The Gadlfy gets some good press in a Bay Area blog called SFist which notes her side of the story and not Kaisers. The story is called David Versus Goliath — And Goliath’s Bigger Brothers, Backed By The Persian Army –to give you an idea of where it’s coming from. They also credit THCB for fair and balanced coverage, and frankly I think I’m the only one calling for reason and moderation in this whole thing.

But what’s been the damage to a great non-profit health care institution?  Perhaps nothing, but now rightly or wrongly they’ve been castigated as a bad employer, they’ve had their proprietary data on the Health Connect program up for all their competitors and potentially hackers to see, and worse they’ve had to admit in court to a patient privacy violation that they waited at least 5 months and maybe much longer to reveal to the  patients concerned. And this says nothing about trying to rather brazenly blame the whole thing on the Gadfly — not that she’s blameless, but she couldn’t have done this without their sloppiness.

Kaiser should be getting great kudos for its roles in promoting IT in health care and running disease management programs. But instead what happens if you do a Google news search about KP? You get basically a page of stories about this incident?  And it could all have been avoided with a decent handling by middle management and HR of the exit of the Gadfly, which included a small settlement and a no-sue confidentiality agreement. Dumb, dumb, dumb.

So the court case was held this morning, and the court issued an injunction telling the Gadfly to take down the pages with the patient information (and I assume the system diagrams too).  That’s pretty much what I expected, althought the Gadfly is a little upset about what she perceives to be biased treatment from the court in her Corporate Ethics blog. 

The real question is whether the Department of Managed Health Care looks into this further, as it said it would — it claimed that it would have a hearing in the notice it issued to the Gadfly if she asked for one. I don’t know as yet whether the Gadfly is requesting such a hearing, but as she’s done all the work already for the KP hearing I suspect that she will. In the same press release the DMCH said that "DMHC authorities are also examining Ms.Cooper’s claims that Kaiser Permanente’s computer systems previously allowed public access to the same patient information." If I was KP I’d be hoping that this would all go away, as the threat of that latter investigation is probably most damaging to them–if of course it actually happens. I just hope that I don’t get supoenaed because I’d have to plead the Fifth (that’s an inside joke for you Ali G fans).

So today brings a couple of new wrinkles to the KP story.  First, following the initial meeting with the Judge after KP looked for an injunction asking the Gadfly take down the site which allegedly holds the 140 patients’ data, according to her version of events, the Gadfly voluntarily acceded to a request from the Judge to take the site down while the case was being decided.
Nonetheless, the Department of Managed Healthcare, which has basically been acting as a lap-dog to for-profit health plans since  Arnie became Governor, decided to intervene by issuing a press release this evening  giving the Gadfly 15 days to take the site down. Given that a judge will be ruling on this within seven days you’d think that the DMHC would have better things to do with its time, like ignoring the potential damage to the state by the local Blue’s licensee becoming part of a major monopoly and having its executives becoming gazillionaires in the process–luckily insurance Commissioner Garamendi was at least partially awake to that last year, even if he too was easily bought off in the end.

Still while the grandstanding by the DMHC is not particularly impressive,  in the press release they also seem to be stating that they are also investigating to see whether KP was guilty of posting this information before the Gadfly did. If they really are dong that, then this whole incident still has the possibility of hurting KP legally and reputation-wise, and it at the least gives the Gadlfy another venue in which to make her feelings about Kaiser known.  Although it’s probably at this stage pointless for me to say this again, KP would have been much better off if it had calmly and quietly dealt with the Gadfly’s complaints about her firing.

So what happened there?  Well there’s no sure way to know.  The Gadfly has put the long explanation of her version on her web-site. It appears that she got caught in a political infight between two managers, and then in attempting to get out of that problem, made a misstep which somehow signaled to their manager that KP would be better off getting rid of her, despite her work performance, which apparently seems to have been good.  But KP is known for being pretty political internally so I’m inclined to believe that there were things going on that were beyond the Gadlfy’s control. I’m also personally a believer in a greater level of trust and honesty being shown between employer and employee, and having seen a copy of the final termination letter from HR at KP, it’s clear that they at the least acknowledge that her version of events didn’t  square with that of her managers’. Now she was within her probationary period, and California is an
at-will employment state which means that anyone can be fired for any
reason at any time, but you’d hope two things.

