OAKLAND, Calif., March 7 /PRNewswire/ -- Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries (KFHP/H) achieved an operating margin of 5.3 percent for 2004 on total revenue of $28 billion.
“Our improved operating margin made possible increased internal investments in health care facilities, care systems, technology, and programs and services to better the health of Kaiser Permanente members and the communities in which they live,” said George Halvorson, KFHP/H chairman and CEO. “We spent slightly more than 7.7 percent of our revenue, or almost $2.2 billion, in capital investments to improve capacity and care. In addition, we have invested $825 million in community benefit programs to meet community health needs.”
“As a nonprofit organization, our sound financial performance directly benefits our members and patients through increased investment in the equipment, facilities, quality, convenience, and services they receive to maximize their care and health at every stage of their lives,” Halvorson said. “Our financial results also enabled Kaiser Permanente to make one of the largest contributions in America to community benefit programs aimed at raising the health of the communities we serve through research, community- based health partnerships, direct health coverage for low-income families and collaborations with community clinics, health departments and public hospitals.”
In 2004, KFHP/H provided $825 million in community benefit funding. The hospital portion of the organization provided $421 million in community benefit funding and the health plan portion provided $404 million. In total, that was an increase of $184 million, up from $641 million in 2003.
“New initiatives and new community partnerships are directly addressing some of the most pressing health problems of our times, including nutrition, physical activity, obesity and racial and ethnic disparities in health care,” Halvorson said. (A full report on 2003 and 2004 community benefit programs is available from Kaiser Permanente.)
Capital spending in 2004 increased by 30 percent to almost $2.2 billion. That expenditure includes facility renovation, seismic rehabilitation, care delivery expansion into new communities, and continued development and implementation of KP HealthConnect, Kaiser Permanente’s state-of-the-art electronic medical record system.
“KP HealthConnect promises to bring a new level of health care that enables the patient to become a true partner with the physician and rest of the care team in monitoring, maintaining and improving their health,” Halvorson said. “The new state-of-the-art electronic medical record is essential to improving care quality and ensuring everyone receives the level and type of care they need to thrive. Every major policy leader in health care is promoting that agenda, and Kaiser Permanente is leading the way in making it real.”
For the year ended December 31, 2004, net income was $1.611 billion and operating income was $1.474 billion on operating revenues of $28.0 billion, resulting in an operating margin of 5.3 percent. That compares to a restated operating margin of 4.0 percent for the year 2003 based on net income of $1.010 billion and operating income of $1.018 billion on revenues of $25.3 billion. (See footnote)
Membership rose by more than 20,000 in 2004 to more than 8.23 million.
“The improved financial performance in 2004 was driven by rate adjustments, operating efficiencies and unanticipated adjustments that included pension and post-retirement costs, workers’ compensation and professional and public liability expenses,” said Kathy Lancaster, senior vice president of strategic planning and acting chief financial officer.
“The health care market place continues to offer major challenges that can shift from year to year,” Lancaster said. “We need to continue to make prudent financial decisions that allow Kaiser Permanente to generate sufficient funds to make critical investments needed to support the health of our members and communities.”
Kaiser Permanente’s success, Halvorson said, “is the result of the talent, dedication and commitment of our physicians, nurses, caregivers, technical, administrative and clerical staffs. Our labor management partnership is one of the major factors that sets us apart in catering to the health needs of our members and the communities we serve.”
In the fourth quarter of 2004, KFHP/H reported an operating margin of 3.8 percent based on net income of $313 million and operating income of $272 million on operating revenues of almost $7.1 billion. That compared to a restated operating margin of 2.3 percent for the fourth quarter of 2003 based on net income of $157 million and operating income of $146 million on revenues of $6.4 billion. (See footnote)
Footnote: The 2003 financial statements previously reported have been restated. Management has corrected the accounting for certain medical services contractual arrangements originally executed in 1998. As a result, the 2003 amounts for net income and operating income have been restated by $14 million (increased) and $20 million (increased), respectively. Net worth of as of December 31, 2003 has been restated by $122 million (reduced) from $8.263 billion to $8.141 billion. Net worth as of the beginning of 2003 has been restated by $136 million (reduced) from $6.301 billion to $6.165 billion. The 2003 fourth quarter amounts for net income and operating income have been restated by $3 million (increased) and $5 million (increased), respectively.
Kaiser Permanente is America’s leading integrated health plan. Founded in 1945, it is a nonprofit, group practice prepayment program with headquarters in Oakland, California. Kaiser Permanente serves the health care needs of 8.2 million members in 9 states and the District of Columbia. Today it encompasses the nonprofit Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals and their subsidiaries, and the for-profit Permanente Medical Groups. Nationwide, Kaiser Permanente includes approximately 140,000 technical, administrative and clerical employees and caregivers, and more than 11,000 physicians representing all specialties.
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 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.
http://www.kaiserpermanente.org/
Kaiser Permanente
CONTACT: Mike Lassiter of Kaiser Permanente, +1-510-271-5953 orMike.Lassiter@kp.org
Web site: http://www.kaiserpermanente.org/