give members better benefits, make you more attractive and the government is able to save five percent over what they otherwise might. It’s a win, win, win. So they would have incentive for more people to come into these contracts. That’s aligned with our incentive to have more people join. So I think the original structure made a lot of sense. If there was a potential change that created some of the current

problem, it was, in my view, allowing plans which ended up being called fee for service plans to operate in a similar way and really not have as strong an incentive to benefit the consumer as the plans that had been in place.

04-00:07:37 Meeker: And this is Medicare Part C Advantage?

04-00:07:38 Crane: Right.

04-00:07:39 Meeker: Is that one that comes out?

04-00:07:41 Crane: Yes, right. So you have a lot of indemnity players who basically just use this as a way to get more leverage on providers and/or enhance their bottom lines.

04-00:07:53 Meeker: So just kind of projecting into the future when health reform might begin to ratchet back some of these payment schemes: would it be logical to assume that the fee for service providers would have a lot more difficult time adjusting to the system?

04-00:08:11 Crane: I believe that is the case. And the health plans that deal with them. I think some of them will just stop their current arrangement. I’m not positive about that. We’ll have to see. We still have a couple of cycles. I think for prepaid group practice, like Kaiser Permanente, we should be able to adjust to these changes.

04-00:08:35 Meeker: So in addition to the risk based contracting, which clearly was a big issue during your period in government relations, you also mentioned geographic expansion and establishing government relations programs in the expansion areas. North Carolina, Georgia. Texas was a little bit before then?

04-00:09:00 Crane: Yes, Texas was before that. Yes, yes. Well, going back to what this role is. It’s to provide support to regions in government relations. During the period, I think it was in 1985, we opened two regions, one in North Carolina, one in Georgia. And I spent a considerable amount of time with those regional management teams thinking through what their strategy should be vis-à-vis state government and how they should execute that strategy. In both cases we decided we would have contract lobbyists, someone who knew government, could learn us and could represent us. I spent time finding who could best do that in both of those state capitals.

04-00:09:53 Meeker: So the fact that both of these state capitals are in the American South, with presumably a different political culture than you’d find in the best or the Northwest or the Mid-Atlantic region, how did that impact the way in which the government relations program was going to be run in those states? Or did it?

04-00:10:15 Crane: Well, a couple of things. I don’t know if it changed it dramatically but it altered what needed to be on our antennas. Let me just give you an example of the environment in Georgia. In Georgia, before we decided to go in there, as a way to thwart the development of HMOs, the Georgia Medical Association had sponsored legislation which required that before you begin marketing to a population, the state health department has to certify that you’re fully capable of caring for that population. The implication of that for us in Georgia is before we could market one group, we had to build facilities, hire doctors, hire nurses. A huge upfront cost. In the first years in Georgia, our doctors did huge amounts of pro bono work in the community because they had nothing to do in our medical offices. That was done to stifle the growth of HMOs. With that kind of environment—and not having many colleagues because it’s hard to develop HMOs—vigilance and looking for the second round of attack is what you need to be prepared for. So you need a lobbyist who’s well wired, is able to, with his or her colleagues, quickly scan bills to make sure that there’s no things which could be damaging—because a legislative phrase can disable a region in its young days. And there’s no political capital on our part.

04-00:12:36 Meeker: A comma or an absence of a comma in some cases.

04-00:12:38 Crane: Yes, yes. And that was true in North Carolina, too. In North Carolina it was a different situation. The governor invited us to come in and we had a lot of state support, even with a commitment that we would be offered to the state group. So we had a group even before we came in. But then the government relations challenge was assuring that we were offered on a reasonable basis, which ended up to be a big challenge. Not just to be offered but offered on a basis that people got some benefit out of joining what would be otherwise a pretty small and closed system. And so, again, we used a contract lobbyist who was able to know the process well.

04-00:13:32 Meeker: I don’t know if you want to talk about these individuals in specific terms, but I’m kind of sort of wondering what sort of relationships they would need to have when you’re establishing yourself in a region and also establishing government relations in an expansion region.

04-00:13:50 Crane: In both cases you’d want them to have multiple other health clients so that they’re tracking these bills anyways, as opposed to somebody who’s a one off. That’s just efficient. And in North Carolina we had a former very respected legislator who was doing this, so we’re in the land of the old boys network, or old girls network, I guess, to be fair. But relationships are really important. And so you want people who have those relationships. We had none.

04-00:14:21 Meeker: Maybe what I’m getting at is that it would make sense, clearly, to go to someone who had an expertise and already had relationships established. But it seems like, especially in a place like Georgia where there is established opposition to the growth of HMOs, that it might well be hard to find someone who’s not already sort of lined up on the other side of the equation. How does one find someone who is well connected to the legislative system and who already has knowledge of the health care sector and then also believe, in essence, that they are going to represent you well? Represent you and your interests well?

04-00:15:11 Crane: Well, we had a special advantage in Georgia in that the medical director, Harper Gaston, who was the medical director here in Hayward, and became our first medical director in Georgia. And he was of the South. He was of Atlanta. He could go to the medical society and reduce the concerns that they might have about our being in town. We could also use business practices and develop relationships which would do that, which we did, as well. So you’d think of your government relations strategy, as well as your business strategy, in a comprehensive way. And so when we had relations established with the premiere, let’s say, orthopedic group or what have you—I’m just throwing out an example, I don’t know if it’s true or not—you all of a sudden changed the dynamics because they were part of your system now. So that’s not so much the lobbyist, although that helps the lobbyist do their job, for sure. I think it’s also important to point out that, just as I said, government relations is having lots of good satisfied customers. That’s true in a new and developing region, too. So serving your people well continues to be job number one.