One, that KP would have the decency to get to the bottom of this, including having a fair internal review process. Two, realizing that this firing put the Gadfly’s life into a tailspin and made her a KP enemy for life, you’d hope that KP would look to find a sensible way to settle the problem rather than ignoring her efforts and seeing her get all the more desperate and dangerous to their public reputation (not to mention having her dump the cost of her health problems on the goodwill of non-Kaiser providers and the taxpayer).

There’s even a bizarre twist that, according to the Gadly in order to get Kaiser’s attention, she tried to post some other Kaiser documents — not apparently the ones in dispute in this round of the story — on eBay. Although apparently nothing ever came of it,

Quite where all this goes I don’t know, but I suspect that the downside for the Gadfly is modest, as she’s clearly at the bottom and at the end of her rope and so has nothing to lose. The outcome for KP is probably modest too, but there’s a wildcard that this whole affair may become a bigger distraction than they’d like, and even that some genuine complaints are raised over their handling of patient data which might even result in penalties.

Somehow you have to feel that this could have been headed off at the pass if the Gadfly had been given a different assignment within Kaiser, or even a half-decent exit interview.

UPDATE: Over on her Corporate Ethics site the Gadfly details her problems with the DMHC which she claims failed to interview a doctor involved in her complaint about care she received when she was a Kaiser member and closed the complaint, and also that the DMHC seems to believe that she put the original site up.  She has continually stressed that she found the data online several months after she left Kaiser and never had access to it when she was there. The original site was taken down several days after this story was first featured in THCB in September 2004, but the Gadfly’s mirror stayed up. I cannot believe that the Gadfly was sneaky enough to steal the documents, stick the original site up, and then mirror it and take it down.  Much more likely, KP found out about the original error by their staff or consultants via the THCB posting and took it down themselves. (I have several Kaiser contacts and I know some of them read THCB). Obviously mistakes happen, and given the complexity of finding the patient data in those diagrams (I looked quite hard and I never saw any!) and the relatively few people who paid this any attention till this week, it seems like relatively little harm was done.  But KP should be trying to blame the original breach on the Gadfly if it’s not her fault. 

And as I’ve said for the nth time, there had to be better ways of dealing with this….

The Gadfly is apparently being interviewed by NBC tonight.  I would have thought that KP would try to settle this before the allegation that they knowingly left patient information out on the web for two years was made on television, but apparently I’d be wrong.

For those of you following along at home….

Today Kaiser sought an injunction against the Gadlfy asking her to take down the web site that supposedly contains the confidential information.  The Gadfly has just emailed me telling me that the judge did not grant that order, but instead set a hearing for next week.

Sigh.  Well KP, an organization that (I repeat) I have much respect for, is not taking my advice in the tawdry little business of whether they or the Gadfly released patient data onto the Internet. If you go to the Gadfly’s website you’ll see both that she has received a notice from Kaiser’s lawyers about an impending court date which presumably will order her to take her mirror site down (something that should please Kaiser), and has requests from two more journalists for interviews (something that probably won’t please Kaiser).

Can calmer heads prevail here? Are there any on either side?

So there’s another version of the fraud that was exposed somewhat last summer, involving recruiting a whole lot of patients for unnecessary surgery. The Blues in particular seem to have been badly hit by this new scam. However, speaking as a British male born since the NHS stopped routinely brutalizing babies in the late 1940s, I was particularly horrified at what one 24 year old male was prepared to go (my emphasis added below) through to make a little extra cash and get a holiday on the beach in LA.

A 24-year-old Phoenix man underwent an endoscopy, colonoscopy, sweaty palms surgery, nasoplasty and a circumcision at one clinic — all unnecessary, said Blue Cross/Blue Shield investigator Tom Brennan. The man lost sensitivity in his hands as result of the palm surgery, a procedure that involves collapsing a patient’s lung to clamp a nerve near the spine that controls perspiration.

The Sex in the City plot where Charlotte converts to Judahism always made me wonder–what if a guy had to convert? How far would he have had to go, and was this individual trying to join up?

Those of you with memories that stretch back to the dog days of summer last year may remember the somewhat curious incident of the Kaiser Permanente Thrive campaign coming up in THCB. If you missed it, here’s a brief recap.

