HMO agrees to pay record fine, make charitable donation

THE SAN FRANCISCO CHRONICLE

Kaiser Permanente agreed to pay a $2 million fine and make a $3 million charitable donation after state regulators concluded the HMO’s mismanagement of its Northern California kidney-transplant unit endangered patients.

The state Department of Managed Health Care determined Kaiser lacked the administrative capacity and failed to properly monitor its fledging kidney transplant program, leading to unacceptable delays in treatment. Regulators said they found no evidence patients died as a result of those problems.

The fine is twice the size of the largest one the department had assessed previously, which was issued against Kaiser in 2002. That sanction concerned the death of a 74-year-old woman at Kaiser‘s Hayward hospital.

As part of its agreement with the agency, Kaiser said it will donate $3 million to Donate Life California, a nonprofit organization that promotes organ donation.

“We felt, and Kaiser agreed, that the ability of having something good come out of this for the public and maybe for those patients still on the (Kaiser kidney transplant) waiting list was important,” Cindy Ehnes, director of the Department of Managed Health Care, said in a press conference Thursday.

The failure of Kaiser to respond adequately to patient complaints about the kidney center, located in San Francisco, has led state regulators to open a separate investigation into how the HMO handles member grievances.

“Patients must know their concerns and complaints do not fall on deaf ears,” Ehnes said.

Officials of Kaiser, which is based in Oakland, said the health maintenance organization has learned from the experience.

“We deeply regret any problems, difficulties or concerns we may have caused our members as a result of their experience with the San Francisco kidney transplant program,” said Mary Ann Thode, president of the Northern California region of Kaiser Foundation Health Plan and Hospitals.

Problems at Kaiser‘s kidney center surfaced in May as a result of a series of news reports about patients experiencing long waits for new organs.

The HMO had long contracted with UCSF and UC Davis to perform transplant surgeries. In 2004, Kaiser created its own program and attempted to transfer about 1,500 patients from the university hospitals to its new Northern California transplant center. Delays in transferring medical records and information about time patients had spent on transplant waiting lists, slowed the process of getting new kidneys.

“No one in the country had ever attempted to make this kind of transfer of this number of patients. Everybody thought it would be much easier than it would be,” Thode said.

Amid state and federal investigations, Kaiser announced May 12 that it would close the transplant center and transfer patients to UCSF and UC Davis. The program remains in operation so Kaiser can perform transplants if matching organs become available before patients are transferred.

The process of transferring patients back to the university hospitals is taking much longer than state regulators had anticipated. Department officials estimated only 22 percent of Kaiser‘s 2,300 kidney transplant patients have been fully transferred.

No Kaiser officials have lost their jobs as a result of the problems. The transplant center’s medical director, Dr. Sharon Inokuchi, has been relieved of administrative duties and focuses on patient care, she said. Kaiser appointed a new administrative director in June.

“To just put blame is not something we feel is really appropriate at this point in time,” Thode said.

Some Kaiser critics questioned the size of the fine, which they considered modest for a company that reported $8.5 billion in revenue in the most recent quarter.

“This doesn’t send a message to Kaiser,” said Jamie Court, president of the Foundation for Taxpayer and Consumer Rights. “Kaiser probably spends a couple million on coffee every year.”

At the same time, some Kaiser kidney patients said they were pleased by the penalty.

“I think it was justified given the inadequacies and deficiencies in the program,” said Bob Langston, 60, of Benicia, speaking via cell phone while in dialysis. “Somebody wasn’t watching the shop.”

Langston, frustrated by the lack of communication with Kaiser‘s San Francisco center, said he requested and received a transfer to UCSF in May. He is scheduled to receive a kidney donated by his 27-year-old daughter in October.

Kaiser still faces multiple medical malpractice lawsuits over the kidney center troubles.

“Did they (Kaiser) kill anybody?” said Stuart Talley, a Sacramento lawyer who has filed three lawsuits on behalf of Kaiser kidney patients. “I think they (state regulators) should know that before they fine them $5 million.”