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Billions of dollars and millions of lives are serious business, but sometimes I wish, if for a moment, that I could laugh at the nightmare that is HealthConnect. Here’s an attempt (followed by the serious part)…

Oakland, California, December 17, 2007. Kaiser Permanente today sought federal disaster assistance for its HealthConnect electronic medical record project. Declaring a state of emergency covering all eight regions impacted by the project’s deployment, each of the regional Permanente medical directors called on the Department of Health and Human Services for help with the ongoing fallout from the ongoing rollout (casualties which include staff morale, patient waiting times, physician burnout, pharmacy overload, nurse exhaustion, and member dues swindling). Embattled and unshaven chairman George Halvorson, via satellite linkup from a rural village in Africa where he is working on his nineteenth book, continued to defend the years-late and billions-over budget project, claiming the system to be “robust” and the deployment to be “on track.”

That was enjoyable, but there is an actual story hiding behind that parody. Kaiser Permanente did apply for a grant from the Agency for Healthcare Research and Quality, which is part of the Department of Health and Human Services. Yes that would be the agency that has a 2007 budget of about $300 million. Kaiser Permanente, on the other hand, is on track to generate ten times that in profit this year (yes, somewhere around $3 billion in profit).

So KP obviously didn’t need the money. What it does need, however, is to restore a bit of the sheen that has been fleeing from HealthConnect since my email last year. With blistering exposés from the Los Angeles Times and the Wall Street Journal, there’s a lot of incentive to allude to an endorsement from the Federal “Agency for Healthcare Research and Quality.”

Sadly for Kaiser Permanente, there is no such endorsement. In fact, HealthConnect is barely involved in the grant at all. Of course, that certainly didn’t stop Kaiser Permanente from repeatedly mentioning the system in the press release announcing the grant. They even managed to slip in a flattering adjective, calling HealthConnect “robust.” Sadly, all signs point to… No. Nope. Nada.

In fact, I was able to take a closer look at the actual facts behind the grant. The vast majority of the grant is to assemble and analyze the data, most of which has already been collected (the data window is from 2003 to early 2008). Interestingly, the region selected for the study is Hawaii, which, yes, you guessed it, was using the pre-Epic, pre-HealthConnect KP-CIS system for a big chunk of that time. So, while HealthConnect might be the one spitting out (or otherwise ungainly expelling) the data, it’s hardly the heroic “robust” miracle worker George Halvorson is making it out to be.

Think about it. If much of the data being analyzed was collected just as well using a system that cost a fraction of what HealthConnect cost, doesn’t that expose the whole debacle for the naked (and damned expensive) emperor it really is?

Sorry, Mr. Halvorson. Just because you were able to convince a federal bureaucracy to hand over $600,000 isn’t all that impressive, and it says nothing about the quality or integrity of system itself. Now, if you’ll excuse me, I need to go write my senators and congresswoman about government waste…

Daniel Garcia is the chief compliance officer of Kaiser Permanente, a sort of “chief investigator” for the organization. He was hired into that position, a position he helped create, in 2002. His history with Kaiser Permanente, however, dates back to 1992, when he first became a member of the organization’s Board of Directors. He continued to serve as an outside and independent director until he became chief compliance officer on February 1, 2002.

What is interesting about Mr. Garcia’s role at the organization is that he reports to the chief executive officer, George Halvorson and is also responsible for investigating Mr. Halvorson’s conduct. This reciprocal reporting relationship is not unique, however, and similar situations exist at many other organizations and companies. What is troubling, however, is the disturbing role Mr. Garcia played in hiring Mr. Halvorson, the significant resulting conflict of interest, and Mr. Garcia’s alarming history in Los Angeles politics, which is littered with serious allegations of corruption. In fact, it appears Mr. Garcia has never met a potential conflict of interest he didn’t like, but more on that in a moment…

When Mr. Halvorson was recently forced to address the mutual conflict of interest, he, again, mislead Kaiser Permanente employees by leaving out key details. Mr. Halvorson admitted that Mr. Garcia was “was on the committee that recommended that I be hired.” In fact, Mr. Garcia was the chair of the committee that hired Mr. Halvorson.