04-00:16:44 Meeker: Okay. Although we talk about the 1990s as the period of the managed care crisis, right, and although what happened in relation to that was, from what I understand, mostly in relation to for-profit managed care organizations and the backlash that their practices engendered, such as the reality of or the perception of denial of care, clearly Kaiser wasn’t really part of that but it got wrapped up in it, at least in the media. I’m wondering that extent to which there were public relations issues along these lines during the period in which you were heading up government relations and how you would have had to deal with things like that. Because that would run exactly opposite to your approach to government relations, which is, yes, we have to know our issues

but the way in which you are successful in government relations is being successful in business.

04-00:17:58 Crane: Yes. Well, let me use your question and bifurcate the answer.

04-00:18:01 Meeker: And I apologize. It was a little convoluted.

04-00:18:04 Crane: Yes. As we go into the nineties, I actually was in a different job and I was actually in a public relations job. So I can answer the question from that point of view. In the late eighties, it was also true, building on your question, that competition was getting more intense. And, actually, the third issue I wanted to just underscore that was a dominant one in government relations during the period in which I oversaw the department really was trying to think through how to best create a fair field on which to compete. And one of the examples that was most troubling to us from lots of different points of view on this fair field issue had to do with rating. We had had a historic and philosophical alignment with community rating. Everybody gets the same rate. It’s a way in which you share risk within the population. And during the eighties and particularly in the late eighties, we were competing against new competitors, some of whom we just talked about. The managed care was developing. The large national insurers were getting involved in this. Blue Cross was thinking about a more competitive arena. There may have been some conversions to for profit. I’m not sure when Blue Cross of California converted. Somewhere in this period or shortly thereafter. So the marketplace competition was intense and it was most intense in the rates in terms of using rates to attract business. And we were, as a federally qualified HMO, not able to respond. Because back from the seventies, community rating was written into the HMO Act. If you’re going to be a federally qualified HMO, you have to do community rating. And, in fact, there was discussion about should we continue to maintain our qualification. It was that significant an issue. And, instead, there was a decision to try to change the HMO Act and that led to the amendments of ’86, which allowed federally qualified HMOs more flexibility in rating and to move to adjusted community rating, which was a big change. And even after we made the change, we had internal challenges about how to implement it, because philosophically this notion of spreading the risk and ensuring that you were affordable to everyone, not having people who are really sick have to pay a lot, was very embedded. It was actually part of who we thought we were, what we were trying to deliver as a not for profit. It was part of our community benefit to have rates relatively equal. And, in fact, some of the cases in the case law around having a 501(c)(3) charitable exemption, a not for profit charitable exemption, related to having community rating. So there was a debate inside the program. If we follow this, do we put our tax exempt status in jeopardy, which is a big deal for an organization which has to have that income to produce facilities.

So we spent a lot of time during this period of time working with the Congress to get that change. And then after ’86, a fair amount of time trying to figure out how we were going to implement it. And that was in a bucket of things that we were dealing with in government relations around how to ensure that the field that we’re playing on we’re not disadvantaged. We have similar issues with respect to requirements in California by the Department of Managed Care, which regulates us but not the insurers. So in our major marketplace in California, we have a different regulator than most of the other plans do. So trying to think through that issue was also a significant theme.

04-00:23:00 Meeker: Well, not to mention that during this period in time you get all the self-funded insurance plans that are exempted.

04-00:23:05 Crane: Oh, absolutely. Right. Which was growing. That was a growing business.

04-00:23:09 Meeker: In the eighties, yes.

04-00:23:11 Crane: Right, right. So then if you fast forward to the nineties and the mid-nineties where managed care really grew, where practices, you could argue, were egregious, where insurance companies took it on the chin and actually backed away. Rates of increase were brought down because of some of those practices and then because of the managed care backlash those practices were really rescinded. They said, “Well, we’re doing what you wanted. If you don’t want us to do this, then we’ll do something else. But don’t count on the premiums being low.” Of course, they did increase.

From a PR point of view, and from a government relations point of view during that time, we emphasized that we don’t do a lot of those things. We don’t have 1-800 numbers. And what happened from both the public’s perception and also really from a physician perception—

04-00:24:17 Meeker: The reference to the 1-800 numbers, physician having to call the health plan getting approval.

04-00:24:22 Crane: Yes. Approval to do the lab test, approval to do the X-ray, talking to a nurse, all of that. It became clear in the middle of this than our physicians had more freedom than any physician in America, just about. They had almost total discretion on doing what they felt was best with the patients. They had agreements within the medical group. There were certain drugs that are better to use. We use certain products that we purchase in more standardized ways. But in terms of deciding what the patient needed and how we needed to have

it, our doctors had a lot of flexibility. And that was being perceived by physicians, a growing number of physicians were joining Kaiser out of residency. And then there was a period in the mid-nineties in which we were very attractive to physicians mid-career. They were taking down their shingles and joining the Permanente Medical Group. That was not lost on the marketplace and we used that in our public relations activities. So when people say, “Oh, my doctor doesn’t like this,” we say, “Well, talk to our doctors. They do like it.” And so there was a real attempt during that period of time to differentiate us from the rest of managed care. And I think it was moderately successful, if not very successful.

04-00:25:58 Meeker: Well, actually, maybe the better way to have asked this question, especially to you in particular, when you move from government relations to National Accounts and PR in 1988 and you’re there for four years, a pretty critical four years. Well, it’s during the Bush Administration. We haven’t quite gotten to national health insurance reform and all the changes that were going on in the 1990s that still increased competition and change of leadership at the organization and so forth. I’m wondering if you can describe what the relationship between PR and government relations is in this organization in response to some of these image challenges that the organization confronts.

