Dr.
Charles Phillips on the
Kaiser Permanente
Bond Issues
Link to actual Bond Offerings: https://kaiserpapers.com/businesspractices/cakpbondods.html
Letter from Dr. Phillips to Mr. Wells the NYC Analyst for Fitch Ratings.
Dear Mr. Wells (NYC Analyst for Fitch Ratings),
Thank you for being willing to read this Email for the purpose of informing bond customers of potential risks with Kaiser Bonds. [I am assuming that the Bonds take the form of Kaiser Hospital Bonds but would appreciate getting a faxed copy of a sample at 559-322-5307.] So here are some concerns which could be expanded as needed.
1. Kaiser Permanente is a medical care program consisting of three partnership entities - the Kaiser Health Plan, the Kaiser Hospitals, and the FOR PROFIT Permanente medical groups;
2. The largest two medical groups are The Permanente Medical Group, Inc. covering Northern California or TPMG (a for profit corporation) and the Southern California Permanente Medical Group or SCPMG (a for profit partnership); each are set up to create stock dividends for the physician partners;
3. My current estimate for last year being $160,000 per partner, although a last minute bonus distribution in December of 2003 might have funneled some of the same money through a different path to the same physicians; this comes off the Tahoe Accord awarding the physicians half of the nearly $1 billion in "net income" (read profits) of KP last year (primary and signed documents now available);
4. The public has no idea of the profit sharing that goes on nor that these monies are hidden under the Plan in such a way as to be non-recoverable by the bond holders should there be a downturn; the transparency of its physician profit system on the backs of seniors could cause such a stir that the government might be embarrassed into action (right now the mutual back scratching is done as a business as usual approach to make Medicare look almost solvent).
5. As the physicians public stance of being at arms length in negotiation with the Kaiser Plan and being salaried with only tiny bonuses is an advertising lie, enrollment is done in fraud; actually - and by a chartered and signed agreement - the physicians are in control of a steering committee that requires all input to itself (and not the Board) as it prepares all issues which go before the Board;
6. As the Plan Board and the Hospital Board are the same, the physicians control the whole tripartite organization and are the primary source of and benefactors of all of the other frauds which will be noted hereafter in this e-mail; yet the myth of Kaiser Permanente being "non profit" is paraded through the media and even is reflected in your own Business Wire article of 3/10/04 with the term "not-for-profit" on page 2 of 5;
7. The fact that the physician profit is built into the base rates to the patients and between the entities - verified in Medicare documents - these funds are not the result of lucky years but stand foremost as a goal from which all other decisions are made, e.g. that Kaiser is a "wellness program" and not a "sickness program" - an internal principle never shared with the gullible seniors who sign up for ads of trust;
8. Kaiser's $40 to $100 million ad campaigns each year are designed to create a brand name for both KP and for the Permanente physicians which draw in new enrollees - mostly seniors as they account for 23% of Kaiser's income per your report - which eclipses the poor word of mouth reports that come from the Kaiser victims and their families; note that Kaiser was kicked out of Texas after having 20 wrongful death cases in Dallas alone;
9. A strong part of the ad campaign is that Kaiser physicians come from top universities; the reality internally is that the favorite choice for Kaiser is often the physician who has come from more life-negating cultures and can be Kaiserized most rapidly into changing the physician-patient relationship to the "group ethic" of the Permanente-patient relationship;
10. Another strong tenant of advertising is that Kaiser practices "evidence based medicine" which is the key channel on the Permanente map for reaching the gold of investment capitol (I guess bonds guaranteed to a degree by your ratings); actually these highly secret documents stray far from the world's evidence of good care and come as close to do no care as possible.
11. Most legal suits against Kaiser are focused on the purposeful avoidance of compassion, diagnosis, testing, referral, and treatment; some others go on to the overuse of morphine to kill off patients in hospice centers (part of the ABC kit with lethal dosage range orders accompanying);
12. Kaiser could easily be fined $5 billion retroactively for failing to live up to its tax free requirements - like having a community hospital open to physician applications from the community, like spending 5% on the poor rather than this year branching into political funding of ballot issues, like being controlled by a for profit steering committee rather than a board, like talking 25% of heart attack victims into Do Not Resuscitate options by painting ICU as a torture chamber with tubes in the throat, etc.
13. Kaiser is ripe for losing its arbitration protection from suit due to false enrollment advertising, gross medical chart - lab tests - films (evidence) tampering after bad outcomes, keeping a stable of judges who each get 2-3 cases a year at about $15,000 a case, having the "independent arbitrator" firm testify for Kaiser to keep the same system in place, by intimidating patients from beginning(the "demand") to the end (you might have to pay for all this); by now going up against an attorney who went to law school primarily to avenge is mother's fraudulent Kaiser care, etc.
14. Kaiser could easily implode on its Joint Ventures program, e.g. CareTouch in which it spent $15 million of nonprofit dollars to set up this for profit company only to spin it out with Dr. Lawrence still on board; note that the chief architect of the ventures has been the grandson of Henry Kaiser, this grandson now being indicted for a $23 million investment scam designed to fool Europe;
15. Similarly Kaiser fakes its inspections by the Joint Commission and other regulators by having faked notebooks suggesting the wide participation of staff in decisions; actually staff cannot look at these same notebooks (a new one for me);
16. Kaiser medical libraries are shams with most textbooks being out of date; one good hospital in California gives Kaiser all of its outdated textbooks as the HMO library is for show not research;
17. The case Timmis v. Kaiser is in Appeals Court and could cost Kaiser some $500 million for the horror of making seniors split their pills into uneven pieces;Kaiser's "half pill" explanation pretends the halves are equal even though the concede the proven 40% swing in dosing;
18. Your bond holders need to understand that Kaiser has failed in more states than it is currently in - failures include Texas, New York, Kansas, Utah, North Carolina, to name a few; many states found reason to fine Kaiser even as they left for fraudulent statements of value;
19. The Washington, DC Kaiser is propped up by taxing other Kaiser units to try to convince the country that it is truly national; it is also a base for lobbying Congress with such items as the Permanente Journal (even though the Journal if read carefully shows jokes about long Kaiser lines);
20. The hospitals being built have strange configurations like putting ICU far from the ER to discourage its use - I know, I used to have to run the long distance from the ER to ICU at the Kaiser Fresno hospital where I worked 18 months; several times I got lost getting back due to the large number of medical wards never developed - the hospital serving more a shell suggesting medical care than giving it.
21. Illegal loans to administration would be another area for you to review.
22. Kaiser maintains that "Kaiser Permanente" is only a program not an entity - so how can they issue bonds as your balance sheets show?
All of this can be proven to any interested party. The question is whether the bond holders should only get one view. Otherwise they can stay with your "Outlook" statement - "Fitch Ratings/Public Finance/Health Care New Issue/Kaiser Permanente, California" - which is much like a typical Kaiser ad.
Thank you for your time and thoroughness. $1.6B in bonds is a large amount to rate.
Charles Phillips, MD - Fresno, California - Former Kaiser physician - Pager 559-262-6240 Board Member of the Managed Care Reform Committee