Mr. Halvorson went on to insist that “It’s…naïve, however, to say that Dan can’t subsequently do his job [as the chief of] compliance because of that prior committee role.” Mr. Halvorson insisted that he believes that demanding otherwise would mean that “any Board member on a search committee would be unable to make future decisions and judgments about people they had voted for in a search process.”

His straw man argument couldn’t be weaker. Here’s why…

It is extremely rare for an inside director to chair a search committee, let alone an inside director who also happens to be the chief compliance officer. A chief compliance officer should be be above reproach, and avoid even the appearance of a conflict of interest.

Dan Garcia was an outside director when he was appointed to chair the selection committee. However, when he later became the primary candidate for the position chief compliance officer (which would have changed his status to a non-independent director), he should have stepped aside as head of the search committee. He didn’t. Instead, he created an even more troubling situation: Mr. Garcia hired Mr. Halvorson, the man who would become his boss. Mr. Garcia did so under the pretense of still being an “independent director.” Mr. Halvorson, by then the (not yet announced, but designated) chief executive officer, turned around and approved Mr. Garcia’s appointment as chief compliance officer. Tit for tat?

Perhaps if Mr. Garcia had been qualified to become chief compliance officer, the conflict would be less obvious. Instead, Mr. Garcia had no executive-level compliance experience or healthcare experience. In fact, Mr. Garcia’s most recent executive position at that point had been as a real estate advisor for a movie studio. That apparently qualified Mr. Garcia to make well over $1,800,000 each year as Kaiser Permanente’s chief compliance officer.

Take a closer look at the timeline:

In July 2001, then-Kaiser Foundation Health Plan chief executive David Lawrence announced he would be retiring, and Mr. Garcia was selected by the board to be the independent director who would chair the search committee.

Over the following months, Mr. Garcia eventually became a candidate to become the organization’s new chief compliance officer.

By October 2001, Minnesota Attorney General Mike Hatch had announced he intended to launch an investigation into Mr. Halvorson and his then-employer, HealthPartners.

By January 2002, Mr. Halvorson had become the lead candidate for the position, meaning he likely began receiving briefings on the organization’s operations, and almost certainly began having input into any major decisions the organization was making, such as… The appointment of Mr. Garcia on February 1, 2002.

Mr. Halvorson’s appointment was then announced by Mr. Garcia on March 7, 2002, barely a month later.

Assuming Mr. Garcia wasn’t qualified for the position of chief compliance officer, perhaps his record as an attorney and politician alone would have been clean enough to assume he could be a sort of “chief ethics officer”? Sadly, no. From quietly recommending his future wife to a city position (without pointing out they had a relationship and while glossing over her previous conviction and short jail time for forgery), to serious allegations that he engaged in a “pay for play” relationship with Los Angeles real estate developer Ted Stein, to his troubling relationship with Leland Wong (who he subsequently was required to investigate at Kaiser Permanente), Mr. Garcia’s past is filled with allegations of conflicts of interest and abuse of power.

In a 2004 exposé, the Los Angeles Times highlighted Mr. Garcia’s lack of concern for avoiding conflicts of interest (let alone the appearance):

Under the City Charter, commissioners are required to disqualify themselves from voting on projects in which they have a conflict of interest or the appearance of a conflict. In a series of opinions dating back many years, the city attorney’s office has consistently held that a commissioner should withdraw ‘whenever the facts are such that the public might well question his objectivity.’ […] But in voting on Stein’s zoning change, Garcia [voted to approve] the request.”

Mr. Garcia, who chaired the planning commission, voted to approve a string of other requests that Mr. Stein brought before the commission, without ever disclosing their past business relationship (until the Los Angeles Times came knocking).

It’s clear that Dan Garcia is neither qualified nor capable of serving as any sort of “chief compliance” or “chief ethics” officer. As a city politician, he time and time again resigned under the stench of corruption, moving from the planning commission to the police commission and finally the airport commission. By the time the Los Angeles Times did its exposé in 2004, Mr. Garcia was already firmly in place at Kaiser Permanente, protected by his boss (and the man he just happened to have hired), George Halvorson.

Making $1.8 million each year.

Tit for tat.

Please stay tuned. More information on the coming relaunch of FixKP will be posted very soon.