04-00:26:50 Crane: Well, there’s a commonality between the two and it gets back to the credo that I cited earlier about if we’re doing well for our members, that’s really important. One of the things that, in addition during this period of time and then even more intensified as we got into the 2000s was, well, show us. Prove to us that you’re doing a better job because we just don’t want satisfaction. And during this period we were actively involved. I can’t pinpoint when this happened but active discussions with national employers and other health plans around developing HEDIS, the Healthcare Effectiveness Data and Information Set. We were being, from a PR and from a marketing period of view—and I was doing marketing and national accounts—being driven crazy by different consultants and different employers wanting to measure us in different ways. And so it became clear real fast that if we could get agreement across employers and across health plans on what made sense, that this would be very important to do. So we focused on what they said was important. We were able to measure what they said was important and deliver results. And what you measure, you can improve. If you don’t measure, it’s hard to improve. And so if we are measuring it, we can put our energy into improving those things. So this has turned out to be, I think, an excellent strategy because we’re number one, number two, number three, in HEDIS results in lots of different categories. Our electronic medical record has helped us do that but it’s also been a matter of focus on and management. And so we worked and some on the medical group side were very active on this. Paul Lairson, and others, very actively to try to define what those initial HEDIS measure were. And then from a PR point of view and from a government relations point of

view, you can use that result to the people who are saying, “Well, show me.” And that continues to be a major effort. Just in this past issue of Health Affairs, there’s an article, and we have been working with researchers to try to share our data to help them come to this conclusion, that prepaid group practice, not just Kaiser Permanente but other groups, actually, group practice, multi-specialty group practice—some of it is not prepaid—actually does a significantly better job at managing these chronic conditions and preventive issues related to that. And so as we measure, part of the strategy needs to be to expose that differential in ways that’s believable, documentable, and in this case, third party represented to show that you, in fact, do deliver value.

04-00:30:26 Meeker: So during the period of time, the five years that you were in government relations, to what extent were these quality measurements something that you were dealing with on a legislative level?

04-00:30:35 Crane: During that period of time, it was really early in the process. It would fit under the category of a level playing field. It was very consistent with that. I don’t recall exactly when most of the HEDIS work was done. Some of it was done in those early days, though, because I know that we were being challenged by the different metric systems. From a consultant’s point of view, that’s their differentiation. They take a better score. So to have it common actually was not something they were generally supportive of, even though we did work with Towers Perrin on doing this.

04-00:31:24 Meeker: Well, one of the things you start to have in the 1970s are the professional standard review organizations. I don’t know the degree to which they’re scoring things that would be ranked across various providers. But then also from one of the changes that I understand was going on in the 1980s was some kind of moving back on this and moving to what were just described as professional review organizations. So not really basing the review on the standards. More sort of a qualitative review. And that’s what I understand is kind of a sort of deregulatory Reagan era approach to dealing with quality review. And I don’t know if there was like a legislative position on any work that you had to do or the offices underneath you had to do in relation to this.

04-00:32:21 Crane: Yes. That was not a huge issue for us. Our point of view on that was not terribly different from other hospitals, because we have hospitals. And so as a matter of course, if you can have a larger entity with more sound and velocity representing you and you do not have a unique position, and you’re there to say, “Me, too,” but you don’t need to spend a lot of political capital and/or organizational effort on it. And the PSRO evolution didn’t effect us in any way different than most of the rest of the industry. And so we let the trade associations carry that.

04-00:33:12 Meeker: Interesting.

04-00:33:12 Crane: That’s true with respect to our health plan trade association, too. Unless there’s something that’s unique.

04-00:33:23 Meeker: And so that would have been the same with NCQA and HEDIS and so forth?

04-00:33:27 Crane: NCQA, we actually were actively involved in because we felt that our leadership role there and the design of where that was going to go was important. HEDIS and NCQA are related developments because NCQA ended up kind of being the data collector and reporter for HEDIS results and we wanted to be actively involved in that. Government relations wasn’t but the Permanente Federation or the organization before the Federation was actively involved, very actively involved, and Don Neilsen, who was one of the physicians in that office, was chair of the standards committee, for example.

The nice thing about having an organization where you have someone who knows something about everything, because you’re involved in so many different specialties and so much types of delivery is that you can go and ask within the organization the question and you’re going to get a really good answer about where things stand and what they’re about. That is really the government relations challenge at Kaiser Permanente and that’s the breadth of issues. It’s hard to point to a health care bill in Sacramento that doesn’t affect some part of us in some way. It’s not just like, oh, well, we’ll focus on the hospital bill or the orthopedics bills or what have you. We need to focus in on them all.

04-00:35:08 Meeker: I wonder about this five year period of time in which you’re in government relations. There are already some very well-established people working in the office on these issues. You have Bob Erickson, who’s an extremely important person in the organization. He’s been around for many, many years, and obviously has relationships with the CEO and so forth. Then you also have, by this time, Richard Froh in DC.

04-00:35:38 Crane: Washington, yes.

04-00:35:38 Meeker: And Joe Criscione in Sacramento. And I’m wondering, as someone who arrived after all these people had sort of been fairly well established in their positions, how do you interact with them? Did it feel like a collaborative endeavor? Did one person kind of defer to the other? For instance, I imagine

people would defer to Joe Criscione when it came to government relations in Sacramento? How did it work?

