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News release: NationalAugust 3, 2005
Kaiser Foundation Health Plan, Inc., and Kaiser Foundation Hospitals Continue Steady Performance Oakland, Calif., – Through the second quarter of 2005, Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries (KFHP/H) report steady financial performance consistent with the same period last year. Operating margin for the period of January 2005 through June 2005 was 5.3 percent, compared with 5.4 percent for the first six months of 2004. Membership showed continued growth reaching more than 8.3 million, up more than 117,000 members for the year to date. “As a nonprofit organization, our operating income is reinvested in serving the health needs of our patients, members and communities," said KFHP/H Chairman and CEO George C. Halvorson. "This continued consistent financial performance will fund long-term capital needs, seismic retrofitting, facility improvements and KP HealthConnect, our new electronic physician-support tool." Prudent spending and sound financial performance enable Kaiser Permanente to deliver better-quality care, greater convenience, and better access and affordability, Halvorson said. Kaiser Permanente also uses its operating revenue to fund wide-ranging community benefit programs aimed at improving the health of the communities it serves through research, community-based health partnerships, direct health coverage for low-income families and collaborations with community clinics, health departments and public hospitals. For the second quarter of 2005 (April through June), Kaiser Permanente’s operating margin was 4.2 percent, down from an operating margin of 6.4 percent in the first quarter of 2005. Operating revenues for the second quarter were $7.7 billion. Net income was $363 million and operating income totaled $323 million. In the second quarter of 2004, Kaiser Permanente’s operating margin was 5.3 percent on operating revenues of $7.0 billion. Net income was $404 million and operating income totaled $366 million. “Historically, first quarter results are strongest, in part, because most rate increases go into effect in January, while cost increases occur throughout the year,” said Kathy Lancaster, senior vice president and chief financial officer. "Operating revenues for the first six months were up 11.2 percent over the same period last year, while operating expenses increased by 11.4 percent,” Lancaster said. For the six months ending June 30, 2005, the operating margin of 5.3 percent was achieved on operating revenues of $15.5 billion. Net income was $915 million and operating income totaled $815 million. For the first six months of 2004, operating revenues totaled $13.9 billion. Net income was $839 million and operating income totaled $756 million. Capital investment for the first six months totaled $926 million, compared to $816 million for the same period last year. "Sufficient margins to meet our capital needs are important as construction costs continue to increase," Lancaster said. Kaiser Permanente has 25 new or expanded hospitals either planned or under construction, including 13 of which are seismic-replacement hospitals required by the state of California. Seven are new hospitals, and five are expansions of existing hospitals to accommodate growth. More than half of the construction projects will be under way by the end of 2006. The total capital project cost for Kaiser Permanente is expected to be in excess of $21 billion through 2012 for hospitals, medical office buildings, other facilities and technology improvements. Implementation of KP HealthConnect, Kaiser Permanente’s state-of-the-art electronic medical record system, is under way and will be fully deployed nationwide over the next three years. This initiative involves the development and deployment of an integrated nationwide information system that combines patient records with best clinical practices, appointments, registration, and business systems. Through this advanced technology, Kaiser Permanente will eliminate inefficiencies and reduce the error rate inherent in paper-based systems. "KP HealthConnect is key to making our members true partners with their physician and the rest of their care team in monitoring, maintaining and improving their health," Halvorson said. "Every major policy leader in health care is promoting the benefits of electronic medical records in improving the quality of care, and Kaiser Permanente is in the forefront of making that a reality." Kaiser Permanente's success in meeting the needs of its members is the result of "its dedicated physicians, nurses, caregivers, technical, administrative and clerical staffs," Halvorson said. "Our labor management partnership is also one of the major factors that set us apart in addressing the health needs of our members and communities." Kaiser Permanente is America’s leading integrated health plan. Founded in 1945, it is a nonprofit; group practice prepayment program with headquarters in Oakland, Calif. Kaiser Permanente serves the health care needs of more than 8.3 million members in 9 states and the District of Columbia. Today it encompasses the nonprofit Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals and their subsidiaries, and the for-profit Permanente Medical Groups. Nationwide, Kaiser Permanente includes approximately 142,000 technical, administrative and clerical employees and caregivers, and more than 12,000 physicians representing all specialties. Except for historical information contained herein, the matters discussed in this media release are forward-looking statements that involve risks and uncertainties. Actual results may vary significantly based on a number of factors including, but not limited to: the impact of competitive products and pricing; government regulations; health care legislation; changing membership requirements, and the change in economic conditions of the various markets the organization serves. # # # |