Former Minnesota Attorney General Mike Hatch made it clear to the Senate Finance Committee exactly what he thought of George Halvorson and his “leadership” at HealthPartners: the Attorney General said there was a complete “lack of accountability and proper stewardship.” He even alluded to Mr. Halvorson being a part of a group of “bad [executives]…who personally profit at the expense of…charitable organization[s] and [their] mission[s].” (See the recently uncovered transcript.)

When finally pushed to address the Attorney General’s investigation last year, in an email to all Kaiser Permanente employees, George Halvorson insisted that “no actions, no citations, no regulation violations, and no mandatory results of any kind” were imposed as the result of the Attorney General’s investigation.

I guess Mr. Halvorson doesn’t consider the lawsuit the Attorney General filed, and the resulting settlement an “action.”

As if lying to (or at least misleading) my colleagues at Kaiser Permanente wasn’t disgraceful enough, Mr. Halvorson and HealthPartners weren’t very honest with the IRS, either. Attorney General Hatch testified that Mr. Halvorson and HealthPartners “took steps to conceal…[executive] payments by mislabeling them, and…improperly omitted executives’ deferred compensation from the IRS [on its filings].”

Now, I wonder why Mr. Halvorson got the hell out of Dodge (or, in this case, Minnesota) when the Attorney General there launched his investigation?

Mr. Halvorson’s abuses were many, and you can’t help but laugh at more than a few. He had the not-for-profit pick up the tab for a personal Harley-Davidson book, which he labeled “business strategies research.” Interesting. Oh, and his personal Lean Cuisine microwaveable meals were deemed business “supplies.” Right.

Those transgressions were probably a wee bit cheaper than Halvorson’s $250,000 country and golf club memberships and his $50,000 season tickets to the Minnesota Vikings.

The Attorney General especially loved the luxurious “‘trade mission retreats’ to Brazil, Chile, and Ireland, though, [since] the organization only operates in Minnesota and western Wisconsin.” And he was absolutely tickled by the $9,000 of not-for-profit member money Mr. Halvorson spent “to travel to Australia to find out: ‘Are we pricing consumers out of health care?’” Indeed.

But the Attorney General saved his most direct criticism for HealthPartners’ rubber stamp board, which allowed Mr. Halvorson to do as he pleased: “…the HealthPartners board of directors not only failed to prevent these abuses, [it] actively participated in them.”

You’ve got to ask: Why did eight of Kaiser Permanente’s twelve independent board members resign or otherwise leave the board shortly after the Minnesota report was released? Mr. Halvorson has only said that “the full results of that audit were read in detail by our Board.” He had never disclosed that eight directors resigned at about the same time, leaving the organization with five simultaneously vacant seats at one point shortly after the audit was published.

I think it’s time California Attorney General Jerry Brown take a closer look at George Halvorson and his handpicked Kaiser Foundation Health Plan Board of Directors, don’t you?

This story was originally posted at justendeal.com.

People ask me sometimes why I still care about Kaiser Permanente. It’s tough to put the reasons into words, except to say that I believe in what Kaiser Permanente stands for. Do you know what it’s like to believe in a country, and just not its current administration? It’s that way with me and George. Halvorson, that is. Mr. Halvorson is destroying the organization’s principles, credibility, and integrity. While that’s painful to watch, I know his time there is temporary, and I know the people of Kaiser Permanente can repair the terrible damage he’s done once he’s gone.

That being said, I spent a few minutes redoing the voiceover for the original Broccoli ad, and I’m calling it Broccoli People. I’m no Allison Janney, but I think one important change needed to be made to the ad. The original ad ends with “We are Kaiser Permanente, and we stand for health.” I’m adding one word: people. So, the new version, Broccoli People goes: “We are the People of Kaiser Permanente and we stand for health.”

It’s pretty obvious that George Halvorson believes in profit, not in health, and certainly not in Kaiser Permanente. But, the people of Kaiser Permanente, our doctors, our nurses, they do stand for health, and they do believe in the principles Kaiser Permanente was founded upon.

