Kaiser Permanente Moves To Boost Finances After Major Losses

Kaiser Permanente plans to freeze executive salaries, cut staff in some areas and take other steps to improve its financial performance in response to major losses in 2008, the San Francisco Business Times reports (Rauber, San Francisco Business Times, 2/20).

On Feb. 13, Kaiser officials announced that Kaiser Foundation Health Plan and Kaiser Foundation Hospitals lost $794 million in 2008, largely because of a $996 million fourth-quarter loss that they attributed to investment declines (California Healthline, 2/17).

New Efforts

Bernard Tyson, Kaiser's executive vice president of health plan and hospital operations, has e-mailed leadership with details on what the HMO will do to "weather the economic storm." Beginning immediately, Tyson said Kaiser will:

• Cut staff in some areas;
• Freeze 2009 salaries for the top 500 executives;
• Decrease the budget for other non-union salary increases by one percentage point;
• Keep full-time staffing at year-end 2008 levels;
• Decrease the use of temporary staff, consultants and contractors;
• Pursue marketing, advertising, sales and account management activities that retain membership and increase sales to compensate for drops in membership because of rising unemployment;
• Cut travel by at least 25%; and
• Reduce or cut large national meetings and conferences "in favor of telephone, web and video conferencing."

Tyson said the actions will accompany regional and local actions "that are in progress or will be implemented in the near future."

Criticism

The move drew criticism from Consumer Watchdog President Jamie Court, who called on California Attorney General Jerry Brown (D) and other regulators to investigate Kaiser for the scale of its investment losses (San Francisco Business Times, 2/20).