Kaiser nets
$4.3 million
in quarter

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Kaiser Permanente Hawaii said yesterday that net income nearly doubled in the third quarter as revenue rose 10.5 percent and it paid off outstanding debt.

The state's largest health maintenance organization, which is seeking state approval for an 11 percent rate increase next year, posted earnings of $4.3 million compared with $2.3 million in the third quarter of 2003.

Operating income last quarter rose 30.4 percent to $3 million, a 1.5 percent return on operating revenue of $197.3 million. A year ago, Kaiser's operating income was $2.3 million, a 1.3 percent return on operating revenue of $178.6 million. Operating expenses increased 10.2 percent to $194.3 million from $176.3 million.

Kaiser, a nonprofit organization, attributed last quarter's $1.3 million difference between net and operating income to no longer carrying a debt balance and earning interest off the money previously earmarked for those payments.

"We're pleased to have another positive quarter, however our operations remain challenged by the costs for outside services, pharmacy, and clinics," said Arnold Matsunobu, vice president of finance. "We remain concerned about achieving our overall financial targets that are essential to our short- and long-term plans to improve services and keep pace with demand."

Kaiser said two new clinics whose openings were delayed earlier this year are scheduled to open in the next few weeks. The Waipio clinic on Oahu will open Nov. 29 and take the place of Waipahu's Punawai clinic, which will be converted to an administrative facility. The Punawai clinic will close Nov. 24. The Maui Lani clinic on Maui will open Dec. 6 and will be Kaiser's 17th clinic in the state.

"We are delighted to be able to open both clinics this year in light of our continued challenges with the budget," said Jan Head, regional president for Kaiser. "Our members and staff have been patiently doing their best to cope with health care delivery under less-than-ideal conditions."

Kaiser Permanente Hawaii, which has 233,000 members, said the two new clinics won't have the full scope of services and hours of operation originally planned due to the uncertainty of the rate filing it submitted in July. Among those areas affected are the pharmacy, which was due to have extended hours; the urgent care clinic; and the on-site lab.

"We'll make final decisions when we have an operational budget based on our new 2005 rates," Head said.

Last year, Kaiser submitted a rate increase of 14.7 percent for 2004 that was reduced to 11.7 percent earlier this year by the Insurance Division and had to be applied retroactively. Kaiser filed its 2005 request with the Insurance Division about a month and a half earlier this year to get a response by the end of 2004. However, state Insurance Commissioner J.P. Schmidt has yet to make a decision and has requested more information from Kaiser. Schmidt said he hopes to have a decision before the end of the year.

Earlier this month, Kaiser announced it received approval from the state Health Planning and Development Agency for a $68.45 million renovation and expansion of the Moanalua Medical Center that will mark the first major improvement to the facility since it was built 20 years ago. Kaiser said that all Moanalua outpatient services eventually will be moved to Mapunapuna's Ceridian Building, which Kaiser bought in 2002.