KP has been running a $40m advertising campaign in California and elsewhere under the tag line "Thrive". By the way, the voiceover is done by everyone’s favorites Presidential spokesperson (No, not Fitzwater, Myers or McLellan–CJ Cregg!)  Quite what the campaign has to do with the delivery of health care I have no idea, but that’s why I was thrown out of advertising finishing school. It seems to me no better or worse than any other corporate makeover campaign, and as KP is in general on the side of the angels it didn’t worry me too much.

However, there are a bunch of people who do have reasons rightly or wrongly for disliking Kaiser, and this small group of dissidents discovered quite a treasure trove of base sloppiness. For example, the URL KaiserThrive was never reserved by KP, so the dissidents took it and launched a parody campaign called "Thieves" on it. Then they discovered some of the strategy documents linked with the campaign on an openly available web site, and copied and posted them on their website. Finally, they discovered a KP web site (or possibly one of its contractor’s sites) that had reams of KP’s diagrams and blue prints for its HealthConnect EMR project–which are all presumably proprietary and at least somewhat confidential. This site was also mirrored by a couple of KP gadflys (long after it was put up on the web originally).

I posted about this on August 30, 2004 and lo and behold a few days later that KP site with the wiring diagrams was taken down. None of this in my view contained damaging internal documents of the "Dodgeball"  style that Merck was exposed for earlier this year. But apparently I didn’t look hard enough.  Somewhere buried in all the wiring diagrams was some patient information, which the anti-KP Gadfly had assumed was test data.  Apparently not. According to KP, there are some 140 identifiable patient records in there somewhere. This week Kaiser sent a cease and desist notice to the Gadfly (which was sent on to me) asking for the removal of all web pages, and stating that the Gadfly had broken the employment agreement signed when joining KP. The letter also threatened prison time, huge fines et al.

It’s a bit ironic that KP has pulled out the big legal guns on this. and got The story is the SJ Mercury News today, (correction posted roughtly 4.15pm PST Friday after I was contacted by Barbar Feder, the SJ Merc journo who wrote the story) amazingly enough not because Kaiser leaked it to put pressure on the gadfly, but because one of the 140 patients they called was a member of the Merc staff and got a call about it! Barbara thereafter contacted the KP public relations people and extracted the story out of them as well as finding the Gadfly’s blog and getting some comments from her. It is still nonetheless ironic for Kaiser to be calling out the legal big guns because the when you consider that the patients they are panicking by telling them that their information is on the web have had it sitting there since at least 2002. There is clear evidence at this URL that the site was publicly up as of 2002, and I know it was available to be looked at on the web until at least August 30, 2003 2004 (typo corrected), because I went to look at it then. I must stress that I didn’t know that there was any patient data in it, and in wandering around the mirror site (you’ll have to go to the Corporate Ethics blog to discover the link as THCB is too lilly-livered to link directly!) I never found any patient data. But presumably I was looking in the wrong place.

According to the Corporate Ethics site, the Gadfly in one of her attempts to get at Kaiser tried to get them for a HIPAA privacy violation because of this posting, but apparently they were cleared of this. It’s quite amusing really that they are now coming after her for the same thing for which they apparently were not guilty.

When you dig a little deeper, this is a typical story of a lack of common sense in corporate policy. Like the McLibel trial in the UK when McDondald’s stupidly went after two penniless anarchists for passing out leaflets about their food being inedible and blew $10m in legal fees and all its goodwill in Europe in the process, or a recent case of a friend of mine whose job offer at Carly’s HP was withdrawn because of a one word discrepancy on a background check from Choicepoint (yeah, that trustworthy bunch)  with NO-ONE at HP’s human resources group having the nous to investigate and find out the truth, Kaiser is not stopping to think about how to resolve this issue sensibly. The Gadfly is an ex-employee who was fired and has since seen her financial life go into cataclsym.

The Gadfly is flat broke, and said in a private email to me that she’d welcome jail time as it would get her health care coverage!  So why did Kaiser fire her? Obviously there are two sides to that story, but is there no way that they can make it up to her and come to a reasonable settlement without pushing her and themselves to all these extremes? This is not good PR for what’s generally a noble organization, and some of the grown-ups there need to get hold of this whole issue pretty quickly. Perhaps if a senior KP person took it upon themselves to have a fair review of the case, and figure out a way to make a reasonable settlement, their organization’s own sloppiness wouldn’t have to become a major fiasco.  At the least presumably they can get her some of the health care coverage she needs at a price they can afford!. Right now the Gadfly is finally welcoming the attention, and if KP keeps pushing this way it’s likely to get much worse for them before it gets better.

