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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.

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I posted last week that membership growth at Kaiser Permanente has crumbled for the past three quarters, down 75% so far this year, a seemingly significant fact that was buried six paragraphs down in the quarterly press release. The news only gets worse from there, sadly. While potential new members are staying far, far away from Kaiser Permanente, George Halvorson has cut reinvestment in healthcare delivery and hospital infrastructure by $100 million so far this year.

That cut is a critical blow to Kaiser Permanente’s healthcare and hospitals infrastructure, and it belies Mr. Halvorson’s true priorities for the organization: cut spending on care, at all costs.

The canaries in the coal mine? The rash of front-page reports over the past two years that have uncovered nightmare stories from Kaiser Permanente members and patients. From the kidney transplant program horror story to the systematic mistreatment of homeless patients, Mr. Halvorson’s drive to cut costs, at all costs, has proven a disastrous development for patient safety.

Mr. Halvorson’s devastating impact on Kaiser Permanente couldn’t be more evident than in the accreditation reports for Kaiser Permanente’s Southern California hospitals: only three of our eleven Kaiser Foundation Hospitals met the national patient safety standards for heart failure care. Three. Of eleven.

A report in the San Francisco Business Times, by Chris Rauber, couldn’t have been more on point: “Officials at the Oakland-based health-care giant said ‘ongoing efforts to address health-care delivery costs and administrative efficiencies‘ contributed to the strong financial results for the quarter.” Profit, at the expense of patient safety and member care. Profit, at all costs.

The cuts in hospital infrastructure reinvestment expose Mr. Halvorson’s misaligned priorities, but for California’s communities, the situation gets worse: he has also cut the organization’s spending on community benefit, down nearly $20 million last year. These cuts come while profits, for the not-for-profit organization, have more than doubled so far this year, up to $2.5 billion.

George Halvorson swindled HealthPartners members out of millions, and he’s doing the same thing at Kaiser Permanente. While the quality of care and patient safety standards plummet at Kaiser Permanente’s California hospitals, Mr. Halvorson is in Washington, D.C., promoting his new book and talking about European hospitals. Misaligned priorities.

Kaiser Permanente needs a chief executive officer who cares about Kaiser Permanente members. Desperately.

This story was originally posted at justendeal.com.

Update: Two hours later and KP still has not yet posted the results to its website, so here is a link to a PDF of the results. You have to dig down to the sixth paragraph to find mention of the “relatively flat” membership growth, which I’ve highlighted for your convenience.

Kaiser Permanente announced its most recent quarterly results today. Membership growth crumbled, with no new members added during the quarter, compared to more than 30,000 new members being added in the year-ago quarter. Reported operating income improved slightly, inflated by George Halvorson’s continued short-sighted efforts to burnish operating results at the expense of the organization’s balance sheet.

Year to date, membership growth has fallen more than 75%. This is the third quarter in a row that California healthcare consumers showed they were tired of George Halvorson’s “transformation” of Kaiser Permanente. For two quarters in a row now, Kaiser Permanente hasn’t added a single net new member (compared to having added nearly 75,000 net new members during the same period last year). How’s that for a testament to George Halvorson’s leadership?

It was a year ago this week that my internal message on the perils of Mr. Halvorson’s flawed leadership first became public. The key concern I emphasized most was the impact of Mr. Halvorson’s financial mismanagement of the organization. Internal financial models projected $2 billion in operating losses this year, $5 billion for 2008. Mr. Halvorson has worked to hide operating costs at the expense of our long-term stability, and his efforts have helped postpone those losses until another day. But our faltering membership shows the true colors of Mr. Halvorson’s mismanagement of the organization, as more and more of the organization’s precious resources have been shifted to Mr. Halvorson’s HealthConnect, instead of in true investment in our infrastructure and care delivery.

George Halvorson is trying to hold on to his job as long as possible. To do that, he will continue to erode investments in healthcare delivery for Kaiser Permanente members, to try and conceal his mismanagement of the organization’s finances. One tactic he is employing is job cuts. Barely a month ago, he trimmed a little less than 2% of our staff in Hawaii (which follows up on initial cuts in Hawaii late last year). In the past few days, he shipped another 2% of our information technology positions overseas. Two percent here, two percent there will add up.

This didn’t start last month, though. Over the past two years, Mr. Halvorson has been gradually degrading healthcare quality at Kaiser Permanente to fund his legacy, his pet project, HealthConnect. The kidney transplant fiasco in Northern California was a core component of Mr. Halvorson’s plan: cut costs by transferring patients from more expensive outside hospitals to new, cheaper in-house programs. The results were devastating for those patients and their families, and the program was eventually halted, but not before much damage had been done.

George Halvorson is determined to cut expenditures on patient care to fund his broken projects and misaligned priorities, and the only place for those cuts to come from is the quality of healthcare delivered at Kaiser Permanente.

Mr. Halvorson will continue to impose measures that hurt healthcare delivery to continue to polish results. The picture is clear: Mr. Halvorson will continue to do serious damage to Kaiser Permanente as long as he is permitted to do so by our unaccountable Board of Directors.

This story was originally posted at justendeal.com.