The San Francisco Business Times today called me a “persistent critic” who has become “no more enamored of the healthcare giant or its CEO.” I think, the distinction of the organization and its current administration is an important one, and a distinction the paper didn’t make. While I recognize and try to bring some light to the ongoing series of lapses in patient safety and care at Kaiser Permanente, I recognize those lapses are the result of George Halvorson’s mismanagement of the organization. Cutting costs, at all costs, is a dangerous proposition for a healthcare organization, especially one as integrated as Kaiser Permanente. (You can follow and discuss, more closely, the press reports of Kaiser Permanente’s lapses over at Kaiser Thrive Exposed.)

But back to the paper. The piece also seemed to imply that George Halvorson was safe in his job, a bit of a difference from a year ago when the paper mentioned that “Halvorson [has been] under fire…for a variety of financial and other challenges facing the Oakland-based organization.” This time around, the paper says that “there’s no sign that Halvorson is in trouble with…the board.” Considering he handpicked almost every member of the board, and considering the board seems to be about as concerned about governance as Halvorson’s last board, I’m not surprised. But, I wonder, has the San Francisco Business Times ever spoken with an independent Kaiser Permanente board member? Or, for that matter, has any newspaper in California spoken to any independent Kaiser Foundation Health Plan director?

The Business Times reprinted this bit from a recent entry: “Someday, soon, George Halvorson will be gone, and Kaiser Permanente will have member representatives on its board, it will have a physician as its chief executive…and it’ll have preventive medicine again as a core focus (not as an advertising gimmick).”

Someday, soon.

This story was originally posted at justendeal.com.

When Kaiser Permanente launched the Thrive campaign in 2004, it set out to redefine the way people thought about the organization. I wrote, back in 2005: “It makes a world of difference when you’re pushing forward with a cause and people know why you’re doing it. Our cause is helping people live healthier lives.”

There are 13,000 physicians, 30,000 nurses, dietitians, health educators, pharmacists, and other caregivers at Kaiser Permanente who do go to work every day to help our members.

Yet, as Kaiser Permanente spends tens of millions of dollars each year on the Thrive advertising campaign, the organization is increasingly rolling out health plans that seem to be more about revenue and profit than about preventive medicine (or even medicine, period).

It has been disappointing to see the promise behind Thrive weaken, because I recognized it as a campaign that could have really been transformational for the organization, and not just transformational for the organization’s external image.

Still, when I see a piece like Saturday, one of the two new spots for 2007, I realize there’s still hope for Kaiser Permanente, because for all the disappointing and disheartening stories of our failures, there are still so many people we help, every day. But, that’s another story for another day. So, Saturday. It isn’t flashy. It doesn’t try to sell you anything. It’s just a few shots from a day in the life of one Kaiser Permanente member, who happens to be a cancer survivor. It’s not too often that you can call a commercial “beautiful,” but Saturday is just that.

Here’s the longer, ninety-second version of Saturday…

There’s also a shorter, thirty-second version, which you can see here. (I think Saturday is the best spot from the campaign, even better than Signs. On the flip side, the other new ad, Kid Wisdom, is probably the worst. Go figure.)

My first major in college was public relations, so I pay attention to stuff like this maybe more than I should. But Thrive was, and I hope still is more than just advertising. It is a message. It could be a promise, a promise that if you are (or become) a Kaiser Permanente member, we’ll help you live your life healthier, and we’ll help you get better if something bad happens, and we’ll do all of this, in ways that most other healthcare organizations can’t or won’t. Someday, soon, George Halvorson will be gone, and Kaiser Permanente will have member representatives on its board, it will have a physician as its chief executive, it will have an empowered member’s ombudsman, and it’ll have preventive medicine again as a core focus (not as an advertising gimmick).

One day, soon, Kaiser Permanente will again stand for health.

This story was originally posted at justendeal.com.

Call it HealthConnect, Take Two. Only this time, replace Kaiser Permanente with Sutter Health.

Tim, over at HIStalk, was the first to pick up a story by Chris Rauber covering Sutter’s Epic Systems implementation. The guy in charge over at Sutter, Jerry Padavano, wants to be clear: “I’ve learned from Kaiser’s missteps, and we’re all learning from one another.”

Indeed. They learned a lot. Sutter’s original project budget was $150 million. They’re, so far, up to $500 million. HealthConnect is going to wind up upwards of five times over budget. Sutter is pulling it in at just three times over!

Alright, that was a cheap shot. Cost is important, but as Tim points out in his Universal Rules for Big EMR Rollouts™, maybe the key goal for any electronic medical record project is to get it up and running, “hopefully without killing patients in the process.”

