Head of Kaiser’s digital project quits

The executive overseeing Kaiser Permanente’s ambitious $3-billion push toward computerizing the medical records of its 8.6 million members resigned Tuesday, a sign of the challenges facing the project.

The resignation of J. Clifford Dodd, a senior vice president and chief information officer for Kaiser, came four days after another Kaiser employee sent a scathing e-mail to most of the company’s 140,000 employees about his concerns over the high-profile technology project, known as HealthConnect.

In the e-mail, Justen Deal, a Los Angeles project supervisor who has worked on the new system, said Kaiser’s switch to electronic medical records was proving far more expensive and unreliable than anticipated.

In an interview, Deal said cost overruns were common and that data showed the new software system breaking down so frequently that doctors and patients were often left for long periods without access to medical records.

He said “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.”

A company spokesman said Dodd’s resignation was not related to the e-mail but did not provide a reason for his departure.

The spokesman said the allegations in Deal’s message were untrue and that though there had been minor problems with HealthConnect, the rollout was exceeding expectations.

Dodd was not available for comment.

Deal was put on administrative leave Monday pending an investigation. The company says it is reviewing whether he violated company e-mail policies.

Oakland-based Kaiser, the nation’s largest nonprofit health organization, is at the forefront of much-touted efforts around the nation to get patients’ drug prescriptions, diagnoses and doctors’ comments online.

Mike Leavitt, secretary of the U.S. Health and Human Services Department, recently said digitizing medical records was “the most important thing happening in healthcare.”

Yet getting rid of pen-and-paper records is proving harder in practice than in theory. Only 20% 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.

Kaiser Chief Executive George C. Halvorson has made modernizing the patient records system one of the company’s biggest priorities.

He is hoping to improve patient satisfaction and care while reducing costs if his organization can get a computerized system up quickly.

The project is expected to be completed by 2009. But that bet has its risks: Few organizations other than the federal government have pushed a plan this big so quickly.

If it fails, and Kaiser has to invest money to fix it -- or worse, scrap it and start over -- the costs could be enormous. Members might see higher premiums as a result.

The company’s overall financial situation has been bumpy of late. In its final quarter last year, Kaiser reported its first loss in three years, at $211 million.

On Tuesday, it posted $417 million in third-quarter profit on $8.7 billion in revenue, compared with $305 million in profit on $7.8 billion in revenue a year earlier, but it warned that rising operating expenses and pending Medicare cuts could affect the bottom line.

In his e-mail, Deal also revealed that a previously undisclosed internal report said the company could lose $7 billion over the next two years if it didn’t reduce operating costs quickly.

Kathy Lancaster, Kaiser’s chief financial officer, confirmed 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 record system now in place, to help.

“The entire industry is facing challenges and some uncertainty,” she said. “But we are pleased with our most recent results and believe in the steps we are taking to ensure we can provide the best care for our members.

“We expect positive results in 2007.”

daniel.costello@latimes.com