Tuesday, November 07, 2006

Kaiser Healthcare IT Meltdown?

In what can be described as a classic "I said...he said" account of what could be a multibillion dollar Healthcare IT boondoggle for Kaiser Permanente, see this series of posts as well as this series on the health-IT-industry HISTalk blog. (The corporate ethics blog may have been first to break this story.)

All of the familiar elements are there: allegations of conflicts of interest; IT mismanagement; IT leadership with questionable amounts of clinical and/or medical informatics experience; sudden resignations of senior IT officers; accusations and refutations; and even a 25-year old whistleblower.

Justen Deal, a 25-year-old employee of HMO giant Kaiser Permanente, was placed on administrative leave yesterday after criticizing the company's $3 billion information technology investment and some of its providers, including Epic Systems, in an e-mail he sent to all Kaiser employees and later to the company's board of directors. The San Francisco Chronicle picked up the story, using internal financial information contained in Deal's e-mail that projected a $7 billion loss for the company over the next two years if expenses aren't better controlled. "Kaiser's loss projections came to light after an employee sent an e-mail to 180,000 employees on Friday. In the e-mail, Justen Deal, a project supervisor who has worked for the company for two years, detailed his frustration with Kaiser's electronic health record system, which he considers inefficient and unreliable. Deal was placed on administrative leave Monday. 'What I'm doing is working to ensure the waste and abuse stops,' said Deal, who lives in Los Angeles. 'That's not something you get fired for.'"

HISTalk reports: you decide.

Here is Justin Deal's controversial mass email to 180,000 employees (!), which I reproduce here almost in its entirety (due to the fact that almost every paragraph describes twists and turns that appear salient.) I've highlighted some themes familiar to Healthcare Renewal readers:

Dear Colleague,

Three weeks ago, George Halvorson, our CEO, wrote to tell us that Health Plan and Hospitals are facing significant financial challenges. What Mr. Halvorson did not mention was the magnitude of the financial losses we could see: our internal projections show that we could lose as much as $7 billion dollars in total over the next two fiscal years. Losses of even a fraction of that total will be a threatening blow to our organization and what we stand for, and will significantly compromise our ability to care for our members.

There are many things that are triggering these losses. Among them are accelerating changes to our membership base as more member move towards higher deductible plans, reductions in Medicare reimbursements, and our capital outlays for rebuilding. But the truth is, these issues are only exposing our real financial problem: we're spending recklessly, to the tune of over $1.5 billion in waste every year, primarily on HealthConnect, but also on other inefficient and ineffective information technology projects.

A History of Problems

On George Halvorson's first day here, he cancelled KP’s existing project to implement electronic health records. He wrote off the $442 million KP-CIS system that we had built with IBM. Instead of continuing to build on KP-CIS, Mr. Halvorson selected a company he was quite familiar with, Epic Systems of Wisconsin. Mr. Halvorson had also pushed through the selection of Epic at the health plan he previously had led, in Minnesota. [If this is true, why was a CEO overriding the IT experts? I have seen this type of mismanagement before -- ed.]

Despite internal resistance to this unusual and significant change of course, Cliff Dodd, our CIO, embraced Mr. Halvorson's decision, and both began working to convince key KP leaders that KP-CIS would eventually fail and that Epic was our only option.

What was particularly disconcerting about abandoning KP-CIS was the significant investment we had already made in the system. It was functioning reliably in Hawaii, had been in use in Colorado for years, and was on track for deployment in our Southern and Northern California regions. In fact, only days before Mr. Halvorson was hired, the Kaiser Permanente Partnership Group had reaffirmed its unequivocal support for KP-CIS. Comprehensive plans and agreements were even in place to continue building on KP-CIS.

But Mr. Halvorson was determined that KP would give its business to Epic. Several respected KP executives, who had supported or were directly involved with KP-CIS, saw the writing on the wall and quickly left the organization entirely. Others converted to supporting Epic after extensive ballyhooing from Mr. Halvorson and Mr. Dodd. All the while, our CEO and CIO ignored internal engineering reports which said Epic software would be unreliable for our size and difficult to adapt to our scope.