Not wanting to sound like a broken record, but it’s been more than a year now since I’ve thought health plan stocks (and I include the PBMs in this category) were well over-extended. Luckily I haven’t had my money where my mouth has been as they’ve kept on going up, not the least of which has been Pacificare’s unbelieveable 80% increase since the election. For the past five years health plans have benefitted mightly from the rise in health care costs. While they have been able to pass on the increase in their costs to their customers such as employers and governments, they have also been able to use more sophisticated techniques to assess the risks in their insured populations to make much more profit per member. Some plans such as Aetna have used this to great effect in turning around seemingly losing businesses, while others like Pacificare have benefitted from the current political ideology that is going to try to shift more of the Medicare population into the private sector.

But at some point the gravy train must end.

Meanwhile PBM stocks have also rallied as they have been able to continue to sell their services to employers, even while some of their customers such as the new watchdog group RxCollaborative are clearly unsure of what value the PBMs bring in reducing their Rx costs. Of course PBMs will also benefit from adminstering the new Medicare Part D. While these insurers will continue to be a powerful force in the business of health care, it may be that their fast growth in earnings in the last few years will take a pause. That means buyers of their stock at these levels might have second thoughts.

In evidence let’s introduce the action in Pacificare’s stock today. It beat its nubmers according to the Street, although not according to some other sources. But in any event its profits have nearly doubled over the last year.

I’m not quite brave enough to go short, but The Street, which is often thouguth of as being a mouthpiece for Wall Street Bears is clearly signalling its thoughts. Meanwhile Pacificare’s stock didn’t react too well to the earnings news.

The giant health insurer, best known for its Medicare coverage, posted fourth-quarter earnings Thursday that handily beat Wall Street expectations. But the stock, which has rocketed nearly 80% since President Bush’s re-election, tumbled 1.8% to $61.78 after the report.

There’s a pretty interesting interview with Kaiser Permanente CEO George Halvorson in the San Francisco Business Times. The tag line is that "Moving Kaiser beyond one-size-fits-all health coverage and ‘Dark Ages’ record-keeping, CEO George Halvorson reshapes a health-care giant for the 21st century". Well, maybe.

Kaiser appears–at the third time of trying–to be making a real go with its HealthConnect electronic medical records system. My spies in S. Cal tell me that the implementation is going really well. However, given that the original system I was shown (based on the old Oceania system) was pretty spiffy back in 1997, I’m not certain that the whole organization needed to wait until 2005-6 to get it right. But no matter, they are clearly ahead of the rest of American mainstream health care in EMR adoption. And they are making the folks at Epic much richer. Plus, it goes without saying that Kaiser has got the integration of incentives and purpose that the rest of the system lacks in dealing with the long term chronically ill. If I was chronically ill, I’d like to be a Kaiser member.

However, Halvorson’s other concern is one that doesn’t really have an answer. He worries that younger healthier people in his catchment area will be attracted to high-deductible plans and HSAs–not an area that Kaiser as a full service HMO has much experience with.

Kaiser is scrambling to move into this new realm by creating benefits packages with added cost-sharing elements, such as high-deductible plans and HSAs, he said. Hiring experts in insurance systems and billing has been a big priority recently. It is also hiring large numbers of new managers and workers with experience in areas such as actuarial work, insurance underwriting and the like.

Kaiser is trying to roll out these types of plans, but of course they don’t fit easily with its historic pre-paid group practice mentality. It also doesn’t fit in with the mathematics of insurance. High-deductible plans work well for an organization that doesn’t have to deal with the consequences of splitting the risk pool. Kaiser is a risk pool. It’s been the pioneer of community  rating forever.

The article suggests that the high-deductible plans are so far a minor irrelevant part of Kaiser’s business. If they stay that way, it’s probably OK. If they become a big deal, well all the actuaries in the world won’t make their chronically ill population healthier, and that could lead to real problems.