blog.fixkp.org

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.

A year ago this week, Kaiser Permanente was called to task for its practice of rescission, the retroactive termination of health insurance coverage. In many cases, coincidentally, Kaiser Permanente and other insurers will initiate a rescission investigation when someone has just been diagnosed with a serious illness, perhaps a serious and expensive illness.

Now that it’s easy to see why strategic rescission could easily save for-profit health plans millions of dollars, you have to ask yourself: Why would Kaiser Permanente, a not-for-profit plan, have been the first health plan ever ordered to reinstate coverage to a former member for its abhorrent practice of rescission? Better yet, why should a not-for-profit plan ever have been practicing rescission, to begin with, anyway?

Finally, this week, the Department of Managed Health Care and the California Department of Insurance have announced that they will introduce new regulations to try and stop health plans, like Kaiser Permanente, from dumping patients:

The Department of Managed Health Care, which governs health plans known as HMOs, and the Department of Insurance, which supervises insurance companies, said they would propose rules that reinforced existing laws forbidding rescissions except when they could show a policyholder was at fault. It marked the first time the two agencies had acted in concert on any regulations.

Unfortunately, many are saying the new regulations, alone, may not be enough to keep Kaiser Permanente and other health plans in check:

The Foundation for Taxpayer and Consumer Rights had petitioned the agencies for rules against rescissions and said the first draft was disappointing. Spokesman Jerry Flanagan said that to protect consumers, regulators must step in and require that insurers prove policyholder misconduct before allowing a company to carry out a cancellation. “They’ve restated the law here fairly well, but that’s not the point,” Flanagan said. “They are supposed to establish a process for making sure that the cancellations are fair and patients are protected.”

You can read the Foundation’s full response to the proposed regulations here.

Rescission shouldn’t even be a topic of discussion when it comes to Kaiser Permanente. But, George Halvorson has worked to transform Kaiser Permanente into a profit-generating machine, a machine that is not accountable to its physicians or its members. “Kaiser Permanente [has] been hit with [record] six-figure fines for revoking policies,” isn’t a headline a not-for-profit organization should be generating, but sure enough you could have read just that earlier this year in USA Today.

How disappointing.

This story was originally posted at justendeal.com.

The New York Times is wondering out loud whether the electronic health “cost savings” emperor has an empty wardrobe:

Saving money can be expensive.

Indeed, the quest to save dollars in the nation’s $2.1 trillion annual health care bill is becoming a lucrative market of its own. Thousands of companies, large and small, are pitching cost-saving ideas that range from electronic patient records to new medical devices.

It’s not all marketing hype. Experts in health policy agree that there is a real opportunity to curb health spending, which last year was the equivalent of $7,000 for every man, woman and child in the country. Studies predict a gain of as much as 30 percent in efficiency, mostly through reducing unnecessary tests and prescriptions, paperwork and medical mistakes.

It’s a really interesting article, from a viewpoint that hasn’t been heard much… Is healthcare information technology spending based on realistic expectations? The article cites the case of Dr. Richard Baron, of Philadelphia. His small practice (four physicians total) computerized their health records and processes. While the investment has “not paid off in actual dollars and cents,” it has helped “streamline the workflow.”

One of the key issues I have with HealthConnect is that it was never genuinely approached from any perspective other than being a better revenue-capturing system. Time after time, when I saw internal and external implementation and deployment teams canvass Kaiser Permanente facilities and departments, the general sentiment I heard once they went on their way was that they didn’t listen, didn’t hear, or didn’t care about “how things work” for that particular department.

For an organization that has had such tremendous local autonomy (until very recently), that’s a cardinal sin in the minds of most KP folks.

The need to break away from broken workflows (if there even is a consistent workflow) is pretty apparent across all of healthcare. But simply switching to a formalized (but still) broken process, or transitioning to a “new and improved” (but still broken) workflow doesn’t help anyone (except the well-paid implementation and deployment folks).

In an office of four physicians, there will usually be only very temporary tolerance for ineffective workflows. Things get fixed quickly. Processes are truly improved.

In an organization where one man is (recklessly) driving a project to help him sell books and repair his legacy, you see horrible tragedies like this.

I think, when you promote electronic health records looking solely at (supposed) additional revenue collection, or looking solely at (more realistic) cost efficiencies, you’re taking an easy road, and you ultimately lose sight of the possibilities for reducing preventable medical errors. Helping save lives was never a sincere part of HealthConnect. You don’t have to look far to see that. And that, I’m afraid, is its biggest failure.

This story was originally posted at justendeal.com.

If Kaiser Permanente was a for-profit, publicly traded company, it would come in at number 63, by revenue, on the 2007 Fortune 500 listing, just ahead of The Walt Disney Company.

In fact, as a not-for-profit organization, Kaiser Foundation Health Plan and Kaiser Foundation Hospitals raked in considerably more profit (on a net income basis) last year than Best Buy, Safeway, Medco, Costco, Kroger (which also owns Ralphs), Cardinal Health, and McKesson. Continuing the list, it made about as much as CVS/Caremark and Sprint Nextel, but just slightly less than Sears Holdings (which also owns Kmart).

If the concept of a not-for-profit making that much money worries you, the tale only gets worse for Kaiser Permanente members. Those sumptuous profits are coming at the expense of the future stability of the largest health insurer in California.

Kaiser Permanente is approaching its perfect storm, the coalescence of an expected deterioration in the rolls of traditional members, a rapid escalation in spending to try to repair the unreliable (and already enormously costly) HealthConnect project, and, at long last, the inability to raise member dues further (since payers simply can’t afford higher rates anymore).

When I learned, last year, that Kaiser Permanente could face losses of billions of dollars through 2009, I was shocked. (Kaiser Permanente later called those projections a “worst case scenario.”) Our organization had grown revenue and income by leaps and bounds for years: could that growth finally come to an end?

Right up to fiscal year 2007, those projections show that all financial signs should be pointing to healthy. By and large, they are. But the warning bells are sounding.

Under George Halvorson, Kaiser Permanente’s financial “transparency” has become murky, at best. Looking at the provided figures for 2006, you would probably notice that net income increased a whopping 30 percent last year. You’d even be pleased (or not) to know that our operating margin increased from 2.6 to 2.8 percent. But, in real numbers, that means our operating income likely only increased around 19 percent, far less than our reported net income increase of 30 percent.

While net income provides an important metric, it doesn’t provide a true picture of our organization’s health, and is more susceptible to one-time adjustments and transactions that could mask true financial changes or problems.

If Kaiser Permanente can’t report upfront, honest financial numbers to the public, you have to wonder why. Perhaps fortunately for Kaiser Permanente, there really isn’t any governmental entity that pays much attention to the truth in financial reporting of not-for-profits. That oversight (or, ironically, that lack of oversight) is quite unfortunate for the organization itself, and especially for our members.

Here’s an interesting snippet from Erik Sherman’s blog.

Ironically, Mr. Deal first sent his complaints to Kaiser’s compliance officer and to the board of directors:

Kaiser’s assistant general counsel sent Mr. Deal a letter saying that “a thorough investigation” found no evidence of misconduct by the executives, nor of a “disastrous failure” of the HealthConnect project.

And yet there was this internal report. In either case it’s clear that the board has some problems. Either it knew of the system issues and ignored them – which would seem like criminal negligence if patient health was affected – or it was incapable of unearthing this report. In either case, this would seem a clear issue of board dysfunction.

This story was originally posted at justendeal.com.