Instead of heeding those engineering reports, Mr. Dodd brought in a company called Tanning Technology to give an opinion on the viability of Epic within an organization as large as Kaiser Permanente. Mr. Dodd, while serving as an officer of Health Plan, also simultaneously served as a director for Tanning. Ignoring this significant conflict of interest, Mr. Dodd paid nearly $1 million dollars for Tanning Technology to give a favorable report on his and Mr. Halvorson’s predetermined plan to shift KP’s business to Epic. Tanning Technology, shortly thereafter, went belly up.

Despite the fact that Mr. Halvorson was hired for what we believed was his experience in implementing electronic health records, the truth turned out to not be quite so convincing. Mr. Halvorson was previously CEO at a health plan called HealthPartners, in Minnesota. HealthPartners is a little less than a tenth of the size of KP. Although George Halvorson had signed HealthPartners to an expensive contract with Epic Systems just before he left, HealthPartners still hasn't seen the results that Mr. Halvorson had promised. In fact, HealthPartners has faced significant problems with its Epic project, and, so far, the Epic software has only been able to completely cover about half of HealthPartners members.

... A Lack of Accountability

When I first began to uncover this information, I almost could not believe what I was reading. As the impact to Kaiser Permanente became more and more obvious, and when I learned of the sheer magnitude of the potential losses, I knew I had to do something ... So, I gathered all of the information I had collected: the news articles, the SEC filings, the engineering reports, and the Attorney General’s allegations. I put it all in a package, and I sent it, along with a letter explaining what I had found, to Dan Garcia, our chief compliance officer. That was in August. I also sent an identical packet to each member of the Health Plan Board.

I was worried by the seriousness of the issues, but I was heartened by many of the responses I received. Several Board members told me privately how shocked they were to see such terrible evidence and how alarmed they were to see the very negative financial projections. They thanked me for bringing the important information to their attention, and said they would be meeting with Mr. Garcia soon to make a decision on an appropriate course of action.

In putting all these pieces together, though, I missed one key fact that would lead me to seriously question Mr. Garcia’s ability to handle the situation. After sending the information to Mr. Garcia, I learned that Mr. Garcia had also served on the Health Plan Board of Directors for several years, even before he became our CCO. The key piece I missed was significant: Mr. Garcia is the very man who hired George Halvorson, back in 2002.

That presented a serious conflict of interest that I don't believe Mr. Garcia disclosed to the Board when they asked him to investigate, on their behalf, the issues that I had uncovered and report back to them.

I trusted Dan Garcia and his staff. I didn't question his integrity or honesty until he directly instructed me to have no further contact with any Board member. I found his order unusual: several directors had personally told me how concerned they were with these issues, and how thankful they were that this evidence had been brought to their attention. Why would Dan Garcia, who reports to the Board, try to create distance between the Board and me, and try so hard to keep the Board in the dark?

When I found a KP press release from 2001 that pointed out that Mr. Garcia headed the small committee that selected Mr. Halvorson, Mr. Garcia’s strange, and incredibly defensive behavior began to make sense.

Having Their Way

For some reason, Mr. Halvorson and Mr. Dodd were determined to make sure KP switched its business to Epic, regardless of the potentially catastrophic financial impact. Mr. Garcia chose to not stand in their way. And to make sure nobody else objected, Mr. Halvorson began replacing each and every director with handpicked candidates, who I believe he thought he could control.

The fact is, in an interview about a year ago, Mr. Dodd made a statement that puts everything into perspective. He said:

"We had a whole executive committee that was quite committed to [[KP- CIS]]... The board... all the medical directors...each had to be unwound and reset."

And “unwind” and “reset” Mr. Halvorson and Mr. Garcia did. Today, only one person remains on the Board from before 2002. That's an unprecedented turnover in our history, that, I believe, has allowed Mr. Halvorson and Mr. Dodd, with Mr. Garcia's compliance, to mislead Kaiser Permanente into a multi-billion dollar spending spree benefitting Epic Systems, that Wisconsin company that Mr. Halvorson is so familiar with.