There’s no word from Sutter on reliability or downtime, although the six hospitals aren’t expected to all be live until 2011, so they may still be a bit aways from having any feeling about that. Maybe they will address downtime ahead of time, and maybe that’s one point they will have learned from Kaiser Permanente?

Speaking of HealthConnect… Kaiser Permanente, by my estimates, has now spent upwards of $5 billion on the project (according to Kaiser Permanente: $3.2 billion; according to the Los Angeles Times: $4 billion). Five of our nearly forty medical centers are now live, which, at this rate, means they’re rolling out about three new hospitals a year.

The project was supposed to be completed “nationally” by late 2006. (Don’t laugh.) The outpatient portion now won’t be finished until well into 2008. The inpatient portion now isn’t expected to be completed before 2012.

And that $5 billion spent so far? That’s primarily just for outpatient. Considerably more funding will be spent on the remainder of the inpatient portion. The nearly $100 million figure Sutter is seeing about matches what KP has spent so far to bring hospitals up on HealthConnect. That means an estimate of as much as $3.3 billion more in implementation costs, although the last actual amount budgeted to HealthConnect that I saw was over $4.2 billion from 2008 through 2012.

Assuming the largest figure is the more accurate one (it always is with HealthConnect), that would mean the total, almost ten-year cost of creating an electronic health record network for Kaiser Permanente will come out to over $9 billion. Ten years. $9 billion. The original estimate? Three years and $1.8 billion. (Why did Bruce Turkstra and Cliff Dodd leave Kaiser Permanente, again?)

So, back to Epic.

Let me say that I agree that Epic, today, has one of the best electronic medical record platforms out there when it comes to features. Many of the problems at Kaiser Permanente were infrastructure: poor desktop deployment planning, lousy network design, inadequate change management processes, and so forth, which led, in part, to the poor reliability of HealthConnect. The issue, as I alluded to in the post on IBM and KP getting back together, is that Epic either didn’t try or was ineffective when it came to helping Kaiser Permanente plan adequately for the project, let alone all the contingencies. You’ll find the same problems at Allina, and now at Sutter (both Epic installs), and at any number of other healthcare organizations and hospitals that are transitioning to electronic medical records, regardless of the vendor.

Yet, the key goal for KP, and it appears Sutter, has always been some elusive ability to “improve” billing. The article on Sutter, which has 26 hospitals, points out that the six chosen facilities for the Epic deployment were picked because they account for “roughly half of overall patient volume.” George Halvorson is on the record time and again saying KP desperately needed Epic for the tide of health savings account members that would be coming along any day (you’re not still holding your breath, are you?).

So, as these projects have their top priorities set in billing, the “ideal” of patient safety and the promise of preventing medical errors have taken a back seat. To this day, HealthConnect has only rudimentary procedures in place to track (let alone processes to actually deal with) potential medical errors. While there’s a lot of promise for intelligent diagnosis support and error detection, you won’t find hardly any of that promise in HealthConnect, and I doubt you’ll find much of it in Sutter, either.

Which, I think, means this phase of electronic medical record deployments in the United States will largely be eventually written off as a failure. Perhaps the only saving grace is that these deployments might, might be laying the groundwork for a better round yet to come (through workflow improvements, network infrastructure upgrades, and so forth).

Time (and lots of money) will tell.

This story was originally posted at justendeal.com.

Update: In related news (to the post below), KP today said it has cut 175 positions from KP-IT headquarters in Pleasanton. Nearly two weeks ago, KP said it was laying off 100 employees, so it is not yet clear whether the the 175 figure is an additional round of layoffs or just an upward revision of the original figures released.

You might already know that not a dime of corporate income tax will be paid on that $2.5 billion in profit Kaiser Permanente has made so far this year. That’s because the Kaiser Foundation Health Plan and Hospitals side of Kaiser Permanente long ago applied to the Internal Revenue Service and was granted tax exemption as a “charitable” organization under section 501(c)(3) of the Internal Revenue Code.

