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The Honolulu Advertiser
Posted on: Tuesday, August 16, 2005

Operating costs lead to quarterly loss for Kaiser Hawaii

Advertiser Staff

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The Hawai'i unit of the Kaiser Foundation Health Plan reported a net loss during the second quarter, reversing a gain of a year earlier. Revenue and investment income for the nonprofit health maintenance organization were higher, but increasing operating expenses put Kaiser Hawaii in the red.

SECOND QUARTER RESULTS

Operating revenue: $207.7 million, up 6% from a year ago

Operating expenses: $209.3 million, up 8 percent from a year ago

Operating loss: $1.6 million vs. a $1.3 million gain a year ago

Net investment income: $1 million vs. $900,000 a year ago

Net loss: $600,000 vs. a $2.2 million net profit a year ago

First half 2005 net income: $3.3 million vs. $4.8 million a year ago

REASONS

  • Kaiser said it is relying more on internal hospitalization and outside medical services that pushed costs higher.

  • Investments helped offset losses from operations, though the organization said this is not a long-term solution to combat rising expenses.

  • There were no second-quarter expenses related to the recently begun $150 million Moanalua Medical Center expansion, though the four-year project will affect operating expenses in the future.

    WHAT THEY ARE SAYING

    "Our operating expenses have exceeded revenues in the second quarter and we are very concerned. We are looking for opportunities where additional efficiencies are possible and make sense."

    Arnold Matsunobu
    Kaiser Hawaii vice president of finance

    WHAT'S NEXT

    The Moanalua Medical Center expansion, which is planned to include a five-story tower adding 106 private hospital rooms and tripling the size of the emergency department, should significantly reduce outside hospital expenses.

    The HMO plans to review vacant positions to see which can be kept vacant without affecting patient care.

    Kaiser Hawaii's new electronic medical record system, KP HealthConnect, should enhance productivity.