Kaiser Permanente’s Second-Quarter Net Income Drops 11%

Kaiser Permanente, the largest not-for-profit HMO in the United States, posted an 11% net income loss in the second quarter, down from $157 million one year ago to $140 million, due to "higher costs hitting managed care and other health insurers," the Wall Street Journal reports. Operating income before investment income dropped 21% to $113 million, from $143 million a year ago. "[B]olstered" by employer and member premium increases, the HMO's revenue rose 11% to $4.9 billion, from $4.4 billion a year ago. Dale Crandall, president of Kaiser Foundation Health Plan and Hospitals, which operates the HMO, said, "[W]e continue to face the higher-than-anticipated cost trends challenging everyone in this industry. If the overall cost trends continue, we will face very challenging third and fourth quarters." Among the "pressures" facing Kaiser are rising drug costs, "strong demand" for out-of-network hospital services, new nurse-patient staffing ratios in California and "slowing membership" due to the "economic downturn" (Wall Street Journal, 8/3).