Kaiser Permanente to build new Oakland headquarters

Kaiser Permanente plans to consolidate its Oakland, Calif., headquarters from seven locations into one to reduce overhead costs and provide what Chairman and CEO Bernard Tyson described as a "community benefit" to the city.

The health system announced Monday it will break ground on the new Kaiser Permanente Thrive Center in 2020, a 1.6 million-square-foot building that will accommodate its more than 7,000 national and Northern California regional administrative employees.

Tyson estimated the move should save more than $60 million per year in operational costs from avoided maintenance on the old sites and lower utility expenses from the more energy efficient new center.

Those savings will be re-invested toward the system's efforts to lower health costs for their members, he said.

"The goal is to make healthcare more affordable in this country, and we're part of that and something that we're working on," Tyson said. "

Plans for the system to consolidate had been in the works for over a year. Tyson said other markets outside of California, such as Colorado and Georgia, were evaluated for a possible move because of the rising costs of commercial real estate leases in the Bay Area.

Tyson said the decision to stay in Oakland ultimately came down to Kaiser's long history in the city, which has been home to the health system since 1945. Kaiser is the single largest employer in Oakland with more than 12,000 employees according to the city's website.

"Kaiser Permanente has been an anchor in Oakland's community for more than 70 years," Oakland Mayor Libby Schaaf said in a statement. "We are so pleased that this organization has reaffirmed its commitment to Oakland with this decision to establish a new headquarters, a central home for its employees and a place for our community to connect and thrive."

Designs for the new headquarters include a health clinic to serve both employees and Kaiser members in the downtown area, dedicated community space for meetings, a weekly farmer's market, exercise and cooking classes, and a gallery for locally inspired art.

Tyson said Kaiser will receive no economic incentives from the city. Instead the system will offer community benefits in the form of an estimated $15 million a year in local tax revenue, as well as the opportunity for the city to lease out new commercial space stemming from old Kaiser sites.

"It's a big win for Oakland and it's certainly a big win for Kaiser Permanente because we'll be running a much more efficient operation out of Oakland," Tyson said.

Construction of the new headquarters is slated to be completed by 2023. Tyson said the health system plans to collaborate with community members in the planning and development of the new location over the coming months to identify the best use of the public space.

"The goal is that the community would feel that they own that building as much as Kaiser Permanente," Tyson said.

There are no plans for Kaiser to direct any portion of its expected annual savings toward the health system's effort to address social needs. Tyson said initiatives launched over the past year to create more affordable housing and to end homelessness in Oakland will continue to be funded through Kaiser's $200 million Thriving Communities Fund announced earlier this year.