KAISER: PROJECTS FIRST-EVER LOSSES IN 1997

      For the first time ever, Kaiser Foundation Health Plan and
 Hospitals is projecting an annual loss this year of $30 million
 to $50 million, San Francisco Chronicle reports.  Attributing the
 loss to an "increasingly competitive health care marketplace,"
 Kaiser CFO Susan Porth said, "We're facing a potential loss this
 year relating mostly to one-time charges that we would not expect
 to recur in subsequent years."  
      CHANGE OF PACE
      Kaiser previously has had problems with too much profit, but
 because the nonprofit company "has been trying to convince its
 2.6 million customers and its increasingly combative labor unions
 that costs need to be cut to remain competitive."  The average
 profit for the national Kaiser system is about four percent of
 revenue.  According to Porth, when considering continuing
 operations, Kaiser expects to "have some small net income in 1997
 -- probably less than one percent of revenues."  The company is
 "reviewing all capital improvement projects and looking to
 streamline its procedures," in an attempt to "[stem] the tide of
 red ink."  Customers should not expect any immediate rate
 increases because rates for 1998 are already set, Chronicle
 reports.  Porth said, "We are not going to do anything to hurt
 our long-term viability or to hurt our service."  Moody's placed
 a "watch" on its Aa3 credit rating of about $1.5 billion in
 Kaiser bonds, Chronicle notes.
      NEW TACTICS
      According to Wanda Jones of the New Century Healthcare
 Institute in San Francisco, "many of the HMOs are seeing losses
 as they battle for market share."  She said, "Those battles for
 market share are very aggressive and very bloody.  You have to
 blow a few dollars before you pull market share away from
 competitors."  Kaiser had looked to markets outside California in
 an attempt to improve margins in response to "aggressive cost-
 cutting by rivals."  According to Porth, California operations
 remain profitable, "despite an anticipated one-time charge to
 account for consolidating the Northern and Southern California
 information technology operations."  However, Porth said, "We
 also have some losses outside of California, and in general are
 not meeting expectations" (Kazakoff, 10/14).