Read Advisory Board's take: Why Kaiser is opening this med school (and what it could mean for the industry)

Kaiser Permanente on Tuesday announced that it will waive tuition for the first five graduating classes of its new Kaiser Permanente School of Medicine, which is set to open in summer 2020.

Kaiser's announcement comes after NYU School of Medicine's August 2018 announcement that it will cover the full cost of tuition for all its current and future medical students, regardless of merit or financial need. The NYU School of Medicine is raising $600 million from its donors in order to fund its tuition plan in perpetuity.

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A new medical school

Kaiser in December 2015 announced plans to open its own medical school. The school, which will be one of the few medical schools in America not connected to a university, will start taking applications this June.

Each class will have 48 students, which is smaller than most medical schools.

According to Mark Schuster, founding dean and CEO of the new school, the curriculum will focus on Kaiser's model of integrated care in which physicians work on teams with pharmacists, social workers, and others to ensure each patient's needs are fully addressed.

The school will not have lecture-style science courses, and instead, will place students immediately into longitudinal integrated clerkships within Kaiser hospitals and clinics, beginning with primary care and then in the second year adding surgery, OB/GYN, pediatrics, and psychiatry.

Tuition free for first 5 graduating classes

Kaiser on Tuesday announced that it will waive tuition for the first five classes of its new school, in the hopes that students will not forgo lower-paying specialties such as family medicine because of medical school debt.

"We don't want debt to influence students' career choices," Schuster said. "We would like it so students can follow their heart and go into the work environment that feels right [to] them."

According to the Association of American Medical Colleges, around 75% of medical school students graduate with debt, and members of the 2017 graduating class had a median debt of $192,000.

Annual tuition for Kaiser's school will be about $55,000, and that, combined with the health insurance that Kaiser will be offering to its students, means Kaiser will be paying about $60 million for the initiative. Kaiser will use part of its almost $73 billion in operating revenue that's dedicated to "community benefits," which nonprofit provide hospitals as part of their tax-exempt status, to fund the effort.

Kaiser will not cover living expenses for its students.

"Even middle class families are finding medical school hard to pay for," Schuster said. "We're going to see how this plays out and learn from it."

Kaiser said it does not plan to cover tuition for students beyond the first five graduating classes, but will provide "very generous financial aid" based on need (Goodnough, New York Times, 2/19; Brooks, Medscape, 2/19; Ducharme, TIME, 2/19; Herman, Axios, 2/20; Kaiser Permanente release, 2/19).

Advisory Board's take

Russell Davis, Executive Director, and Natalie Trebes, Consultant, Health Plan Advisory Council

The attention given to the free tuition at Kaiser Permanente's School of Medicine distracts from the greater significance of the initiative. In fact, it's fairly common for new schools to lower tuition to help them get started and attract quality candidates. What does seem unique is that Kaiser is counting the funding as "community benefit" spending, which is a sign that it very much sees this as a population health management move (and may have to prove that to regulators).   

As a fully-integrated system, Kaiser has a dire need for clinicians who not only provide high quality care but also understand that they "own the healthcare dollar"—and what that means in practice at the point of care. Traditional medical schools, it seems, have not produced enough physicians who internalize this perspective, so Kaiser is "breaking this mold with a sledgehammer" and creating its own.

Kaiser will incorporate technology, emphasize care continuity, and strive to reduce healthcare disparities in their curriculum. Their 21st century training model will produce a stream of new physicians who act as change agents to solve the problems rooted in 20th century thinking. It's likely, based on the school's goals, that there will be strong selection bias in who applies—we'd expect it to attract medical students more interested in managing population health and more willing to challenge the status quo. If these students are more likely to work at Kaiser after residency (which could be possible as a condition of the assistance), it could pull them away from other plans and ACOs without this type of pipeline.

That a health plan is launching a medical school is telling. In a fee-for-service world, the tradeoff between cost and quality occur between the provider and the health plan, to the frustration of the patient. New solutions require more than new payment models; they require new thinking and new behaviors. Kaiser is hoping to create the generation of physicians who will do it.

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