Healthcare IT: The Perfect Storm


The Perfect Storm, Corporate IT vs. Determined Employee

Kaiser Permanente employee Justen Deal noticed few months ago that the custom implementation of the health care provider's Epic Systems records management system, dubbed "HealthConnect", was costing billions of dollars but was plagued by persistent problems that effected health care delivery. In addition, the employee projected future operating expenses and expected revenues and asserted that Kaiser faced a $7 billion dollar deficit in the next couple of years. He wrote some letters to individuals in charge of corporate oversight, to the board, and to various internal parties who he thought should be concerned. They said they'd investigate his concerns, they warned him not to talk to the board, they said he was mistaken, and at times claimed they didn't understand his complaints. He sent more evidence. Finally Kaiser lawyers said they investigated his complaints and said they were all baseless. Not satisfied, he sent letters to several California state agencies. All of these communications are now posted at his site called, and make for very interesting reading. Finally he sent a letter to over 50,000 employees, again listing his concerns.

In response, the CEO of Kaiser, George Halvorson, wrote a letter of his own to all 151,000 employees refuting Justen Deal's allegations. "The person who wrote the e-mail is a young man relatively new to KP whose job involves publications...", he starts out. "Overall, the e-mail was an unfortunate combination of partial facts, old data, incomplete data, "conspiracy" thinking, and naivete´.", he ends. He addresses the complaints. Responding to Justen's comments about his replacement of the board right after he was hired at Kaiser, he says, "I suspect he hasn't evaluated very many Boards."

He dismisses Justen's questions about an audit of his position at a previous employer, a Minnesota managed healthcare organization called Health Partners. The Minnesota Attorney General's Office's audit was "critical" his $5.5 million dollar compensation package when he left and his financial oversight as the CEO. But Halvorson said the 'routine' audit cleared him: "no actions, no citations, no regulation violations and no mandatory results of any kind."

Justen Deal also criticized the CIO of Kaiser for simultaneously serving as a director of a company hired as a consultant for Kaiser, while he was employed at Kaiser. Halvorson's letter declared that the CIO "was not, in fact, a principal or Board member of the "Tanning" company when they did our systems evaluation work. However, "J. Clifford Dodd", the CIO of Kaiser, was indeed at Kaiser when he hired Tanning Technologies, a consulting company that lists him as director "John C. Dodd", at least according to Tanning's own SEC filing in 2002.

Mr. Halvorson also addressed the technical problems implementing Epic Solutions system that Deal outlined: "KP HealthConnect issues are both inaccurate and wrong". The HealthConnect system is working well, he said. However a ComputerWorld author wrote an article titled "Problems abound for Kaiser e-health records management system: An internal report details hundreds of technical issues and outages", which details a few of the hundreds of problems listed in the 722 page internal report on the system's issues and outages. The system has been down for hours at a time causing various critical disruptions within the Kaiser healthcare system:

  • "On May 10, a power outage that lasted for 37 hours and 9 minutes affected multiple facilities [causing pharmacy and tracking problems]..If a patient were transferred during this time they would need to track their location manually [and]....users are reporting that multiple patients are showing in the wrong beds"
  • March 26, for 3 hours and 51 minutes, "users in multiple locations..were unable to access patient info or update patient info"
  • April 10 for 1 hours and 23 minutes, drug information is not population for nurses, pharmacists, and technicians in one office and they "cannot see patient updates for new [drug] orders or changes in meds, such as stopping orders..."
  • "On June 7, for 6 hours and 34 minutes, labs were unable to collect data, run tests and provide test results."
  • "On Oct. 10, for 3 hours and 24 minutes, doctors and nurses in several facilities were unable to retrieve critical medical information to treat patients."

These were only a few of the issues. IT is tough business, especially for critical systems in healthcare and banking. Clearly, this is a massive system subject to significant challenges. Kaiser Permanente has 151,000 employees, 37 medical centers, 12,000 physicians, 8.6 million members and $31 billion in operating revenue. The plan to get the system up and running in three years was ambitious. So someone like Justen, who is not accustomed to the thorny business of IT would be rightly shocked at the messiness of it all. That the system was supposedly written in "MUMPS (Massachusetts General Hospital Utility Multi-Programming System) -- a health care programming language originally developed in the 1960s", may or may not be relevant, but the software had certainly never been scaled to this size organization. Various sources report different issues, architecture, planning, personnel and management failures.

