justen

The much bigger story today is that George Halvorson is once again proving that he has destroyed accountability at Kaiser Permanente: instead of paying a $25,000 fine for an egregious medication error that led to the death of a baby, he’s ignoring the fine. Read the story over at Kaiser Thrive. I’ll have more on medication errors and HealthConnect shortly, though.

A source inside IBM confirmed to me that a comment on this morning’s HIStalk is accurate: Kaiser Permanente is moving rapidly towards outsourcing a significant portion of its information technology operations. I haven’t had a chance to really sit down and think through all the implications of the (fairly monumental) shift in strategy, but here are a few first thoughts:

• IBM is obviously back in KP’s good graces. KP and IBM had a very close partnership on KP-CIS. But, after George Halvorson nixed the KP-CIS project in 2002, IBM and KP largely went their separate ways. Aside from legacy Big Iron, Tivoli, and Lotus Notes, KP went from being a huge IBM account to a pretty insignificant one. IBM Services, especially, was pretty much persona non grata in Oakland (and Pleasanton).
• Something like a quarter of IBM’s services workforce is in India. Which means lower costs for IBM and its clients. Lowering costs to help delay a financial meltdown at KP has been a critical mandate for the new leadership at KP-IT. A key component of Phil Fasano’s “plan” has been to outsource to lower costs, and an obvious opportunity to offshore work seems even more financially advantageous, if questionable for a non-profit.
• It’s no secret inside KP that the regions outside California are being undermined by the ridiculous amount of financial waste at KP-IT. (Remember Cynthia Finter?) In the near term, the arrangement with IBM could finally return the regions outside California to a reasonable level of operating financial health.
• Carol Rizzo, in particular, is playing a central role in the IBM relationship. You saw that one coming, right? I’m not clear yet on exactly what Diane Comer’s responsibilities have become, but I imagine she might have something to do with the (re)new(ed) IBM relationship. You saw that one coming, too, right?
• George Halvorson may not have been fond of KP-CIS, but it was nothing if not scalable. That was IBM’s big contribution. Going off with a vendor whose largest integrated install was less than a tenth of KP’s size might have been novel and good publicity for a while, but now IBM has to come in and clean up the mess.
• I don’t doubt their abilities, but IBM knows as well as anyone that KP’s a very bizarre client. For example, insisting on a single data centre for almost all its userbase was a very foolish move on KP’s part, and we knew better. I wonder if IBM might have guaranteed itself broad latitude to make decisions on KP’s behalf, perhaps with even some limited power to overrule the occasional KP ridiculousness?
• No matter the benefits for KP and IBM, this is most significantly a win for Epic. (Yes, I meant to write that.) HealthConnect’s failures aren’t as much the doing of Epic as they were the doing of poor planning and implementation on the part of KP. (Dr. Wiesenthal and Dr. Liang, still want to take credit for that?) IBM can get uptime up to par and help restore a bit of luster to HealthConnect, and a bit of glean to Epic. Plus, it can’t hurt Epic to have the likes of IBM familiarizing itself intimately with their products. Is that a clearing in the clouds over Madison, I see?

Lastly, the murmurs of a first round of layoffs in Pleasanton, at KP-IT headquarters, are not primarily the result of the growing IBM relationship. As HIStalk noted, these were cost cutting measures by sheer job elimination, not cost savings measures by outsourcing (or offshoring). Moving forward, though, I think a big question is whether a primarily California non-profit ought to be shipping hundreds (and eventually thousands) of jobs overseas. (I say no, but KP has been spending millions on offshoring for years, anyway, and nobody’s spoken up yet…)

Stay tuned.