Questions raised about Epic software – Kaiser official quits in flap on cost overruns
November 13, 2006
By Jeff Richgels
Electronic medical records software from Verona-based Epic Systems Corp. is at the center of a controversy that has led to the resignation of a key executive at the nation’s largest nonprofit health organization.
J. Clifford Dodd, a senior vice president and chief information officer for Kaiser Permanente, resigned Tuesday, four days after another Kaiser employee sent a highly critical e-mail to most of the company’s 140,000 workers about his concerns over the $3 billion, high-profile technology project known as HealthConnect, the Los Angeles Times reported Wednesday.
In the e-mail, project supervisor Justen Deal said Kaiser’s switch to electronic medical records for its 8.6 million members was proving far more expensive and unreliable than anticipated.
In an interview with the Times, Deal said that cost overruns were common and that data showed the new Epic-based software system breaking down so frequently that doctors and patients were often left for long periods without access to medical records.
He told the Times that “the company is wasting hundreds of millions on the project and should consider scrapping it for a better one that can handle the scale of a company like Kaiser.”
Kaiser CEO George Halvorson defended the Epic system in an interview with the San Francisco Chronicle. He told the paper that power outages have caused recent reliability problems unrelated to the system, which is expected to be completed by 2009.
A Kaiser spokesman told the Times that despite minor problems, the HealthConnect rollout was exceeding expectations.
Epic spokeswoman Terri Leigh Rhody said today that the company, which recently moved to its new headquarters in Verona, declined comment and directed inquiries to Kaiser. Calls to Kaiser were not returned by deadline today.
Deal told Computerworld magazine that he has had access to “internal projections that show that we could lose $7 billion over the next two years. Losses of even a fraction of that amount could be destabilizing to the organization.”
Deal told Computerworld that he sent letters to Kaiser management expressing his concerns, but in internal memos, management said it had investigated Deal’s concerns and found them baseless.
Deal has not backed down.
“It’s chilling for anyone in the organization to see how far off-track this project has gone,” he told Computerworld.
Kathy Lancaster, Kaiser’s chief financial officer, confirmed to the Times that her office compiled the report last March but said it was only a “worst-case scenario” and that she expected cost-cutting efforts, as well as savings from the parts of the electronic medical records system now in place, to help.
Deal was put on administrative leave Monday pending an investigation and Kaiser said it is reviewing whether he violated company e-mail policies.
“What I’m doing is working to ensure the waste and abuse stops,” Deal told the Chronicle. “That’s not something you get fired for.”
Halvorson described the memo as alarmist and inaccurate, the Chronicle said.
“He has bits and pieces of information and has managed to construct a theory … but what he doesn’t have is any of the subsequent data about what we’re doing to manage those costs,” Halvorson told the Chronicle.
Kaiser has already started cutting costs, through measures such as hiring freezes, Halvorson told the Chronicle.
Kaiser faces the same cost pressures as other health care providers, and must find ways to reduce expenses rather than continuing to increase premiums for consumers, Halvorson told the Chronicle.
A Kaiser spokesman said Dodd’s resignation was not related to the e-mail but did not provide a reason for his departure, the Times reported. Bruce Turksta, vice president and program director of HealthConnect, has been named interim CIO, Computerworld reported.
Epic signed the 10-year, multimillion-dollar deal to provide its health care record management software to Kaiser in 2003.
At that time, Epic founder and CEO Judith Faulkner told The Capital Times that “I think that the Kaiser implementation would be challenging for any company, but I don’t think there’s any company better suited in the world to do it than Epic. It’s a matter of scaling it up and just hunkering down and doing the installations. There’s not much customization involved.”
Epic’s software handles everything from patient medical records and clinical information to scheduling, registration and billing. It also offers patients online access to their records and health care providers.
Kaiser began pursuing the vision of an automated medical record system in the 1960s, long before it was technologically possible, and had worked in the area for many years before contacting Epic in the summer of 2002, the Wall Street Journal reported in 2003. The paper said then that Kaiser expected to save $1 billion by going with Epic over its internal development path.
Oakland, Calif.-based Kaiser, the nation’s largest nonprofit health organization, is at the forefront of the electronic medical records effort, which Mike Leavitt, secretary of the U.S. Health and Human Services Department, recently said was “the most important thing happening in health care.”
Yet getting rid of pen-and-paper records is proving harder in practice than in theory. Only 20 percent of physicians today use electronic medical records, and many organizations are finding glitches.
Others worry that digital medical records pose risks to patients’ privacy, pointing to cases like that of the Veterans Administration, which lost personal data including medical information on millions of veterans last spring.
Published: November 10, 2006