04-00:36:10 Crane: Well, I think the government relations group has really been an effective team. Erickson created an environment in which dissent and argument was welcome. Then you decide and you do it. But argument for a lawyer is like getting up in the morning. If you don’t do it, it’s not fun. Joe Criscione handled much of what goes on in California, supported by the team that I had responsibility for. Similarly, Dick Froh was in the Washington office for twenty plus years. Very capable guy. Good style. Represented us well and worked on the inside of a lot of issues. He had a unique position with respect to a lot of committee staff around being seen by them as a resource thought partner, someone they could test ideas out on and not read about it in the trade association magazine. So I actually felt blessed in this role because of the capability of these people. My rule of thumb is if it’s something’s not broken, you support it operationally. And that’s what I did with Dick. We were colleagues. He did report to me but I don’t think he really felt he did. He felt that we were colleagues. The marching orders about policy really came from a collaborative activity which had potentially lots of debate, as it should, analyzing what was the right thing to do, what was best for us, what was the public interest involved and what was the political dynamic around taking this position or not taking this position, how would it play down the road, what kind of precedent did it set. We had good debates. And the fact that you had a strong team with lots of experience just meant you did all those things better.

So I don’t know. The analogy—I never thought of this before—but it’s kind of a role as an orchestra leader. When you have people that are very professional and well versed at carrying out their instruments you don’t need to tell them how to play the oboe. You just make sure that the different interactions are harmonized and that you give them the tools, the practice time, and the support to do the best they can.

04-00:39:10 Meeker: Similarly, I wonder how the government relations team operated. And I’m thinking the government relations team probably as the policy recommending.

04-00:39:24 Crane: Being a think tank. Yes, right, sure.

04-00:39:26 Meeker: Yes, which would have been the subcommittee of the KaiPerm committee. I had an opportunity to read some of the minutes of those meetings and then see the ways in which what happened on the subcommittee was reported to the larger committee. There’s a great deal of editing that happens. That’s certainly by necessity, but I imagine also by design, particularly maybe by design by Bob Erickson, who has been in the organization a long time and he has his

own ideas about where he wants the organization to go. One of his big things was the community rating issue. He really didn’t want that one to go away. And he also was very much in favor of the risk contracting. And I wonder what was the organizational politics of developing policy at the subcommittee and then determining when it’s going to be voiced or shown to the larger committee. I kind of wonder if Bruce Sams had raised objections to all this work that was being done on behalf of a risk contracting in advance to rejecting it after it was passed. Do you see what I’m getting at?

04-00:40:53 Crane: Yes, yes. Well, it’s a big organization. It’s complicated. You bring the organizational policy, your own point of view, to the table every time you kind of raise or talk about an issue. Bruce was on the policy committee, an active participant. He was very shrewd on these matters. Knows public policy very well. My guess is that when it was being debated as whether or not it’s a change that we should support, risk contracting or what have you, because that happened actually before I came. But say ACR or what have you. Most of our program leaders take a step back when they’re in those roles and say, “Okay. I understand what’s best for my region but I also understand that this could be good for Southern California or one of the other regions that really needs to grow. Here’s a growth engine. I suspect that the notion that Bob Erickson, sometime after it passed, would be “breathing down my neck and encouraging me to do this,” may not have been on the front burner. It’s a process of kind of debate and accommodation. We’re an organization where there are lots of different local interests. Part of what you do at a national organization where you have that, just like any other organization with lots of divisions, is you have to evaluate the pros and cons. Often you have to protect the weak in the process of figuring out what your position is and adding the political dynamic to this is also very important. Erickson particularly, but others that we’ve just talked about, are attuned to that. Sometimes it may make the most sense from our self-interest to do something, but from a political point of view, which was to calculate the public interest and people’s reactions to the positions we take, it may make less sense. We clearly have not proceeded with some things that might have been great for short-run Kaiser Permanente because we were able to look at the long run and know the environment in which we were trying to sell an idea.

04-00:43:49 Meeker: So we’ve covered quite a bit around this period of time once you’re in government relations. Are there other issues of importance?

04-00:43:56 Crane: I just mention two other things that were large things. I think the issue of coverage continues. That’s an ongoing issue. And Kaiser has been pretty consistent around the advocacy of state or federal government interactions that make it easier for people to get coverage for insurance. The last debate around health care reform underscores that. Against much of the industry, we have

played a leadership role in advocating that this is important. I think some of our leaders, George Halverson and others, have really played an exceptional role in carrying on a long tradition of trying to make sure people have coverage. From our roots with preventative care, which has not always been covered, as well as trying to remove the barriers for people to get coverage. So understanding that underwriting is not a good thing and we could have a system that didn’t require it. The rating issue and rating bans. We’ve argued those issues in lots of different forms over the years, and including in this recent period.

The other theme that probably collectively represented a fair amount of activity would be just dealing with a variety of different regulatory issues. We talked about certificate of need. We were very active in Colorado in using special needs in circumstances and helping the region get a certificate of need for a hospital, which ended up getting approved and which we never built because we had created a different dynamic. If we hadn’t gotten approved, we might not have had the long-term agreement that we established with our long-term hospital provider there, potentially. But we didn’t add beds to a community that was somewhat overbedded, so I think that ended up being a good decision. But that took an enormous amount of effort on Steve Zatkin and other people’s part to work that out and to help the region think through how they should be positioning themselves.

And then a range of scope of practice issues. Because we’re prepaid and don’t rely on a title and a degree necessarily to say that’s the way it should be done, we’ve used nurse practitioners, physician assistants, nurse midwives, anesthesiology nurses in ways that the rest of the professional community just doesn’t think about. Because if you’re an anesthesiologist, you don’t want a nurse anesthesiologist competitor. And so the standards for the state about who can do what have always been a little bit off for us because—

04-00:47:19 Meeker: Off? You mean not as progressive as it might be?

