Kaiser posts $4.6M profit for quarter
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Kaiser Permanente Hawaii, the state's largest health-maintenance organization, said yesterday it had swung to a fourth-quarter profit of $4.6 million from a year-earlier $2.9 million loss, as cost-cutting efforts took hold faster than the company expected.
Operating expenses decreased 1.9 percent in the quarter to $213.2 million from $217.3 million a year ago. Kaiser's internal restructuring has included the elimination of 144 positions over the last two years, putting in a new executive team, consolidating property, reviewing all contracts and evaluating all positions.
For all of 2007, Kaiser posted a profit of $1.5 million versus $4.5 million a year ago.
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Kaiser Permanente Hawaii, reaping faster-than-expected benefits from its cost-control efforts, turned a losing year into a positive one as it recorded net income of $4.6 million in the fourth quarter and a full-year profit of $1.5 million.
A year ago, Kaiser lost $2.9 million in the fourth quarter but had full-year earnings of $4.5 million.
The state's largest health-maintenance organization, with 222,000 members, has eliminated 144 positions over the last two years.
Other restructuring included putting in a new executive team last year, consolidating property, reviewing all contracts and evaluating all positions.
The cost cutting helped operating expenses decrease 1.9 percent in the quarter to $213.2 million from $217.3 million a year ago. For all of 2007, operating expenses ticked up 0.8 percent to $875.7 million from $868.7 million.
"Compared to the prior three quarters, our fourth-quarter results indicate that the measures we are taking to control our costs are working," Kaiser Chief Financial Officer David Delaney said. "Although our net income in 2007 is less than in 2006, we have seen positive results sooner than expected."
Kaiser, which increased the rates it charges businesses and government employers by an average of 2 percent on Jan. 1, is planning to open the first phase of its new tower at Moanalua Medical Center in May.
The $150 million tower, which represents Kaiser's first major renovation since the hospital opened in 1986, will provide 106 new hospital beds and cut down on the expenses Kaiser has had to incur for sending some members to outside hospitals.
The new center also will offer members a larger, more personalized mother-baby unit as well as additional operating suites.
"We are pleased with how we ended the year, because it means we'll have funds for new technology and expansion of our facilities," said Kaiser President Janet Liang. Liang took over in March for Jan Head, who resigned.
That expansion includes renovations being made to the original part of the hospital and to the Mapunapuna clinic.
Besides Moanalua Medical Center, Kaiser has 17 clinics on Oahu, Maui and the Big Island.
"Our recent investments, combined with more convenient services and hours, are being well received by our members and the community," Liang said.
For the quarter, Kaiser's revenue, or funds collected from member dues, rose 2.2 percent to $215 million from $210.3 million. For the year, revenue edged up 0.4 percent to $864.2 million from $860.5 million.
The return on revenue from net income was 2.1 percent in the quarter versus a negative 1.4 percent in the year-earlier period. For the full year, it was 0.2 percent compared with 0.5 percent in 2006.
Operating income swung to a profit of $1.8 million in the quarter from an operating loss of $7 million a year ago. For the year, Kaiser's operating loss widened to $11.5 million from $8.2 million.
Net investment income fell 31.7 percent in the quarter to $2.8 million from $4.1 million but rose 2.4 percent for the year to $13 million from $12.7 million.