Press Releases: National
July 31, 2002
Positive 2nd Quarter results will help Kaiser Permanente meet expected financial challenges
Not-for-profit shows second quarter operating income of $168 million
OAKLAND, Calif. – Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals, and their subsidiaries (KFHP/H), reported net income of $161 million and operating income of $168 million on operating revenues of $5.5 billion for the second quarter of 2002. By comparison, in the second quarter of 2001, KFHP/H posted net income of $140 million and operating income of $113 million on operating revenues of $4.9 billion.
Through June 30, 2002, KFHP/H reported net income of $458 million and operating income of $456 million on operating revenues of $11 billion. This compares to net income of $296 million and operating income of $298 million on operating revenues of $9.7 billion during the same period in 2001.
Membership as of June 30, 2002, is more than 8.3 million, an increase of 200,000 members from a year ago.
Among the continuing cost trends affecting second quarter results are higher compensation and outside hospital and medical costs.
Major construction projects are underway to provide more capacity. In addition, there is a significant need for seismic and technology upgrades. Seismic issues will result in the replacement of at least six medical centers, such as the $428 million rebuilding of the Kaiser Permanente Los Angeles Medical Center, a key facility for Southern California members. Nationwide there are more than 40 medical office construction projects underway to meet members' needs. These and other capital projects will cost the organization approximately $1.3 billion in 2002.
"This is an exciting and challenging time for Kaiser Permanente. If we are going to continue achieving the very best results as a health care system, our doctors need the best in technology to support their outstanding medical practices," said George Halvorson, chairman and CEO, KFHP/H. "We also need to build new hospitals and medical offices, recruit and train thousands of nurses and other health professionals, and continue to manage the costs of pharmaceuticals and other medical technologies. We must do all of this and still maintain an affordable price for our members and purchasers."
KFHP is America's largest not-for-profit health plan. Founded more than 55 years ago, with headquarters in Oakland, California, KFHP serves the health care needs of 8.3 million members, primarily on a prepayment basis. Kaiser Permanente is the trade name for the organizations that comprise the Kaiser Permanente Medical Care Program. These organizations consist of Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, their subsidiaries, and the Permanente Medical Groups, independent physician group practices that contract with KFHP and its health plan subsidiaries to provide or arrange medical services for KFHP members. Nationwide, Kaiser Permanente includes about 126,000 technical, administrative, and clerical employees and about 11,000 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; litigation; changing membership requirements; and the change in economic conditions of the various markets the organization serves.
About Kaiser Permanente
Kaiser Permanente is committed to helping shape the future of health care. We are recognized as one of America’s leading health care providers and not-for-profit health plans. Founded in 1945, our mission is to provide high-quality, affordable health care services and to improve the health of our members and the communities we serve. We currently serve 8.6 million members in nine states and the District of Columbia. Care for members and patients is focused on their total health and guided by their personal physicians, specialists and team of caregivers. Our expert and caring medical teams are empowered and supported by industry-leading technology advances and tools for health promotion, disease prevention, state-of-the art care delivery and world-class chronic disease management. Kaiser Permanente is dedicated to care innovations, clinical research, health education and the support of community health. For more information, go to: www.kp.org/newscenter.