04-00:47:21 Crane: Not as progressive. Yes. That’s a better way to say it. Not as progressive as it could be and not as beneficial to cost and quality as it could be. So there’s an ongoing debate around potentially the professionals creating barriers for others to do what they do and us objecting to those barriers because it doesn’t make sense in our practice setting, and potentially expanding the roles of other professionals to do things which they can legitimately, safely, and with great quality do. So there was a lot of emphasis on scope of practice and in regulatory affairs, just the whole way in which we’re regulated as an HMO at the state level. Every year there are bills on that that you deal with, some of which you like, some of which you don’t like. So I guess this last kind of of the five themes that I’ve talked about representing this five year period is really kind of the housekeeping of just keeping the regulatory structure tuned

in ways that are supportive of your interests and the development and/or checking, trying to check, folks that are trying to push things for professional economic gain using the trade associations or the colleges as interest groups for economic purposes.

04-00:48:58 Meeker: Well, I think that’s a good segue way here. In the interest of keeping focused on the topic on hand, I think we’re going to sort of skip a few years—

04-00:49:07 Crane: Yes, no. I think that’s good. [laughter]

04-00:49:09 Meeker: —to talk about the Institute for Health Policy. Because the way in which the government relations program has been described by several people, and I think that the way in which you describe it fits within this—I’m not sure if active and passive is necessarily the best language terminology to use. But the way that I’ve sort of understood it is that really the government relations program at Kaiser has sort of been Kaiser will respond to policy or legislative initiatives but won’t necessarily take a really active role in proposing or pursuing new avenues. So therefore it is sort of a more reactive or passive approach to policy than perhaps some other organizations that take a really active approach and try to reshape the regulatory landscape to favor them, as opposed to preventing changes happening that might challenge them or might disable them in some fashion. And so you were talking about scope of practice and how California could be more progressive in, for instance, allowing nurse anesthesiologists to do certain work that MDs would have done. And that would require more active—

04-00:50:47 Crane: Active, yes.

04-00:50:48 Meeker: —government relations program. I’m wondering when you were in this program, in this five years, were there ever any conversations or debates about trying to take the government relations program in a more active direction?

04-00:51:05 Crane: Some, yes. I think it was not an unusual discussion to do it. And then you got overrun by the day to day issues. You just had to deal with the crises and it’s very hard to do more of the strategic work. And I’d say that in the period since I joined the program to the period when we started the Institute in 1999, the issues were hotter and more complex. In the early days of government relations, we were able to solve our issues with the phrase, the comma, we were the exception. And no one really cared. They didn’t want to kind of mess things up for Kaiser. They knew we were different in lots of ways. It required

a lot of education and it required relationships. But often they could be handled at the staff level, at those drafting sessions. It was not a big deal.

You fast forward to the end of the nineties, now Kaiser’s a big player. HMOs have a different footprint. The comma, the phrase does matter. You have X number of people in the Medicare Advantage program. But the plans in the program were not all kindred souls. So all of that led to a more front row position for Kaiser Permanente in government relations because we were a bigger player. We’re only a few percentage points of the total US population but because of the view that people had about what we could be and the other organizations that were like us whose banner we were often carrying, we had influence. In addition we worked with GHAA, now American Health Insurance Plans, and we were actively involved in ACHP, the Association of Community Health Plans, which are more like us. Not for profit, smaller, local community organizations. And were often working both with them, as that organization has grown and matured, but previous we were carrying the flag for a lot of the organizations like us. So the fires are hotter and while there was an interest in doing longer term planning in the past, there was a growing recognition that it just wasn’t possible to take this same staff—and it may not have even been desirable because the people that do tactics and short-term firefighting are not necessarily the people that do prevention and strategy and looking over the next hill. It takes a different skill set, orientation and timeframe. And that’s why, in part, I think, Dave Lawrence asked me to develop the Institute for Health Policy in 1999.

04-00:54:28 Meeker: Was there a watershed moment or was it, as you described, just a gradual evolving?

04-00:54:36 Crane: I don’t know what was in Dave’s mind. The big moment that had just passed was the defeat of the Clinton. It’s a couple of years back. We put a lot of energy into trying to make that successful. And time was kind of marching on. I think there was a recognition that the need to deal with the access problem was great. I think Dave just had a feeling that we could have more impact than we were having on the longer term environment. And I had worked for him for a decade. He had given me some great other opportunities on the operation side.

One of the things that we wanted to do with the Institute was to make it different from all the other institutes that were out there. We were interested in having it bring to the table kind of real experience and focus on the operational implications of policy, as well as what policy should be operationalized from the largest integrated health care plans point of view. I was delighted to make the move. I was the senior vice president and chief administrative office at the time, which is a challenging job, one might even say a thankless job, because your whole day you’re dealing with problems.

While that is fun for lots of people, I like to invent. I like to develop. The opportunity to take on and build the Institute as kind of, initially, a solo and project to develop into something that could have an impact was very exciting to me. And from Dave’s point of view, I was just perfect to do it. I had the public policy experience, I was well-known in Washington and had the government relations experience. And then for the past eleven years, I had seen the business from marketing and public affairs and IT and quality management and a whole range of different perspectives. So for someone who could think about what the organization’s interest in looking over the hill was, I was well positioned to do it. And also to understand the environment and how the environment might evolve because of my early public policy involvement.