Unfortunately, in this process, many of us have been misled, and no matter what happens to Mr. Halvorson, Mr. Dodd, and Mr. Garcia, we will be the ones left to deal with these problems. We put our faith in each of them. Other KP leaders trusted them, and depended on the integrity and accuracy information they provided. Dr. Jay Crosson, the leader of The Permanente Federation, and one of the most respected physician leaders in the country, recently wrote that downtime with Epic's systems has been getting better and better. The truth is, over the past several months, Epic outages have increased from just over 9,000 user hours per month in June to over 59,000 last month. Dr. Crosson, and each of us, have all been told how reliable and wonderful Epic is going to be. Sadly, it’s just not true.

Epic simply cannot scale to meet the size and needs of Kaiser Permanente. And we're wasting billions of dollars trying to make it.


... Please, help me fight to protect the future of our organization, the future of Kaiser Permanente, the future of America's foremost healthcare leader.

If you would like to stay up to date, I will try to update a website I have set up, fixkp.org, with the latest information.

Sincerely, and most respectfully,

Justen Deal
Kaiser Permanente

KP's CEO posts a refutation which is also posted at the HISTalk blog; read it at the links above.

If Mr. Deal's allegations are even partially true, however, this spectacular story would exceed in severity most of the worst healthcare IT debacles known (excepting the difficulties the UK NHS's Connecting for Health national EMR project is experiencing that I have linked to in prior posts). I have opined that all the assumptions, methodologies, and practices in health IT design and implementation need a critical examination by experts - and that does not mean by computer experts alone - and massive revision and reform to take into account the complex and unique setting of healthcare.

My own take on the matter? From my experiences in health IT, I place my bets on the whistleblower's account. However, that's just my opinion.

Of note, I did not select EPIC for Christiana Care some years ago due to my concerns about its ability to scale and be customized as needed for various specialties and sites. I do not know if this has changed in EPIC's current EMR products, however.

Finally, this is one 25 year old with real guts.


kaiserfraud said...

Thanks for reporting this. I would like to point out that I broke the story on my blog, and I was the first to post the Dodd resignation memo last night. If you notice, HISTalk kindly brought me up. The blog is http://corphq.livejournal.com

I also had Justen's email, but I refrained from posting it because I didn't want to do anything that might get Justen into a deeper mess. I did write Dr. Poses of this blog with the tip, so it seems like I should be mentioned upfront.

Roy M. Poses MD said...

In view of the comment above, I think I need to clarify how Health Care Renewal works.

Please note that the Health Care Renewal blog is a volunteer effort done by several bloggers, without funding, without staff, without an office. We mainly post to add commentary about issues that were brought up in the media or in health care/ medical journals. We have no capacity to do our own reporting or investigating other than searching on the Internet. We write independently, and have no single editor. We all blog in our spare time, and do not have the capacity to find and comment about every relevant story. I did get a tip about this issue, but had no time to act on it. MedInformaticsMD wrote the post above independently from me. We are grateful for all tips, and will do our best to act upon them, but can only work within the context of our extremely limited resources and times.

kaiserfraud said...

But the article is still not acknowledging that I've been working on this since Friday, because...?

I'm not trying to be a stick in the mud here. I just don't understand why a blog that's supposed to be about abuse and corruption in the health care field could be overlooking me (also a hard-working, volunteer blogger - not to mention a victim of abuse and fraud by a huge HMO and a notorious whistleblower).

Roy M. Poses MD said...