Throughout his communications, Justen Deal expressed concern about a projected $7 billion dollar deficit that Kaiser was facing. Halvorson said in his letter, "The memo leads off with a mention of our financial future. Interestingly, that's the one area where the e-mail may have done us all a service". Halvorson says he warned about the looming deficits in internal memos. The projected deficit was news to the San Francisco Chronicle, which published a story about Deal's email and the impending deficit titled: "Kaiser: Critical need to cut rising costs $7 billion in losses if no action taken, HMO report says". Halvorson told the Chronicle that Kaiser has started cutting costs -- that wouldn't affect patient care.

Many, many of the details of this story are unknown. In the end, similar to Katrina, if there's a massive hurricane brewing off the coast, then FEMA's assurances that they're prepared and everything is fine will only subdue the masses until the storm hits. Kaiser will hopefully get the system up and running -- and if so it will be a feat. In the meantime, the turmoil is very real. The CTO, Cliff Dodd, resigned the day after Deal sent his mass email. Kaiser denies that the Chief Technology Officer's resignation is at all related to Justen's allegations.

Business and the Web 2.0 Generation?

On one hand Justen Deal believes he's preventing another Enron, which is arguably an idealistic or grandiose idea. Its easy to imagine that he was infected by disgruntled IT employees whose project was canned in the decision to license Epic. It's easy to argue that he's young and naive, which is the tack that Kaiser took in their correspondence. However, while anyone can make these points, a reading of the letters on the website shows that the organization handled him abysmally. One letter written by outside counsel addresses just one of his complaints by curtly listing about 30 other organizations using the Epic System, followed by: "Do you have any concerns that you can list with us about the decision-making process used by these providers to select Epic?".

It was clearly a fishing expedition and Deal quickly questioned why the lawyer, who Kaiser used to defend itself against wrongful termination suits, was fielding operations questions addressed to the board. He writes back in a letter posted on his site that his opinions of Kaiser's Epic selection processes are "irrelevant" and that engineering documents addressed this. Obviously he couldn't answer her question about other organizations' decisions, he said. He did offer information about the relative sizes of some of the organizations she listed. Some had several hundred members, compared to Kaiser's 8.6 million, others had several hundred doctors, compared to Kaiser's 13,000, doctors, etc.. In this view then, the system wasn't proven to scale or architected to an organization the size of Kaiser.

Clearly, his opinions of the system aren't isolated, since outages have caused turmoil across the organization. A recent article in Harvard Business Review talks about different IT implementations including enterprise systems that impose process changes at all levels of the organization. The author gives the example of another health care organization that failed:

"In 2002, a Boston-based hospital set up an IT system that replaced handwritten prescriptions with online orders. ...Even though studies had demonstrated that the system would reduce medication errors, physicians bitterly resisted. They complained that the computer-based process was slower and less convenient than paper-based ordering and that the built-in error checking didn't work. They protested so strongly that the hospital was able to roll out the system in only a few departments. Today, most of the doctors continue to write prescriptions on paper and fax them to the hospital's pharmacy..."

It wasn't the only Healthcare IT project to fail. On a larger scale, Britain's 2002 healthcare initiative evidently wasted $24 billion, and apparently two Members of Parliament say the project is "sleepwalking toward disaster." The author of the Harvard Business Review article says, "In fact, the biggest mistake business leaders make is to underestimate resistance when they impose changes in the ways people work." He quotes a CIO, who said '"I can make a project fail, but I can't make it succeed. For that, I need my [non-IT] business colleagues."' Successful system implementations need to broad support at all levels. This may be even more important in the future.