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05-00:00:00 Meeker: We were just starting to talk about the Institute for Health Policy. You had described why it was that Dave Lawrence felt that it should be established, as well as why you might be interested in heading up. Dave Lawrence has somewhat of a reputation for some controversial policy initiatives in the organization. However, before working on the government relations topic, I didn’t come across much reference to the Institute for Health Policy, so I don’t know the degree to which it was controversial or not within the organization. Certainly didn’t rise to the level of the Care Management Institute or the end of the regions and the creation of the divisions and so forth. What was the anticipated relationship between the Institute and the established government relations program and then how did it work out in the period of time that you were heading it up?

05-00:01:15 Crane: Yes. Well, with respect to controversiality, I don’t think it was controversial at all. I suspect it could have been, based on how it was implemented, because it could have been structured, to get to your question, as a potential threat or problem for government relations. I think the way that we implemented it, we mitigated a good bit of that. Problems could be in the following arena. If you’re responsible for the Washington, DC office for government relations, you like to manage the interactions between the organization and public policy, committee staff. This is natural. And so if all of a sudden Kaiser has an Institute for Health Policy in which we have health policy professionals parachuting into Washington and creating events that you know nothing of and inviting people and making outrageous statements, it could set things back.

One of the benefits of my experience in this job is one of the first things I did was to try to make sure that we operated in a synergistic way with the government relations program, both here in Oakland and in Washington, DC.

So how did we do that? Well, one of the things we did was we talked to them in the process of developing our agenda. What is it we should work on? What don’t you have the time to work on? What might it be helpful for us to do that would complement the issues you were working on? What issues do you see down the pipe? That was very helpful to us initially. You’d have to ask them, but there are multiple occasions in which we’ve done advance work that has made it easier for them to do their work.

05-00:03:36 Meeker: Can you provide an example or two?

05-00:03:38 Crane: The first issue that we took on was some of the more controversial recommendations in the IOM report, To Err is Human, which was on patient safety. We organized two separate round tables, pulling together experts, people who had participated in the IOM committee and others, to vet some of the recommendations. It was a very controversial report. A very high profile report. Dave Lawrence was on the committee that prepared it and so we were well positioned to build on it. But there was a fair amount of controversy, particularly around mandatory reporting, less so on voluntary reporting and some of the other provisions. There were also references in the report to the great strides that other industries had made in safety and improvement, particularly the airlines. And so we felt it would be useful to better understand that and help the health care industry better understand it, because it was pretty clear that patient safety wasn’t the kind of priority it should be, that people were dying needlessly because of errors, that there was a culture of not exposing errors. One might be hard and say cover-up of errors.

05-00:05:22 Meeker: Or at least not learning from errors.

05-00:05:24 Crane: Not learning from errors, for sure. That that put in place a system that perpetuated non-improvement. And so from a policy point of view we were asking ourselves, because this was a report, what should government do in response to this report? What should Kaiser Permanente advocate government do in response to this report.

So we had one of the meetings down at the Claremont Colleges, in which we had a variety of experts come together and talk about reporting. We developed a white paper in advance of the report and then we did a report on the meeting. And then we did a collaboration with NASA. NASA runs the aviation safety reporting system. Just sits across the Bay. So we organized a meeting there to showcase how NASA identifies errors, the culture that they have put in place to make it the right thing to report errors and to learn from errors. And we invited thirty, forty experts from around the country to kind of learn with us and then we published a report as a result of that. In each of

these cases we involve some Kaiser Permanente people, but most of the people were outsiders.

Our experience there helped the organization in a couple of ways. First of all, it created a center of expertise on this report and on what was going on within the Institute of Health Policy. It was probably stronger than in the quality department in a short period of time. And we collaborated with the quality department to organize a Kaiser Permanente wide conference on patient safety, which we were to bring some of the learnings that we had and we supported. We talked about some of the public policy recommendations in the report and where this might go. The work that we did also created an agenda for discussion for the health policy committee, the committee we were talking about earlier, to identify where we might carry out advocacy and kind of created that for the Washington office to react to and then actually carry as this was being considered in the next couple of months. It took five years for Congress to do something. Shockingly slow performance from my point of view, given the size of the problem, but there was a bill passed in 2005 that created protection for voluntary reporting. So that if you report something to an entity that is designated for reporting, that can’t be used against you in a court of law, which was one of the big concerns about people reporting things and then the trial attorneys finding it out and coming back and disadvantaging the people who were trying to learn.

It also put us on the map as an entity that could sponsor and carry out solid policy discussions with some follow through and it created for us some partners in advocacy. So we had the American Hospital Association, we had a whole range of organizations who would then be involved in the lobbying issues around these. Organized labor was there. And we learned their position early. We were able to build this into the positions that we took. And so I think it helped both our government relations and it accelerated the development of patient safety improvement in Kaiser Permanente. And I think it gave the government relations folks some comfort. Before I step back, there are things we've done, though, that have made them uneasy. One of our areas of emphasis has been healthy eating and active living and that has caused us to challenge some of the morays around food within this country, some of whom run against the interests of some important customers. Sugar and soft drinks. We have a lot of business with Pepsi. That’s not so much a government relations issue, but it is, in a way, because they find us being thrust out in a position against people that we normally collaborate or don’t have issues.

05-00:11:00 Meeker: Well, and it brings up the issue not just of the relationship between the Institute and government relations, but also the relationship between the Institute and PR and National Accounts or—

05-00:11:08 Crane: In marketing. Yes, absolutely. Absolutely. Yes. So there are things that we can do. But there are also ways to do those so that you’re responsible more often than not. We organized a meeting with the Robert Wood Johnson Foundation on healthy eating and active living as one of our early, early meetings and we the experts. But we had the industry at the table too. We didn’t want to be exclusionary. We wanted to understand their point of view, maybe move them if they saw that this was a train that might go somewhere. Could that change the position of others? It was a very successful meeting and it actually has led to a whole stream of work on healthy eating and active living that we’re doing and continue to do. So there are things which help.