I suppose that we should be flattered by the assumption that seems to underlie the comment above, that Health Care Renewal can cover every important case of concentration and abuse of power in health care.
Unfortunately, as I said above, we do not have anything close to the capacity to do that.
If we had a million dollar budget, a full-time staff, and piles of advanced hardware and software, maybe we could.
Any donations to FIRM that could take us down that road would be greatly appreciated. ;-)
But right now, we are just a bunch of volunteer bloggers trying to discuss concentration and abuse of power in health care as best we can.
But unless and until we get more people, resources, and money to helpd out, we will only be able to cover a fraction of the stories and issues out there.
We apologize again for all the important stories and issues that we have missed, and that we will miss in the future.
We are sorry that the writer above feels overlooked. We did not intend an offense. We are just doing the best we can to cope with mountains of stories on concentration and abuse of power.

InformaticsMD said...

I would be happy to add a mention and will do so.

I became aware of this story last evening via HISTalk.

kaiserfraud said...

Thanks - I appreciate it!

Anonymous said...

It is very interesting to me that someone who purports to be so altruistic about his aims does the one thing that would almost assuredly deeply hurt the very company he works for. I find it particularly hard to believe that a 25 year old Publication Project Supervisor in the Health Education and Training Department, his actual title at KP, would have such vast amounts of knowledge about a company that is the largest private supplier of health care in the world, larger than most countries in fact.

For someone so savvy on technology, he doesn't provide a single document that actually proves his case. Just a future earnings risk assessment and a document concerning downtime are referenced. Does it mention that such a thing as 'planned downtime' exists?

I have been all over the internet today looking at this, and it seems incredulous to me that so many people are taking his story hook, line and sinker.

As someone with 3 years of actual software implementation and project management under my belt, not Publication Project Supervision, even I understand that implementations are difficult processes that often look terrible. 2 years from completion is a long time, and with the largest Health Care IT Implementation the world will likely ever see I am not one bit surprised that they are running into issues.

kaiserfraud said...

You obviously missed the 722 pages worth of incident report proof. Or did you? You are replicating Kaiser's "key messages" against Justen: he's too young, he can't possibly have an "executive level" overview. This is a stupid PR tactic: Kaiser employees of various organizational levels talk and connect via email, the web, etc. The proof has been flying around via email. If a PR agency has been advising Kaiser to take this approach, Kaiser should fire them: simply asserting a "key message" on the web that so many people know to be false just makes Kaiser look bad. If Kaiser insists on pushing this sort of horse hockey, then the public will end up assuming everything Kaiser says is a lie.

Oh, but wait - that's been the problem all along!

Anonymous said...

I am a Kaiser employee with seven years of IT healthcare experience and three years of project management and technical experience on HealthConnect.

I too am amazed at the number of news sources accepting without question Justen Deal's expertise in large scale healthcare finance and also the technical complexities of HealthConnect. Yes, it is possible for someone his age to have powerful insights and executive level thinking. But it isn't the case here.

I have no "key message" or PR niceties to shout, but as a KP employee I can tell you honestly that though there may be things wrong with Kaiser, HealthConnect is not one of them. Of course a deployment of this scope has had issues, but HealthConnect is scaling and it is providing reliable service to thousands of KP providers and millions of patients across the country every day.

I believe Justen Deal does care about Kaiser, but I also believe his comments were reckless and at least in part inaccurate. I believe that somehow he feels wronged because he wasn't taken seriously. It is a shame that Justen's well-meaning but off-target claims and the news agencies lack of research depth and common sense tainted an incredible initiative and a very solid EMR product.

Troup said...

kudos to Justin. My guess is he tried time and time again to get them to acknowledge the issues and mgmt chose to not listen.

Typical upper mgmt. They care about them selves only. Lining their pockets and keeping their friends intact.

Well done Justin!

Anonymous said...

Epic Employees KNOW that Kaiser project has been in the RED ever since it started. Because it is completely out of scope. Epic hired 1000 people just for KP...and that was doubling their size. Epic had to invent departments to handle KP's scalability which they NEVER encountered before. So Epic does not have any experience nor technology. IT IS VAPORWARE. You can learn a lot about the company by the way they treat their own employees. KP fired Justin. Even worse happens at Epic Systems.

Anonymous said...

