Press Releases: National
April 30, 2004
Kaiser Health Plan and Hospitals record strong first quarter financial results
OAKLAND, Calif. – In the first quarter of 2004, Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries (KFHP/H) continued its strong financial performance, supporting the ongoing investment in new facilities and technologies to better serve the health needs of members and the communities that Kaiser Permanente serves.
"Kaiser Permanente's sound financial performance and prudent spending enables us to continue to provide convenient, quality and affordable health care to our members," said KFHP/H chairman and CEO George Halvorson.
"Being a not-for-profit organization is not about making or losing money; it's about how that money is put back to work," Halvorson said. "As a not-for-profit our operating income is reinvested in serving the health needs of our patients, members and communities."
Halvorson said, "This kind of financial performance will fund long-term capital needs, seismic retrofitting, facility improvements and KP HealthConnect, our new electronic physician support tools. These investments are key to improving the care and health of our members and the communities we serve."
For the quarter ending March 31, 2004, an operating margin of 5.6 percent was achieved on operating revenues of $6.9 billion. Net income was $431 million and operating income totaled $385 million. Membership remained flat, at 8.2 million.
"The first quarter results are traditionally the strongest," said KFHP/H Chief Financial Officer Robert Briggs, "in part because most rate increases go in effect in January while cost increases occur throughout the year. Last year, for example, the first quarter margin was 4.9 percent, while the margin for the year ended at 3.9 percent."
For the first quarter of 2003, operating revenues totaled $6.2 billion. Net operating income was $308 million and net income was $301 million.
In March of this year, Kaiser Permanente was able to benefit from its strong financial position to lower the organization's cost of debt by about $25 million a year.
The reduction was made possible by the early retirement of almost $1.1 billion of relatively expensive debt and replacing it with the sale of $1.6 billion in new tax exempt revenue bonds at a lower interest rate. The savings was realized despite raising the overall level of debt by $500 million.
"While Kaiser Permanente's strategy calls for generating sufficient cash flow to cover long-term building and equipment requirements, financing capital expenditures by using tax-exempt financing enables us to take advantage of very favorable borrowing terms to improve the liquidity and stability of the organization," Briggs said.
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.
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.