There are things that can make it uncomfortable for the organization and for government relations. So this issue of the Institute could be quite controversial. I think the issues that we’ve attacked and the way in which we’ve attacked them have mitigated controversy for controversies sake. We didn’t think that that was the way to do it. And we’ve gotten some real good traction as a result.

05-00:12:40 Meeker: Well, it seems to me there is a real fine line to walk there because to actually stay on issue about issues that are of importance. This question of healthy eating and living, or healthy eating and active living, and the way you describe it, is pretty important. If you go too safe on it, it can be just sort of a banal marketing campaign, right?

05-00:13:04 Crane: Well, that’s right. That’s right.

05-00:13:07 Meeker: But if you go hard hitting on it, I can see in a way which marketing and national accounts and all these other parts of the organization and probably the CEO, as well, will determine that it’s now time to shut down the Institute. So how did you negotiate these difficult choices?

05-00:13:28 Crane: You just use good judgment and you do some consultation. Let me just kind of backtrack a little bit.

05-00:13:35 Meeker: Sure.

05-00:13:38 Crane: When I took on the Institute, it was Bob and an assistant and one of the things I recognized from the very beginning was there are lots of institutes out there. So what is our niche? What’s our niche? How can we make a difference? Well, we were the only one that was located in a major integrated health care

delivery system, and so part of what I initially explored was how can we create that into a competitive advantage or a comparative advantage, as the case may be. And the way in which I approached that task was to realize, one, we were never going to be big so we needed to collaborate and we needed to take full advantage of Kaiser Permanente. So the operating strategy that I developed focused on leading, leveraging and linking. Actually, the other way around. Link, leverage and lead.

And on the linking issue, I’ve observed over the years that you’re much stronger in your analysis, in your thought process and in your follow through if you actually have good collaborators. So I spent some of my first months visiting others who I respected who were in this space. So I sat down with the president of the Robert Wood Johnson Foundation, the president of the Commonwealth Fund, the president of the Milbank Memorial Fund, the president of the Kaiser Family Foundation, all who are philanthropists, really, in this. They are not policy institutes, per se, but they have policy institute qualities and they support activities. I have had the luxury of being on hard money. I don’t have to raise money to focus on what the Institute has. So we’re able to develop an agenda that we can actually carry out.

05-00:16:03 Meeker: And this Institute is funded by the health plan, by health plan hospitals?

05-00:16:07 Crane: All the health plans but basically our members. We’re taxing our members a little bit to pay for what it costs us to do this. But in this issue of link or collaborate, these four organizations that I mentioned are the biggest funders of health care, of policy and other work. So I went to them with the proposition that there might be things that we could do together. I wasn’t looking for money. Here are the things initially that we were interested in. I wanted to understand what their agendas were, how they approached their task, some of which I knew, but it’s been a while since I dealt with them. And we’ve done projects with all of them. And sometimes they can’t do a project without giving us money, so we take it and we don’t therefore spend our members money.

But I talked about the RWJ project with health eating and active living. We’ve done projects with Milbank Memorial Fund around innovative policy at the state level in information technology or other areas. We’ve done work with the Commonwealth Fund on international comparisons in health policy, on health system improvement. And in addition to the Foundations, I met with probably twenty other organizations that either had policy work—I wanted to understand what others’ space was, how they were defining that—so that we could really make a difference. I didn’t want to be a me, too institute or create one.

05-00:18:09 Meeker: How has that actually worked out? Where do you feel like the Institute has been able to make a unique contribution?

05-00:18:17 Crane: I think we did in patient safety. I think with a lot of others helping, because we’re one of the few health care organizations that’s out beating the drums for healthy eating and active living, or we were one of the first. There are other academic organizations and associations around those that sponsor or are concerned with diabetes or the associations where obesity is a problem from a health point of view. But the whole campaign, which was developed independent of but now is very much linked to our brand, “Thrive!” was very synergistic.

I think the other area that we’ve had a major impact is around the area of the health care delivery system matters. That’s been a theme that we’ve pursued from the very beginning. That the organization and structure and operation and financing of the system itself does matter. I mentioned to you earlier about the book that we sponsored and edited on that subject called Toward a 21st Century Health Care System. It’s about the delivery system matters. Lauren Tollen, who’s full-time with the Institute, and Alain Enthoven co- authored that book. We had a series of meetings in which we explored the topics that were then written up for the book. The Institute’s just completed a second book on how hospitals and physicians can collaborate together, which is the basis for much of the organizational structure around accountable care organizations, which is a major emphasis in health care reform on a pilot basis and will help the development of the system.

05-00:20:33 Meeker: I wonder, in relation to this work that the Institute is pursuing, it sounds like some of it runs a little far a field from specific legislative or policy initiatives or is the goal that it all does eventually possibly result in some sort of legislative initiative? Maybe I just don’t have the imagination to think about some of the health care delivery systems matters topic. How does that then translate?

05-00:21:02 Crane: Oh, that’s directly related.

05-00:21:05 Meeker: Okay. Can you unpack that for me a little bit?