Here is what it is like to WORK AT EPIC to support HealthConnect:

- flat organization structure, private and no unions.
- work says 40hr/wk but usually its 55hr+ (and no you dont get compensated for extra hours)
- dont matter if you did MS or Ph.D, they require only max BS.
- some immigrants complained that they do only EB3 and not EB2 (even if you qualify) - they feel that this is a tactic to prolong their stay there, but company says that it coz the job description doesnt require MS (thus no EB2).
- what work you do there is mostly not useful in other tech companies since not many outside banking and healthcare use mumps language.
- "if you are overqualified, then you are screwing youself" - 1 comment
- you can get paged/called even when on vacation or during night/weekends
- salaries are negotiated with employees during hiring interview call
- ex-employees said they mainly left due to they feeling less appreciated and being overworked, some youngers ones saying "no future"

many people i spoke with wanted to leave when they get a "chance". based on all there it sounds like its a place to maybe work for an year or two just to make some dough and leave - not worth settling there or rotting yourself there. most people sounded like they got in by mistake or just wanted a break from other job and want to leave, some wanted to stay on just for the pay and non-tech work (albeit ridiculous hours). some immigrants just were in for H1 and GC; some left inspite of H1/GC and some are stuck for next couple of years due to the current GC process.

InformaticsMD said...

And this is the industry that's supposed to "revolutionize" healthcare.

Anonymous said...

Stupid, Insane or Corrupt?

Because I have heart failure, heart arrhythmia and asthma, I have been forced to use oxygen for than half the time. Although an oxygen concentrator kept me supplied at home, I needed portable oxygen to go outside.

Over one year ago, I learned that an oxygen conserver could allow me to be outside my home for 5 to six times as long. That meant that my E tank could last all day rather than just 2 hours! It would have saving Kaiser 500 percent of their oxygen costs, which would have been a savings (after the cost of the conserver) of about $2,300 yearly!

I went to talk to my heart doctor. To my surprise, they refused. When I tried to appeal the decision, all oxygen coverage was cut off without any tests or reason. They later claimed that they were forced to only test me when my heart was stable, and go by that. I checked the law, and the law said I was to be tested “when chronically stable”, which was quite different!

I began to wonder why Kaiser would fight to spend more money? I questioned other patients on oxygen, who were also Kaiser patients, and they too were not offered an oxygen conserver!

On the same day Kaiser removed my oxygen conserver, they also removed my wheelchair, which I used when the disk in my spine went out of alignment.

I felt that they had only three possible reasons for such an extreme reaction. The first was that all those in the heart clinic were insane, but I doubted that. The second possible reason was that they were all too dumb to realize that this would have helped patients and saved them money! The idea that all the doctors were fools was also very unlikely!

Sir Arther Sir Arthur Cannon Doyle once said, “If you ignore what is impossible, whatever is left, no matter how unlikely, is your answer!” The only other answer was possible kickbacks?

I checked some other facts. Kaiser pays out 45 dollars per E tank refill plus a delivery charge. Most patients use at least 5 tanks per month at $225 dollars per month, and that is without delivery costs!

That would come to $2,700 per year (minimum). A conserver would cost about $300 dollars, yet it would save Kaiser at least $2,200 off the cost! Kaiser could save even more if they chose an Home Oxygen Refill System, which would cost about $3.500 dollars with a service contract.

If we assume the machine will last 8 years, that would be a savings of over $18,000!

I next wondered about the wheelchair. Kaiser rented the chair for $140 per month! That would be about $8.400 over the life of the chair. Kaiser could have purchased one of the best manual wheelchairs, with a 5 year service contract for less than $1,000! Again they wasted $7,400!

I cannot prove what their motives were. I can tell you this. There are only 3 reasons why they would choose to waste all that money.


They are all insane.

They are all retarded.

They are getting kickbacks, and they are willing to endanger and even kill to keep those kickbacks coming in.

I will leave the answer to you readers and any investigators who wish to review their choices?

Mark Heinemann