Kaiser Permanente Reports Increased Operating Margin for 2003
Oakland-based HMO Kaiser Permanente on Monday reported a 3.9% operating margin for the fiscal year that ended Dec. 31, compared with 0.6% for 2002, the Sacramento Bee reports. The 2002 figure includes a $442 million write off for the HMO's computerized medical record system. Without the write off, Kaiser would have had a 3% operating margin for 2002. Kaiser reported a net income of $996 million and operating income of $998 million on revenue of $25.3 billion for 2003. Premium increases were the primary source of the increase in operating income; while membership declined in 2003 from 8.4 million to 8.2 million systemwide, premiums increased by an average of 13%. "One of our challenges will be keeping our HMO rate increases as low as possible. We are challenged like everyone else by the increases in pharmacy and hospital costs that drive up insurance rates," Bernard Tyson, a Kaiser spokesperson, said. Kaiser Chair and CEO George Halvorson said that the HMO's financial performance in 2003 will fund construction projects systemwide, including projects in California estimated to cost about $4 billion during the next decade to meet state-mandated seismic retrofit requirements (Rapaport, Sacramento Bee, 3/2).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.