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Steve Burd portrait. CEO of Safeway.

Bread, butter and universal health care

Safeway’s CEO talks reform

Rolling your grocery cart along the aisle at a local Safeway store, you’re probably not thinking about universal health care, but Steve Burd is.

Safeway’s chief executive is one of corporate America’s most vocal proponents for reform of the health-care system. So why has a grocery store honcho and self-described free-market capitalist entered the political arena’s equivalent of solving an extreme sudoku puzzle? Simple, he says: Rapidly rising health-care costs threatened the chain’s already slim profit margins. Burd also evangelizes about the power of individuals to reshape their own personal health. To wit, over the last two years he has ratcheted up his fitness regime — which he contends is necessary if he is going to lead by example.

Paul Costello, the School of Medicine’s executive director of communication and public affairs, spoke with Burd about reform, fitness and why the federal government — and not the states — needs to lead the effort to solve the nation’s health-care woes.

You’re often described as an unlikely backer of health-care reform. Why do you think that is?

Burd: Well, my guess would be, people say that because they think of me as a business guy with a strong free-market perspective. And I think when people think about health-care reform, they automatically jump to the conclusion that it’s not going to be market-based. And yet, we’re advocating a market-based solution to health care.

What got you so involved in this?

Burd: It started when we had a billion dollar health-care bill three years ago. And it was escalating at a rate of about 10 percent a year. So this just became one of the areas that we thought we could improve. We surprised ourselves and actually experienced per capita cost declines. And once we discovered that, and fearing that someone might try to nationalize health care and deny a market solution forever, we started making speeches. I later built a coalition of like-minded business people and started sharing our story with policymakers.

We believe that there’s so much inefficiency in today’s health-care system that you could probably cut the cost of total health care by 35 to 40 percent. And the savings more than finances the subsidies to the poor.

I want to get it across that there’s this big discovery on Safeway’s part — which is still undiscovered by most of America, including most policymakers but not all: Behavior really matters. And we just changed the design of our health-care plan and said, “You’ve got to take some personal responsibility. If you smoke, you should pay more. If you have a large body mass index, that’s largely your fault. If you have uncontrolled high cholesterol or high blood pressure, you’re responsible for that.” Behavior and prevention are the keys to that 40 percent reduction.

And how is that going down?

Burd: It’s gone down well in our company. And I’ll tell you it’s because we’ve taken a very holistic approach. Anytime somebody in the organization points out an inconsistency we fix it. A couple months ago, people took notice that we didn’t put calorie counts on the menu [at corporate headquarters’ cafeteria]. So now we do. Two years ago, we didn’t have a fitness center. A year ago, we didn’t have discounted fitness memberships for the 200,000 people in our remote locations. We are just launching a service that helps people in our organization diagnosed with prostate cancer or breast cancer by hooking them up with a major cancer center and walking them through the treatment process. This leads to a much better outcome, which coincidentally is lower cost.

When people look at you, do you think they see a role model?

Burd: If I’m going to be effective, I think I’ve got to be a bit of a role model. I don’t know that you need to write about this, but I moved my body fat percentage from 26 to 15 over the last two years. And I do eight cardio workouts a week and three and a half strength-training sessions. You can’t preach this stuff if you don’t keep in shape yourself.

Do you think either of the major political parties has done a good job of framing the problems with health care?

Burd: The Republicans have probably done a better job of explaining that there’s a tax problem. If someone has a small business and pays his own insurance, he doesn’t get the tax deductions he would if he ran it through the company. It’s one of the things that McCain talks about, and it’s absolutely part of the solution, there’s no question about it.

And then I think on the Democratic side, they probably have been more outspoken on trying to get everyone in the game, meaning insured. Most people who’ve really looked at this would tell you that those who are insured pay a premium, we estimate about 30 percent, because there are about 47 million uninsured who don’t get any preventive care and end up doing a lot of emergency visits, which are very expensive. So they actually become a burden on all the insured.

Can state-by-state reform really solve the problem?

Burd: Well, clearly the tax issue can’t be resolved without federal legislation. I think it’s been good that states have taken the lead, but I do think that the bigger problem doesn’t get solved without federal engagement — because there are things that have to be adjusted in federal legislation, to put more of a responsibility on the individual for behavior, for example.

So, for you, personal behavior is the thing.

Burd: Behavior and prevention. And anybody who’s really looked at this would tell you exactly the same thing.






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