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Kaiser Foundation Health Plan and Hospitals Report Third Quarter Results

Posted on: Tuesday, 4 November 2008, 21:00 CST

OAKLAND, Calif., Nov. 4 /PRNewswire/ -- Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals and their subsidiaries (KFHP/H) reported total operating revenue of $10.2 billion for the quarter ended September 30, 2008, compared to $9.4 billion in the same period last year.

KFHP/H's operating income in the third quarter was $307 million, compared to $449 million in the same quarter last year. Financial market volatility impacted KFHP/H's investment portfolio in the third quarter, resulting in a net non-operating loss of $706 million versus net non-operating income of $205 million in the same quarter last year. As a result, net income in the third quarter declined, resulting in a loss of $399 million versus net income of $654 million in the same period last year. The current economic environment, particularly declining employment, contributed to a slight enrollment loss for the quarter. Total membership, as of the end of the third quarter, was more than 8.6 million members.

Capital spending was $682 million in the quarter ended September 30, 2008, increasing slightly from $641 million in the same quarter last year. KFHP/H opened or expanded four new medical office buildings in Southern California in the third quarter of this year to meet the expanding needs of our members.

"We are pleased with our positive operating results, given the deteriorating U.S. economic environment," said Executive Vice President and Chief Financial Officer Kathy Lancaster. "Like other investors, however, we have not been immune to the extraordinary volatility in the financial markets and are monitoring market developments closely. Our balance sheet and cash position remain solid despite these challenges, and our operating performance allows us to make prudent investments that enhance and expand our health care programs, services and infrastructure."

Total operating revenue for the nine months ended September 30, 2008, was $30.3 billion, increasing from $28.2 billion in the same nine-month period last year. Year-to-date operating income was nearly $1.4 billion, compared to nearly $1.8 billion in the same nine-month period last year when a reduction in reserves for professional liability and workers' compensation contributed to the difference in the year-to-date results. Financial market turbulence in the first nine months of 2008 resulted in a net non-operating loss of approximately $1.1 billion, compared to net non-operating income of $630 million in the same nine-month period last year. Net income for the first nine months of this year was $202 million, compared to net income of $2.5 billion in 2007. Year-to-date capital spending was approximately $1.8 billion, on par with the same nine-month period last year.

"Though the unprecedented events unfolding in our economy and financial markets are posing challenges to our organization, our basic business and our integrated care delivery model remain strong," said Chairman and Chief Executive Officer George Halvorson. "We continue to pursue the strategic direction that has helped us achieve a solid financial footing during the past several years. From building state-of-the-art facilities to leading the technological revolution in health care to delivering high-quality care, service and education to our members and communities at an affordable cost, our people are focused on delivering total health -- and not just health care by the piece."

As a not-for-profit organization, KFHP/H also uses its earnings to support a wide range of community benefit programs, which provide direct health care coverage for uninsured families and support community-based health partnerships, and research and collaboration with community health organizations. In the third quarter of this year, a portion of KFHP/H's community benefit activities included the approval of more than 490 community benefit grants and donations. In 2007, KFHP/H provided more than $1 billion to support community benefit programs and services.

A leader in integrating technology in the delivery of health care, KFHP/H continues to expand its electronic health record system KP HealthConnect(TM). All Kaiser Permanente members can now securely access their personal health records online and communicate with their Kaiser Permanente physicians through My Health Manager on kp.org. Approximately 2.3 million registered members accessed My Health Manager 11.5 million times in the third quarter to make decisions about how they choose and receive their care. In the same period, members sent more than 1.5 million secure messages to Kaiser Permanente physicians and clinicians. Members also refilled nearly 1.5 million online prescriptions through kp.org in the three months ended September 30, 2008.

Kaiser Permanente is providing members unprecedented access to their physicians so that they can make the best health care choices with improved quality, service and safety. "One of our goals is to become the recognized world leader in electronic connectivity in health care," said Halvorson. "We believe that the electronic tools we offer our members empower them to make informed care choices for themselves and their families. More than 10,000 members connect electronically with their Kaiser Permanente physicians every day. That number is up 70 percent from a year ago."

About Kaiser Permanente

Kaiser Permanente is America's leading integrated health care delivery system. Founded in 1945, it is a group practice prepayment program headquartered in Oakland, California. Kaiser Permanente serves the health care needs of more than 8.6 million members in nine states and the District of Columbia. It encompasses the not-for-profit Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals and their subsidiaries, and the for-profit Permanente Medical Groups. Nationwide, Kaiser Permanente includes approximately 165,000 technical, administrative and clerical employees and caregivers, and more than 14,000 physicians representing all specialties. The system's Labor Management Partnership is the largest health care labor-management partnership in the United States. It governs how workers, managers, physicians and dentists work together to make Kaiser Permanente the best place to receive care, and the best place to work. For more Kaiser Permanente news, visit the KP News Center at: http://www.kp.org/newscenter.

Except for historical information contained herein, the statements in this release may contain forward-looking statements. Forward-looking statements include, among other things, statements that refer to plans and expectations such as future events and future financial performance. Forward-looking statements involve a number of risks and uncertainties. Actual results may differ materially from those expressed or implied by the statements herein based on a number of factors including, but not limited to: the impact of competitor products and pricing; government regulations; health care legislation; changing membership requirements; and the change in economic conditions of the various markets the system serves.

http://www.kaiserpermanente.org/

Kaiser Permanente

CONTACT: Susannah Patton of Kaiser Permanente, +1-510-271-5826,Susannah.F.Patton@kp.org

Web site: http://www.kaiserpermanente.org/

Source: PRNewswire

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