Kaiser’s First-Half Profit Exceeds For-Profit Insurers’
Kaiser Permanente in the first half of 2007 reported net income of $1.8 billion from operations in California and Hawaii, more than double the combined California proceeds at the state's three for-profit insurers, according to state financial records, the Sacramento Business Journal reports.
Kaiser, a not-for-profit HMO, does not report financial information for only its California operations.
Kathy Lancaster, executive vice president and CFO of Kaiser, said the first-half figures are driven by an unusually large reduction in reserves for professional liability and workers' compensation insurance.
The HMO's $356 million in savings is due partly to fewer workplace injuries and claims, which could lead to more affordable health care coverage in the future, according to Lancaster. She added that reduced administrative costs also helped boost its savings.
A large difference between Kaiser and for-profit insurers is that Kaiser's earnings are reinvested into its health care system, such as substantial investment in new facilities in California, according to the Business Journal.
Lancaster said Kaiser continues to grow, citing figures that show $2.5 billion in capital investments in 2005 and $2.8 billion in 2006.
The HMO's operating margin also continues to rise (Robertson, Sacramento Business Journal, 9/10).