Kaiser Permanente membership growth plummets.

Update: Two hours later and KP still has not yet posted the results to its website, so here is a link to a PDF of the results. You have to dig down to the sixth paragraph to find mention of the “relatively flat” membership growth, which I’ve highlighted for your convenience.

Kaiser Permanente announced its most recent quarterly results today. Membership growth crumbled, with no new members added during the quarter, compared to more than 30,000 new members being added in the year-ago quarter. Reported operating income improved slightly, inflated by George Halvorson’s continued short-sighted efforts to burnish operating results at the expense of the organization’s balance sheet.

Year to date, membership growth has fallen more than 75%. This is the third quarter in a row that California healthcare consumers showed they were tired of George Halvorson’s “transformation” of Kaiser Permanente. For two quarters in a row now, Kaiser Permanente hasn’t added a single net new member (compared to having added nearly 75,000 net new members during the same period last year). How’s that for a testament to George Halvorson’s leadership?

It was a year ago this week that my internal message on the perils of Mr. Halvorson’s flawed leadership first became public. The key concern I emphasized most was the impact of Mr. Halvorson’s financial mismanagement of the organization. Internal financial models projected $2 billion in operating losses this year, $5 billion for 2008. Mr. Halvorson has worked to hide operating costs at the expense of our long-term stability, and his efforts have helped postpone those losses until another day. But our faltering membership shows the true colors of Mr. Halvorson’s mismanagement of the organization, as more and more of the organization’s precious resources have been shifted to Mr. Halvorson’s HealthConnect, instead of in true investment in our infrastructure and care delivery.

George Halvorson is trying to hold on to his job as long as possible. To do that, he will continue to erode investments in healthcare delivery for Kaiser Permanente members, to try and conceal his mismanagement of the organization’s finances. One tactic he is employing is job cuts. Barely a month ago, he trimmed a little less than 2% of our staff in Hawaii (which follows up on initial cuts in Hawaii late last year). In the past few days, he shipped another 2% of our information technology positions overseas. Two percent here, two percent there will add up.

This didn’t start last month, though. Over the past two years, Mr. Halvorson has been gradually degrading healthcare quality at Kaiser Permanente to fund his legacy, his pet project, HealthConnect. The kidney transplant fiasco in Northern California was a core component of Mr. Halvorson’s plan: cut costs by transferring patients from more expensive outside hospitals to new, cheaper in-house programs. The results were devastating for those patients and their families, and the program was eventually halted, but not before much damage had been done.

George Halvorson is determined to cut expenditures on patient care to fund his broken projects and misaligned priorities, and the only place for those cuts to come from is the quality of healthcare delivered at Kaiser Permanente.

Mr. Halvorson will continue to impose measures that hurt healthcare delivery to continue to polish results. The picture is clear: Mr. Halvorson will continue to do serious damage to Kaiser Permanente as long as he is permitted to do so by our unaccountable Board of Directors.