What makes Kaiser Permanente different from, say, WellPoint, which owns Blue Cross of California? WellPoint has to pay federal and state income taxes, so why not Kaiser Permanente, you ask? Theoretically, the $800 million that Kaiser Permanente pays out to various community organizations makes it more charitable than WellPoint, which gives away about $300 million each year through its various foundations. Of course, WellPoint is also a publicly-traded company, with shareholders who get a cut of its $3 billion in profit each year. On the flip side, all of Kaiser Permanente’s profit is supposed to go back into the community or into its hospitals (incidentally, both areas which have seen their funding cut significantly recently).

Otherwise, the big requirement that Kaiser Permanente set for itself a number of years ago is that it should operate for the “public benefit,” and that “its assets are irrevocably dedicated to public and charitable purposes.”

Which, at last, brings me to my topic of the day: how is eliminating jobs in California, and moving those jobs to India, Russia, the Philippines, China, and Israel “benefitting” Californians? (More than two-thirds of Kaiser Permanente members are in California, for what it’s worth.)

Two years ago, the California State Auditor did a report on offshoring by organizations which receive money from state contracts. The audit found Kaiser Permanente was one of six out of 39 audited organizations that shipped a portion of its workload to other countries. In the case of Kaiser Permanente, the state auditor found a “small portion” of the dollars the state paid the organization ultimately wound up employing someone in another country, instead of in California.

At that time, I believe about 100 of about 500 employees in the application support division within the organization’s information technology department were offshored. While those figures are important, the big difference is in cost: Kaiser Permanente spent about $107,000 in salary and benefits for the California workers, compared to only about $47,000 for the offshore workers. The direct amount of pay eliminated from the California economy? About $10 million.

No big deal, you say? The application support division offshoring was a test. An experiment. To see how well offshoring worked. Sadly for us, it went pretty well. At that time, about a fifth of the application support team was offshored. The new head of KP-IT, Phil Fasano, has a strong need to continue to cut costs (to keep his own job). What if a fifth of all of Kaiser Permanente’s information technology workforce was offshored? The total direct cost to the California workforce economy would be upwards of $110 million.

So, an organization that is specifically mandated to operate for the public benefit, which has “irrevocably” dedicated all its resources to benefit Californians, is offshoring a significant portion of its workforce. Does eliminating California jobs to cut costs, and shipping those jobs overseas fit within the requirements of a not-for-profit?

I think it’s very difficult to justify, especially for a not-for-profit that’s generating nearly $1 billion in profit every few months, tax free.

What do you think?

This story was originally posted at justendeal.com.

For the past few weeks, I have been looking at a few of the potential candidates who could succeed George Halvorson and get Kaiser Permanente back on track. Each candidate so far has been from outside the organization. Today, though, I’m going to talk about Bernard Tyson, who is effectively the chief operating officer of Kaiser Permanente (officially, executive vice president for Health Plan and Hospital Operations).

Mr. Tyson is probably best known inside the organization for leading the development of the Thrive campaign. While his most recent position was a marketing one, he served in a number of hospital administration positions for his first decade with Kaiser Permanente.

Inside the organization, there are questions as to why Mr. Tyson was not actually named COO last year. The title was eliminated by Mr. Halvorson in 2002, just weeks after he was hired. (Power sharing issues, anyone?) Nevertheless, inside the organization Mr. Tyson is well liked, not only for his work on the Thrive campaign but for his honest efforts to address hospital operations issues over the past two years.

Despite that, so far this year, nearly $100 million has been cut from health plan and hospital capital spending, and the serious kidney transplant fiasco happened under Mr. Tyson’s watch (in his old stomping grounds of San Francisco, nonetheless). Mr. Halvorson even went as far as to essentially recently blame Mr. Tyson and two of his colleagues for the mess. (One of Mr. Halvorson’s more controversial claims.)

It’s difficult to accept that any of the senior management of Kaiser Permanente would be able to be fully objective as to the damage Mr. Halvorson has done to the organization. But if the Board is indeed interested in trying to protect its reputation, perhaps it would go with a safer, inside candidate like Mr. Tyson to prevent the appearance of throwing the baby out with the bath water. We shall see.

This story was originally posted at justendeal.com.

