Kaiser Permanente Releases First Quarter FinancialResults for 1999.

OAKLAND, Calif.--(BW HealthWire)--April 30, 1999--

Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries posted net income of $61 million for first quarter 1999.

The result includes a one-time, non-operating charge of $28 million for a change

Income from operations totaled $56 million for the quarter on operating revenues of $4.2 billion, an operating margin of 1.3 percent. This is the first quarter Kaiser has realized a positive operating margin since third quarter 1997.

In first quarter 1998, Kaiser incurred a net loss of $54 million and an operating loss of $106 million on $3.8 billion in operating revenues. These amounts are revised from those previously reported to reflect an adjustment to certain retirement liabilities, and to exclude Group Health Cooperative's financial results. The first quarter 1999 results are presented on a consistent basis with the 1998 annual results, which reflected a net loss of $288 million and an operating loss of $434 million.

"Our first quarter results are encouraging, but a quarter is not a trend," said Dale Crandall, Kaiser's executive vice president and chief financial officer. "We're pleased our financial performance is on plan to date, but we must see continuous improvement in our overall cost management to stay on track for the year."

Rate increases introduced in January helped improve first quarter results, as membership overall grew by about 64,000 members. Higher-than-anticipated membership growth in California was offset by expected membership declines for regions outside California. Membership nationwide remains approximately 8.6 million.

In California, Kaiser posted operating income of $44 million for the first quarter, as compared with the division's first quarter 1998 operating loss of $96 million. A key contributor to improved results was a successful hospital winter planning effort to reduce costs due to seasonally high demand for hospital-based care.

By centrally coordinating bed and staffing availability, the number of instances in which Kaiser patients received care in non-Kaiser hospitals due to capacity issues decreased dramatically -- to 77 patients in December through February 1998-99, from 2,069 patients the winter before. Providing hospital-based care to members in Kaiser's own facilities both improves the quality of the inpatient care experience and reduces its costs, as compared with inpatient care for members in non-Kaiser facilities.

"Everything we do must reflect Kaiser Permanente's long-standing commitment to providing quality health care and community benefit," Crandall said. "By improving operational performance, we improve quality and service, increase member satisfaction, and rebuild the financial resources necessary to sustain and expand our community commitments in the future."

Kaiser Permanente is America's leading integrated health care organization. Founded in 1945, it is a non-profit, group-practice prepayment program with headquarters in Oakland, Calif. Kaiser Permanente serves the health care needs of 8.6 million members in 17 states and the District of Columbia.

Today, it encompasses Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries, and the Permanente Medical Groups. Kaiser Permanente also has an affiliation with Group Health Cooperative, based in Seattle. Nationwide, Kaiser Permanente includes about 90,000 technical, administrative and clerical employees and about 10,000 physicians representing all specialties.