KAISER PERMANENTE: Reports $288 Million Loss for 1998
In yet "another indication that the managed care industry is having only mixed success with its mission of managing medical costs," Kaiser Permanente Friday announced a $288 million loss for 1998. Excluding a one-time charge for bond refinancing, Kaiser lost $266 million, the same amount it lost in 1997. The company blamed "cost increases for prescription drugs, hospital care and an 'unexpectedly bad flu season.'" "Yes, 1998 was a bad year for Kaiser, but a year that was consistent with our expectations," said Kaiser CFO Dale Crandall. But optimism reigns: buoyed by substantial premium increases and a $500 million delay in capital expenditures, Kaiser is predicting a 2% profit margin for this year (Hilzenrath, Washington Post, 2/20). Unlike other large health plans such as Aetna U.S. Healthcare and United HealthCare, Kaiser has no plans to withdraw from the Medicare market. The company has, however, shed some operations in North Carolina and Texas and may soon leave other unprofitable markets (Galewitz, AP/Orange County Register, 2/20).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.