Kaiser Permanente Hawaii reported operating income of $200,000 in the third quarter, but said the profit was the result of a one-time gain on the sale of a property as it continues to cut costs and restructure itself.

Kaiser said it would have had an operating loss of $1.5 million if the sale of land at the Mililani Technology Park were excluded from the results. That compared to a loss of $1.8 million a year earlier.

Kaiser and other healthcare organizations are trying to cope with rising costs as more people increase their use of healthcare services. Last year Kaiser started a program to pare expenses and more recently announced a restructuring plan that includes laying off workers. The nonprofit is restructuring and reviewing where best to use people and resources as it plans for lower increases in Medicare next year and a decline in membership.

The health maintenance organization and insurer reported revenue, including the land sale, rose 2.8 percent to $214.9 million compared with a year earlier.

Expenses climbed about 1.9 percent to $214.7 million.

When $2.7 million of investment income was added, Kaiser's net income totaled $2.9 million in the three months ended Sept. 30.

"Our third-quarter performance was consistent with our expectations as we work to strengthen our organization for a challenging 2007," said Allison Maney, acting Kaiser chief financial officer, in a press statement.

Lynn Kenton, Kaiser spokeswoman, said Kaiser is reaping the benefit from some of its cost-cutting programs, including lowering the number of patients it had to place with non-Kaiser hospitals. It's been able to do that by lowering the number of beds it devotes to long-term care in its Moanalua hospital and increasing the number of acute-care beds.

Other cost-cutting initiatives have included not filling vacant jobs, reviewing vendor contracts and withholding merit pay increases for senior management.

Kaiser, which said last week it would lay off about 45 people to help pare costs, announced yesterday that the number cut will actually be 54. The company has almost 4,800 full- and part-time workers as part of its restructuring plan.

Included in the cuts, the company will eliminate about 15 medical transcription jobs and seven management positions.

Kenton said the transcription work will be taken over by three vendors who also are looking at hiring the laid-off workers. She said other cost cuts under the restructuring program include denying merit-pay increases for 1,200 non-union Kaiser workers in 2007.

Kaiser's results compare with those from the Hawaii Medical Service Association, the largest Hawai'i healthcare insurer, which reported a third-quarter net loss of $7.2 million as operating expenses grew faster than revenue. The loss was the first in more than three years for the insurer.

HMSA said it might have to seek its highest rate increases in three years in 2007 if a spike in healthcare service expenses continues.

Kenton said Kaiser already has set a 3.75 percent increase for 2007 and that it is beginning to study whether an increase will be needed for 2008.

The vacant land that was sold had been slated for a building housing Kaiser's non-member administrative services, Kenton said.

Those plans have changed and the workers are now in other Kaiser offices, she said.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.