Email Blasts Billion-Dollar IT Project at Nonprofit HMO

A project manager's rant focuses attention on problems with the conversion of the Kaiser system to electronic medical records. 

This week the Wall Street Journal gave front page coverage to an email memo written last November by Justen Deal, a 22-year-old employee of the Kaiser Health Plan (EIN 94-1340523 Form 990) criticizing HealthConnect, Kaiser's project to convert to an electronic medical records system.  The Journal also provided the full text of the email, which was sent to most of the organization's employees (over 100,000 of them), and the response from CEO George Halvorson.  (Both articles are available without subscription.)

Mr. Deal was fired in January (for unrelated reasons, of course, according to Kaiser), but, as the Jounal story shows, the effects of the memo continue to be felt:

• Shortly after the memo, Computerworld ran a story about the problems with the system that quoted Mr. Deal and an anonymous source within Kaiser, but also refered to a 722-page internal report that listed numerous technical problems, including a 55-hour power outage at the data center.  There were also question raised whether Citrix, a system for running programs from a central server, could handle the huge demands of the Kaiser system. 
• Around the same time, the health IT blog HIStalk carried an interview with Mr. Deal that sealed his fame in the blogosphere.
• In February, the LA Times (Daniel Costello) ran a story on the project that also explained what is at stake with these systems: the current reliance on paper-based medical records is responsible for 98,000 deaths a year as a result of errors. 

That brings us to the Journal article in April.  This shows how fast news travels in some nonprofit circles, despite the Internet (no celebrities are involved, which might be a factor). 

Notable here is the huge size of everything connected with the Kaiser Health Plan.  The Form 990 shows the organization with over $20 billion in income.  News reports say that the organization has income of $8 billion, and the difference is probably due to differences in accounting.  However, since Kaiser doesn't release conventional financial statements, there's no way to know for sure. 

As with the American Red Cross response in a huge catastrophe like Katrina, Kaiser has to respond to an unprecedented need as best as it can, without access to either large pools of capital or to government resources.  At the same time, like most nonprofits, it seems to lack effective internal checks and balances and is reluctant to face outside scrutiny.  And yet what they are doing is extremely important—literally life and death.  It's why I think the real focus in nonprofit studies should be the large scale nonprofit organizations.