Deal was definitely a thorn in Kaiser's side, someone who was young, unintimidated, and apparently not yet appropriately practical (or cynical, depending on your view). Kaiser's tactics, aimed at quieting him, seemed to have the opposite effect. The internet gave easy public access to SEC statements, newspaper articles, attorney generals' audits. He dug deeper, found more evidence, wrote precise, articulate letters, and did not back down. He thought he had important insight that was being ignored. In a way, Kaiser executives underestimated both technology and Mr. Deal.

Twenty somethings virtually grew up with the internet. Deal's identity is available at his blog, and anywhere else on the internet, which is typical to many people his age, who for better or worse, have markedly different attitudes about privacy then previous generations. The attitude that information, personal, corporate or otherwise is free and accessible, flies in the face of a certain corporate theology in which information is coveted and hoarded, and top down management restricts open exchange especially between personnel levels. In this age, is this an effective way to manage? Is it an effective structure with which to implement an enterprise wide system? The corporation's attitude about information clashed with today's information accessibility.

Is Justen Deal and Kaiser an isolated event or a new trend? Either way, it could be a wake up call for organizations. But whether Kaiser is contemplating this, or as we speak rewriting the employee handbook rules and toiling over their public relations effort, remains to be seen.


Acronym Required has written other articles about management issues here.


Thanks for a generally even-handed synopsis of all that has been written about this subject. I think lost in all the furor is the fact that HealthConnect is working beautifully in the Kaiser Permanente regions where it has been introduced. Today, members in Colorado can e-mail their doctor, find their lab results online, check the doctors' notes from past visits, and see a list of their allergies. Similar features are available in Hawaii, Oregon, Ohio, Georgia, and the mid-Atlantic states. For several years in Colorado, patient records have been paperless, which has meant fewer errors caused by illegible handwriting, easier hand-offs to specialists, and just-in-time information in the emergency room. Colorado pioneered the CIS system that was later scrapped in favor of HealthConnect. I don't think you'll find many doctors here wishing they still had the old OS2-based CIS system. Outages happen, and we hope they will happen less frequently. But if the medical world waits until system outages are extinct before building electronic medical records, we'll remain in the 19th Century forever.

Good post. I see it got slashdotted today..( . Kaiser's problems with the Epic reflect the really complex issues manifest in the kind of technical and cultural shifts these installations require. Although bringing about the needed changes often requires a certain "get on board or get out" ethos, I found Kaiser's brushoff treatment of the PM whistleblower pretty arrogant and distasteful. Andy Grove once said something to the effect of executives must listen to the voices on the periphery because the employees will know more than senior management about threats from the periphery. From an outsider perspective, it seems Kaiser should have figured out a better way to handle an employee waving a red flag than just trying to squash him.

In this whole debacle, it shouldn't be lost on anyone that Kaiser's management has very valid points in their defense, as far as the need for a system with more business-oriented features for billing, problems with the original IBM/CIS system, etc.. Still, I can't get away from the shrill pedantic tone of Halvorson's response, which to me says a lot more about the underlying problems at the company than his factual points, which are lost in his vitriol at Deal.

So, even if Justen Deal is largely misguided and wrong (perhaps misled by IBM or internal IT staff, as you suggested), it's very clear that leadership made critical errors, as well as significant ethical lapses -- even if their uber goals for Kaiser were well-intentioned. To me, this looks potentially far worse for the company in some ways than the HP scandal, and if I were a betting man, I'd wager it won't be long before the some hygiene is applied to the entire leadership echelon at Kaiser. (rumor has it that Kaiser one told a group of vendors they had money problems and needed to fix "unhygienic practices" and collectively reduce rates everywhere to cut $50M-- outraging all their vendors.) The timing is also unfortunate, since it's open enrollment season across the country this month....

Healthcare IT projects like this are always tough. Why did the CIO leave, was the heat too much? Was there a conflict of interest that was made public, pressure from the CEO? Weird.

I'm not sure what "Steve Krizman" is talking about but here in Colorado, HealthConnect has been a disaster. We were the one region, besides Hawaii, I think, that had the old system completely functioning. To go from the older system which never went down to the "new and improved" HealthConnect system, which is constantly down, is a nightmare for us. I hope all the attention from the outside will finally get the people in Oakland to wake up to reality.

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