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.

Misleadership

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.

[snip]

... 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.