05-00:21:07 Crane: The roundtable that we had that served as a basis for the book, Partners in Health, talked about government interventions with respect to how you pay providers, how you encourage organizations which have direct connection to provisions in the new health care reform legislation. Not because of that round

76 table but the discussion that was going on before and at that meeting and allowed us to advocate bundled payment, accountable care organizations, transparency, more effective measurement of organizations so that you can differentiate them. We sponsored some of the discussion around the study of let’s understand and develop proof points for what is true. Does the delivery system really matter? Do prepaid group practices really make a different in terms of health and outcomes? That said, not all of these things are related to a specific bill.

We worked in IT. We’ve had several roundtable discussions and developed articles and papers on IT. What I was interested in doing with that was sharing our early experience. We had more experience, other than the VA, with implementing health IT within an organization. The policy work that we did identified that the biggest barrier to the adoption of IT was people’s lack of understanding of what the business case for doing it is. What’s the benefit? How do you get the benefit? So as we were starting to get benefit, I felt it was important to communicate that. And so staff on the Institute, with program staff from IT, wrote articles in New England Journal and other places. Again, that didn’t necessarily lead to any specific legislation, although you could say that some of that work, and the communication we sponsored about the benefits of IT led to the billions of dollars that was in the stimulus package to encourage every provider in the United States to move in this direction. Small but Kaiser’s experience and advocacy helped. It might have happened without any of our involvement but it’s another of the things that you could point to.

We’ve encouraged evidence based medicine. I’ve talked about linking. We’ve linked a lot of people to do this. This is a point of leverage. We have a Care Management Institute. We’ve had it for ten years. It’s based on evidence based medicine. It’s motto is making it easier to do the right thing. That requires knowing what the right thing is, the evidence, and then figuring out ways, systems, etcetera, to do it. Well, we’re a leader in that. So how do we position Kaiser Permanente out there to get others to move in that direction and to support more evidence in health care, which we want to do? Well, our work in this arena, has supported—I wouldn’t say caused at all—but it certainly supported the Institute of Medicine to start an evidence based medicine roundtable, which George Halvorson sits on and I have supported it on a day to day basis with IOM Staff.

So lots of different connection points. Being opportunistic, leveraging the experience of our organization. Let me give you an example. We wanted to do a roundtable on the small group marketplace and how it could be improved. What state actions should happen? And what we did before we designed our agenda and meeting was we pulled together a small group of people who managed the small group within Kaiser Permanente. These were the experts. And we said, “Here are the types of things that we’re thinking about doing. What are the issues that you see? If you could write the best template to have good competition and more effective support of small groups, what would it

be?” And then you take that expertise. You may have one of them sitting at the table as one of the experts. That was a roundtable we collaborated with the California Health Care Foundation because we wanted to have a California focus and came out with a whole range of issues.

We have sponsored several retrospectives on exchanges that are part of the new legislation. The Institute recently did one in which it showcased the Massachusetts experience and other experience and tried to pull out lessons learned from the experience of those who have tried this thing which is now required by the health reform legislation. So some of that relates to the third L, link, leverage and then lead, to basically advocate things that we think will make a difference and take a leadership position. That may end up being a legislative proposal which government relations carries forward, but it may simply be a positioning for the organization that’s positive.

05-00:27:26 Meeker: Since one of the big innovations of this was to take a more proactive stance when it came to legislation, in other words, perhaps, proposing a legislative agenda instead of responding to legislation that’s making its way through the system, are there examples of pieces of legislation or at least bills that have been produced in response to, or as a result of, the work done through the Institute?

05-00:27:55 Crane: Well, it’s hard to ever point to one activity and a piece of legislation because fundamentally our whole strategy is to link and have a chorus of voices to support change. But I think in our “delivery systems matters” work there are a sprinkling of a number of things that have happened because of that work and our focus on a better measurement. And they’re in the health care reform legislation. I think overall there’s a sense of disappointment that the health care reform was insurance reform and not delivery system reform, too. But there are elements around better measurement of quality, reporting of quality, transparency overall, new payment methods, and accountable care organizations of which are elements of making the delivery system matter.

I would point to our advocacy for protection of voluntary reporting. It took a long time but we certainly saw that as an early need. We supported the IOM recommendations. We did work to support that from a government relations point of view which got enacted in the 2005 Act. At the state level, a number of the provisions that were debated as part of California’s health care reform, which didn’t end up passing in the aggregate, were based on things which we had explored, etcetera. But having said that, and I think it is good to measure benefit from potentially legislation as effected. I think almost more important is the fact that Kaiser is doing this, supporting it, making the connections, sponsoring the discussions, developing its own point of view in response to a broader range of issues than would otherwise have been on our plate. We’re sitting at a lot of tables that we wouldn’t be at as a result of the Institute. And I

think that helps shape the environment of the future. Because there are lots of ways in which the environment is shaped, through government leadership, through gubernatorial leadership. The interaction we have with the Secretary of Health and Human Services on a variety of issues. The Institute positions Kaiser Permanente in a way that embraces the public interest, that has created a track record that demonstrates our broad range of interests as opposed to a narrow self-interest and I think it reflects positively on the organization. I think it contributes to Kaiser Permanente’s community benefit. We’re stimulating discussion, which lead to better results, improved health, more coverage, a better delivery system, effective IT, and we’re able to both showcase and share the considerable experience of Kaiser Permanente on those multiple stages. So I’m actually delighted. I’m not running the Institute, of course, anymore, but it carries on and continues to accomplish those things. We have lots of written evidence of the stuff that we’ve done. I’ve mentioned the fact that the Institute’s published two books. When you look at all we have accomplished in its short ten years it’s had a pretty remarkable impact.

05-00:32:30 Meeker: Any other final comments you’d like to make?

05-00:32:33 Crane: No, I think we covered it.

05-00:32:34 Meeker: All right, excellent.

[End of Interview]