Kaiser discloses
$10.8 million profitBetter management of health
services is among factors cited
Hawaii's second-largest health insurer, Kaiser Permanente, reported a 2003 net income of $10.8 million yesterday, a turnaround from losses of $2.8 million in 2002.
Improved management of medical services provided outside Kaiser's local hospital helped the bottom line, officials said.
Kaiser collected $645 million in insurance premiums in 2003. The previous year, Kaiser premiums totaled $579.4 million. Both 2002 and 2003 premium revenues include money collected for patients covered by Medicare and Medicaid.
Kaiser got a $2 million boost in net income from accounting changes required when the state began regulating health insurers in January 2003, said Arnold Matsunobu, vice president of finance.
There were also significantly fewer patients who received care or who had long hospital stays outside the Kaiser system in 2003. A larger number of members receiving care at facilities outside its Moanalua hospital had been a significant contributor to losses incurred in 2002, the company said. Improved investment performance also helped the bottom line.
The organization also added about 1,500 new members in 2003, Matsunobu said. Kaiser's total membership now stands at about 235,000.
Its major competitor, the Hawaii Medical Service Association, recently reported net income of $47 million for 2003 after losing $41 million in 2002. HMSA has more than 677,000 members.
Both companies have asked the state Insurance Division to grant rate increases this year. HMSA was previously granted a 9.6 percent rate increase effective July 1. Kaiser is still waiting for a decision on its request for a 14.5 percent increase that would be retroactive to Jan. 1.
Matsunobu said he was pleased with Kaiser's 2003 financial performance, especially in light of rising costs.
Kaiser spent $708.2 million to cover health-care costs last year, up 12.6 percent from the $629 million it incurred for medical and hospital expenses in 2002. The organization's largest expenses continue to relate to rising hospital and drug costs, funding employee pension obligations and increases in medical malpractice insurance, Matsunobu said.
Kaiser also is converting to an automated medical record system, which will cost about $12 million, he said.
The organization's biggest challenge is to expand access for its members, Matsunobu said.
The company announced plans in 2002 to launch a $200 million construction and renovation plan, now under way, to meet increased member demand. Kaiser operates its Moanalua Medical Center and 16 clinics on Oahu, Maui and the Big Island. It recently announced plans to discontinue medical care contracts covering a small group of Kauai members at the end of the year.