Kaiser net falls 4.2%
The health plan earned
$2.3 million in the quarter
Kaiser Foundation Health Plan reported a gain of $2.3 million for the third quarter, a drop of 4.2 percent from the $2.4 million in net income it reported for the same period a year ago.
Kaiser's third quarter revenues of $178.5 million were an improvement on the $160.3 million in revenues generated in the third quarter of 2002. But expenses also rose, to $176.2 million from $157.9 million a year ago.
The medical and hospital component of the organization's expenses for the quarter totaled $172.3 million.
Kaiser president Jan Head said she was pleased with the results given the financial challenges the organization faces.
"Given our need to keep up with rising health care costs and continue to invest in facilities and services that benefit our members, I am pleased that we continue to have positive results," she said.
Arnold Matsunobu, vice president of finance, said the organization had made better use of existing hospital resources and also had done a better job controlling outside medical costs.
Matsunobu noted that early in 2002, Kaiser has some extremely high-cost outside medical cases. That has not been the case this year, he said.
"We've been able to maintain beds and accommodate members rather than have to send them out. That's been a key factor," he said.
Last year, Kaiser lost more than $2.8 million overall on its health plan operations.
In September, the organization asked the state Insurance Division to grant a 14.5 percent rate increase. If approved, the increase would take effect Jan. 1. Kaiser is still waiting to hear if the increase will be granted.
Matsunobu said the increase is needed.
"The primary reason for the hefty rate increase is two part. There's the construction costs of building the various clinics and hospital renovations, which will increase our capacity, and also the new medical records system. Those two will help our members and improve care," he said.
Kaiser will spend about $200 million in the next few years on construction of new facilities and renovations of existing facilities. It also plans to institute an automated medical records system next year that will cost $12 million.
Matsunobu said he is optimistic about the organization's financial performance for the remainder of the year.
"I'm crossing my fingers it continues the way it has been going for the rest of the year," he said.
Kaiser's major competitor, Hawaii Medical Service Association, reported an 117 percent jump in quarterly earnings yesterday, with a $9.1 million profit in the third quarter, compared to $4.2 million in the same period the year prior.
Kaiser has 235,000 members statewide and is the state's largest health maintenance organization. It operates 16 outpatient clinics on Oahu, Maui and the Big Island and contracts with Kauai Medial Group to provide care for its Kauai members. The company has 350 physicians and 4,000 employees.
