KAISER PERMANENTE: Posts $92 Million First Quarter Loss
Kaiser Permanente Group, "the nation's largest HMO," Friday reported "an operating loss of $92 million for the first quarter as it struggled to cut costs on the heels of a $270 million loss last year," the Bloomberg/Los Angeles Times reports. Kaiser said the quarterly loss "was caused primarily by a need to direct patients away from its network in California and pay for them to be treated elsewhere." The loss also stems from the company's "failure to accurately estimate how much health-care costs would rise when setting rates for customers" (5/2). Kaiser's membership at the end of March totaled more than 9.1 million people, including more than 5.5 million in California. Dr. David Lawrence, Kaiser Foundation Health Plan and Hospitals Chair and CEO, said the loss was "expected" and "Kaiser Permanente's continuing rapid growth in California has made the job of caring for our members a greater challenge."
Cutting Costs, Raising Revenue
In an effort to cut costs and increase revenue, the company began implementing competitive rate increases on January 1, 1998, and is opening two new hospitals this year to expand Kaiser's ability to care for its California membership in its own system. Plans are also underway to open closed units in many other existing facilities. In addition, the company will attempt to improve its emergency room triage process and the speed of repatriation of members to Kaiser hospitals and contract facilities. It also will create special call centers for chronically ill and frail patients. Kaiser is also renegotiating contracts with outside providers while providing training and feedback for its own providers on their referral patterns. Finally, the organization will implement review programs to provide better tracking of referrals and negotiating new generic drug contracts. Lawrence said, "We have intensified our efforts, which we started in 1997, to meet this challenge, especially in the management of outside medical costs. The early impact of our improvement efforts won't be reflected in our financial results until the second half of this year" (release, 5/1).