Kaiser's profits up 22% in 2nd quarter

By Deborah Adamson
Advertiser Staff Writer

Kaiser Foundation Health Plan reported a 22 percent increase in profits for the second quarter, even as it's asking the state to approve a rate hike in 2005.

The state's second largest healthcare company earned $2.2 million in the quarter compared with $1.8 million a year ago. Revenues rose to $196.1 million from $173.9 million in 2003.

Expenses in the quarter totaled $193.9 million, or 98.88 percent of revenue. In the same quarter last year, expenses came to $172.1 million or 98.96 percent of revenue.

The quarter saw fewer expensive procedures, while a drop in outside services also reduced costs. Kaiser pays other providers to render care to its members under certain circumstances.

Kaiser also had reduced pension fund requirements, in part due to changes in federal law, which helped quarterly profits.

"We're pleased to have a positive quarter, however, our performance is due to a reduction in pension funding requirements, as opposed to core operating results," said Arnold Matsunobu, vice president of finance.

Kaiser is awaiting state approval on an 11 percent rate hike for 2005. The increase would affect 210,000 of its 235,000 members next year.

This year, the state approved a rate hike of 11.7 percent for Kaiser. The HMO had asked for a 14.5 percent increase, which would have been its biggest hike since 1989.

In March, Kaiser reported that it had $106 million in reserves.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.