In my message last fall to my colleagues at Kaiser Permanente, I voiced my concerns that the Kaiser Foundation Health Plan Board of Directors was abdicating its most important responsibility: the oversight of our chief executive officer. I had spoken with several directors last fall, and was disappointed and shocked by their lack of knowledge of the organization, its operations, and its finances. In my message, though, my goal was to encourage the board to take its responsibilities seriously, and I acknowledged that the board was made up of “knowledgeable, respected, and experienced men and women.”

In a “the lady doth protest too much” moment, though, Mr. Halvorson responded angrily, writing that he couldn’t believe anyone would label his board a “rubber-stamp board.” I’m not sure where he got the term, as it wasn’t a term I had ever used to describe our board, but, since then, I have come to recognize it as a sadly accurate label.

Not surprisingly, it wasn’t the first time Mr. Halvorson had to defend a board overseeing him for incompetence. In 2003, Mr. Halvorson tried to defend his previous board, at HealthPartners, after a report by Minnesota Attorney General showed that directors there spent only a few hours each year overseeing the organization (a situation eerily similar to Kaiser Permanente today). Mr. Halvorson insisted the HealthPartners board, which he also had assembled, was not a “parade” board that only rubber stamped a “padded agenda.”

If the accountability and competency of Mr. Halvorson’s HealthPartners board was questionable, it paled in comparison to the rubber-stamp board he would set up at Kaiser Permanente. Less than two years after he became chairman of Kaiser Permanente, Mr. Halvorson had cleared nearly the entire board. By the spring of 2004, the organization had five vacancies on its board, an unimaginable situation for the largest not-for-profit healthcare organization in the country.

In addition to the five empty seats, three other directors had already quit and been replaced. That meant eight of the twelve independent directors had resigned less than two years into Mr. Halvorson’s tenure as chief executive officer, and five of those twelve seats were empty by March 2004. As I’ve said before, it was unprecedented turnover in the history of Kaiser Permanente, for the organization to lose two-thirds of its independent directors in less than two years.

Only two men remain from the board that hired Mr. Halvorson. One is Daniel Garcia, the man who hired George Halvorson, the same man who was later hired and (surprise!) kept by Mr. Halvorson to manage the organization’s ethics department (amid much controversy). Although Mr. Garcia was an independent director when he hired George Halvorson, he is now considered an inside director as his paycheck is signed by Mr. Halvorson. The other man remaining from the original board is Thomas Chapman, an independent director who was recently caught up in an illegal non-profit healthcare kickback scheme investigation by the Connecticut Attorney General. (Yes, you read that correctly. The only two remaining directors that hired George Halvorson have both been caught up in ethical scandals, and, yes, one of them now “runs” the Kaiser Permanente ethics and compliance department.)

Fast forward to today. The majority of the independent directors on the Kaiser Foundation Health Plan board have barely three years of experience with the organization (some even fewer, as high turnover has continued). Each independent director, with one exception, was hand-picked by Mr. Halvorson. Just like in Minnesota, Mr. Halvorson’s hand-picked board has become the epitome of an unaccountable, irresponsible, and incompetent board.

Mr. Halvorson, last year, defended his conduct at HealthPartners, saying that the Kaiser Permanente Board of Directors read the Minnesota Attorney General’s report on his behavior there, and found no problems. If that’s so, why did eight of the directors resign following that discussion?

(If KP were a publicly traded company, it would likely have been required to file a report with the SEC, indicating the reasons for eight directors resigning or being replaced in such a short period of time. Instead, under Mr. Halvorson, the organization has kept director resignations quiet, and only mentioned any vacancy once the seat is subsequently filled. Which explains the large five seat vacancy in 2004: Mr. Halvorson had to fill those seats slowly, to prevent outside knowledge of a rash of resignations. The fact that five or more board seats were empty is buried on page 54 of an obscure bond sale notice from 2004.)

In Minnesota, the Attorney General considered installing his own independent directors on the HealthPartners board. By that point, though, Mr. Halvorson was gone, and the problems had largely (but not surprisingly) left with him. If the Kaiser Foundation Health Plan Board of Directors continues to refuse to adequately meet and consider the critical flaws of the direction in which George Halvorson is taking Kaiser Permanente, perhaps it is time California Attorney General Jerry Brown implement the Minnesota Attorney General’s plan to create a truly independent and competent board to oversee Kaiser Permanente?

This story was originally posted at justendeal.com.