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Kaiser Foundation Health Plan And Hospitals Sees Membership Growth And Increases Investments In Integrated Care Delivery

2/16/2006 11:23:41 AM

OAKLAND, Calif., Feb. 16 /PRNewswire/ -- Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries (KFHP/H) reported that total revenue for 2005 increased to $31.1 billion from $28 billion in 2004. Capital spending aimed at enhancing KFHP/H's health care systems, technology, facilities, and health programs and services also increased, growing to $2.5 billion from $2.2 billion in the prior year. The operating margin for the year ended December 31, 2005, was reported at 2.6 percent, compared to an operating margin of 5.3 percent in 2004.

"We are investing our membership dollars to extend and improve our ability to broaden access and provide affordable and quality care," said KFHP/H Chairman and Chief Executive Officer George C. Halvorson. "The health care landscape is changing and we are committed to rounding out our care delivery capabilities and product offerings, and building new facilities and renovating existing ones to satisfy the direct and increasingly complex needs of our members."

Every year, KFHP/H's earnings also fund a variety of community benefit programs to serve communities through research, community-based health partnerships, direct health coverage for low-income families and collaboration with community clinics, health departments and public hospitals.

KFHP/H's membership grew by nearly 208,000 members in 2005, increasing by 2.5 percent from 2004. "We are pleased that more than 8.4 million members in our communities choose us to meet their health care needs," said Halvorson. A broader array of new products contributed to an increase in total membership, which supported the growth in revenue.

While revenue grew last year, continued investment in KFHP/H's care-delivery capabilities, health services and programs, and an increase in operating expenses resulted in net income of $1 billion in 2005, compared to $1.6 billion in 2004. Similarly, the expanded investment in KFHP/H's integrated health care system and higher expenses impacted fourth quarter 2005 results. KFHP/H reported a net loss of $211 million on operating revenues of $7.9 billion in the fourth quarter of 2005, compared to net income of $302 million on operating revenues of $7.1 billion in the same period last year.

"Our strong financial position tempered our fourth quarter results, which include expenses associated with our work to put into place an infrastructure that will lower the cost and improve the quality of care we offer our members in the long term," said Senior Vice President and Chief Financial Officer Kathy Lancaster.

"Providing the best care possible has always been one of our essential goals," added Halvorson. "By making investments in our community benefit programs and state-of-the-art tools like KP HealthConnect, we are promoting a partnership with our members and the communities we live in together to improve health in a sustainable way."

KP HealthConnect is an industry-leading integrated medical record system that combines comprehensive patient records with best clinical practices, appointments, registration, and business systems. KFHP/H is currently in the process of implementing KP HealthConnect nationwide.

"To fulfill our mission, we rely on the dedication and skills of our physicians, nurses and caregivers who are supported by their technical, administrative and clerical team members," added Halvorson. "The strength of our labor management partnership continues to be one of our key competitive advantages."

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.

Kaiser Foundation Health Plan Inc.

CONTACT: Mike Lassiter of Kaiser Foundation Health Plan Inc.,+1-510-271-5953

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