KAISER PERMANENTE: Expects Significant 3Q Losses
Kaiser Permanente announced yesterday it will likely report a "substantial third-quarter loss," which could mean that its "troubles are more serious than previously thought." Bloomberg News/Los Angeles Times reports that the HMO is anticipating the losses because of rising medical costs. As a result, Kaiser increased prices for 1999, including an 11% increase for the state government. The increases, however, will not come in time to alleviate this year's losses. Bloomberg/Times reports that last year, the company posted $270 million in losses, and "chalked up an operating loss of $150 million in the first half of 1998" (10/23). Although Kaiser's losses during this year's first two quarters "were offset by gains of more than $130 million," this quarter's losses "probably won't be offset by investment income," the San Francisco Chronicle reports. A Kaiser source predicted, "With the stock market gone so far south, we probably won't be able to offset our operating losses as in the past." Snalysts attribute losses incurred throughout the health care industry to soaring hospitalization and prescription drug costs. "We'll be seeing more of this (kind of loss) elsewhere, but Kaiser is big enough to really notice," warned Wanda Jones, a health care analyst with the New Century Health Care Institute in San Francisco (DeBare, 10/23). Kaiser incurred significant losses after an influx of California enrollees forced the HMO to "direct patients away from Kaiser's network ... and pay for them to be treated elsewhere." Six million of Kaiser's 9.2 million members are California residents (10/23). Click here for previous CHL coverage of Kaiser.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.