KAISER PERMANENTE: Posts First Profit Since 1997
Kaiser Permanente's turnaround strategy appears to be "taking hold," the Sacramento Bee reports, as the HMO announced its first positive earnings since the third quarter of 1997. Kaiser's operating income last quarter was $56 million on revenue of $4.2 billion, compared to last year's first quarter operating losses of $54 million on $3.8 billion in revenue. Kaiser officials credited rate hikes for the success -- premium increases were up almost 10% across the board this year, "some of the steepest in the industry" (Young, 5/1). Excluding a $28 million charge for adoption of a new accounting system, income from continuing operations last quarter was $56 million, the Wall Street Journal reports. Membership this year held "steady at about 8.6 million." Diana Lee, a health care analyst at Moody's Investors Service Inc., said that while the increased premium revenue clearly helped, "What is less clear is how effective their cost-control initiatives will be, and that is something we will be looking at over the next few quarters," she said (Rundle, 5/3). In a step in the right direction on cost- control, the Bee reports that only 77 Kaiser patients had to be cared for at non-Kaiser hospitals between December 1998 and February 1999, compared with more than 2,000 patients the winter before. Kaiser EVP and CFO Dale Crandall said the overall first quarter financial results are "encouraging," but added that the HMO "must see continuous improvement in our overall cost management to stay on track for the year" (5/1).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.