Beleaguered Kaiser Permanente Besieged By Bad News

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Kaiser Permanente Weathers Criticism

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Managed care giant Kaiser Permanente continued to suffer scathing reports this week about the safety of its patients and the quality of its hospitals.

On Tuesday, the Los Angeles Times reported that five of the organization's 28 California hospitals scored among the deadliest in the state for patients with pneumonia on a new report. The five Kaiser Foundation Hospitals, along with 23 other facilities, had an average death rate of 17.2%, more than double the mortality rate of 8.1% for the top 25 hospitals on the report. Across the state, 12.29% of pneumonia patients died within 30 days of admission.

Then, on Wednesday, the Times reported on an investigation by authorities into the death of Ruben Navarro, a 26-year-old San Luis Obispo man. The San Luis Obispo Police and the Medical Board of California are investigating whether Kaiser Permanente transplant surgeon Dr. Hootan Roozrokh may have euthanized Navarro in order to harvest his organs. The Medical Board is also investigating the conduct of Dr. Arturo Martinez, who was, at the time, surgical director of Kaiser Permanente's transplant program.

The two reports come as the organization grapples with significant fallout from a series of recent reports. In May, the organization, under pressure from federal and state regulators, was forced to shutter its San Francisco kidney transplant unit after the Times uncovered evidence that the unit had among the worst death rates of any kidney transplant program in California. In a bizarre twist, Roozrokh and Martinez, the surgeons being investigated in Navarro's death, had both previously been involved with the San Francisco unit before it was shut down.

In August, the organization agreed to a record $5 million penalty for its mismanagement of the San Francisco kidney transplant unit, including a $2 million fine and a mandatory $3 million donation to promote organ donations.

Then, in November, the organization's $4 billion project to convert its paper medical records to a new electronic system, dubbed HealthConnect, came under sharp criticism after budgetary, reliability, and patient safety issues surrounding the initiative came to light. The organization's longtime chief information officer, J. Clifford Dodd, resigned abruptly after the issues came to light.

Later in November, Los Angeles City Attorney Rock Delgadillo filed civil, and unprecedented criminal charges against Kaiser Foundation Hospitals for the dumping of an ill homeless woman, 63-year-old Carol Ann Reyes, on the street. Reyes was wearing only a hospital gown and slippers.

Then, in January of this year, the organization paid a $100,000 fine for dropping patient coverage following the diagnosis of a serious illness. The state Department of Managed Health Care investigated the case of Steven Baba, a now-52-year-old man who had his Kaiser Permanente coverage revoked after he was diagnosed with epilepsy and a seizure disorder in September 2004.

Also in January, the DMHC began a "private investigation" into issues surrounding reports of the reliability and safety of the organization's electronic medical record system, HealthConnect. Then, on Monday, Kaiser Permanente announced that Philip Fasano had been hired to become the third chief information officer, in nearly as many months, to try to repair the system. Fasano will replace Bruce Turkstra, who was the chief "architect" of the system, and who took over the effort after Dodd resigned in November. Turkstra served for just barely three months, and the organization said he will help Fasano transition into his new role.  Fasano is new to healthcare, having served as a defense contracting consultant for the past three years, and having worked on technology projects in the financial sector during the late 1990s.

The barrage of concerns -- the euthanasia transplant probe, the high pneumonia death rates, the aftermath of the kidney transplant shut down, the homeless patient dumping criminal charges, the member coverage dropping fine, and the ongoing questions of the safety of the new HealthConnect system -- come at a pivotal time for the organization. Specifically, as it tries to attract new members to its lower-premium, higher-deductible "consumer directed" health plans and health savings account products, the organization has developed a "critical" need to cut costs, according to its chairman and chief executive officer, George Halvorson.

Halvorson, under significant criticism for his role in the organization's problems, called on all Kaiser Permanente employees to help cut costs in October, and acknowledged in November that the organization could face losses of as much as $7 billion through 2009. Yet, the organization reported an unexpected and unexplained uptick in profit, from $1.0 billion in 2005, to $1.3 billion in net income for 2006.

Halvorson himself has weathered mounting concerns regarding his management of the organization and decisions he made relating to the HealthConnect project, as well as whether his direct demands for cost-cutting may be causing perverse problems, like the issues seen with the transplant problems, the patient dumping, and the coverage dropping situations. The organization acknowledged it faces significant "challenges" in 2007, but has, so far, remained silent on any broader efforts to do more to prevent problems like the ones seen recently.

Justen Deal was a projects manager for Kaiser Permanente until he was moved to administrative leave in November for raising concerns regarding the HealthConnect project.