Kaiser Permanente Inks Deal With IBM, Discloses Job Cuts in IT Division

On Monday, Kaiser Permanente announced plans to cut 860 staff positions in its information technology department, including 700 cuts that stem from an IT services contract with IBM, the San Francisco Business Times reports (Rauber, San Francisco Business Times, 3/16).

IBM Contract

Kaiser and IBM signed the seven-year contract on March 13 (Robertson, Sacramento Business Journal, 3/16).  It calls for IBM to manage operations at Kaiser's data centers, including:

• Computer systems;
• Storage systems; and
• Associated software.

IBM said the deal is valued at $500 million.

Kaiser will continue to manage its electronic health record system and other applications (San Francisco Business Times, 3/16).

Kaiser Chief Information Officer Phil Fasano said IBM "will not have access to any of the records of our patients."

Of the 700 employees whose positions will be cut because of the IBM deal, about 500 are in California.

Fasano said IBM could hire as many as 40% of those workers during the six-month transition period (Tansey, San Francisco Chronicle, 3/17).

Other Cuts

The other 160 eliminated IT staff positions are being cut as part of a larger cost-savings effort.  The job cuts will affect 30 locations throughout Kaiser's eight service areas (Sacramento Business Journal, 3/16).

Work Force Implications

The eliminated positions account for about 14% of Kaiser's 6,200 IT staff throughout the U.S.

Affected workers will be given two months' notice and will receive a severance package amounting to six months' pay, on average (Avalos, Contra Costa Times, 3/16).

Kaiser Not Alone

The Sacramento Bee reports that other health care organizations also are cutting staff at this time.

For example, insurer Health Net confirmed its plans to eliminate claims processing and IT staff positions at its Rancho Cordova site (Caina Calvan, Sacramento Bee, 3/17).