KAISER PERMANENTE: Falling Deeper Into The Red?
Oakland-based Kaiser Permanente is facing financial losses this year that "match or top last year's $266 million loss," Modern Healthcare reports. "We're still looking at a difficult year, similar to what we had in 1997," said Jim Williams, president of Kaiser Permanente International. He acknowledged it is "not out of the question" that this year will be worse than last. Williams said Kaiser is experiencing "significant financial difficulties" nationwide. The behemoth managed care company just had to double its planned expenditures to "address its year 2000 computer problems," and had to enter into "a number of expensive contracting deals with non-Kaiser providers" to keep up with the flood of new enrollees in California. A senior official "who asked not to be identified," said Kaiser's 1998 losses could reach "half a billion dollars." Modern Healthcare reports that in the first half of this year, Kaiser racked up $162 million in operating losses, "but was bailed out by investment income," shrinking the loss to just $33 million. Sources, however, say Kaiser "has since suffered through a horrendous August" and could continue bleeding red ink this year and possibly next. Modern Healthcare reports that company officials say they may try to curb losses by "an across-the-board 5% budget cut" and getting rid of "several" non-California divisions. Williams said "we're making difficult decisions" and are "looking at a whole range of options." Watson Wyatt Worldwide analyst Glenn Smith said, however, "It's like turning a battleship around. Kaiser may have overestimated the speed with which they can make these course adjustments" (Rauber, 10/12 issue).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.