Kaiser Foundation Health Plan
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Kaiser Foundation Health Plan Inc Profit health plan and hospital units said late Friday that third-quarter profits soared to $569 million and profits through the first nine months skyrocketed to $1.6 billion. Those strong results were largely the result of the much-stronger investment climate on Wall Street, especially compared with last year's horrible third-quarter environment. "The big story was the partial recovery of the finanical markets," Tom Meier, a Kaiser senior vice president and corporate treasurer, told the San Francisco Business Times late Friday, noting that from an operational standpoint 2009 so far has been very similar to 2008. Last year, swamped by investment losses, Oakland-based Kaiser lost $706 million in the third quarter on net non-operating income, for a net third-quarter loss of $399 million. Similarly, through the first three quarters of 2008, Kaiser lost $1.1 billion on investments, causing its net income to slump to just $202 million. What a difference a year makes. Friday, Kaiser Foundation Hospitals and subsidiaries said total operating revenue for the quarter ending September 30 jumped about 2.9 percent to $10.5 billion, from $10.2 billion for the year-earlier quarter. Third-quarter operating income, at $336 million, was up 9.4 percent from 2008’s total of $307 million. But non-operating income, which jumped to $233 million in 2009’s third quarter vs. the huge $706 million investment loss in the third quarter of 2008, was the crucial difference. Bottom line for the third quarter: Net income of $569 million in 2009, compared with a nearly $400 million flood of red ink in 2008, amidst some of the worst of the global financial meltdown. For the first three quarters, meanwhile, operating reveue jumped 4.3 percent to $31.6 billion from $30.3 billion a year earlier. Investment income through three quarters chimed in at nearly $250 million -- $248 million to be exact -- far better than 2008's dismal comparable total of $1.1 billion in the red. On the negative side, enrollment dipped by about 63,000 to roughly 8.58 million, and Meier said Kaiser has continuing "concern about high levels of unemployment" next year, especially in California, its primary market. Roughly 75 percent of Kaiser's enrollees reside in the Golden State. As a result, Kaiser is approaching 2010 cautiously, and spent about $100 million less on capital projects through September than it did the prior year, Meier told the Business Times. He said Kaiser has done a good job of controling costs recently, adding that "we're trying to be prudent." George Halvorson, Kaiser's chairman and chief executive officer, stressed that the giant Oakland-based system has opened four new hospitals and 27 new medical office buildings since last fall, and has expanded, renovated or completed seismic retrofits of another nine hospitals. Kaiser's health plan and hospital operations are non-profit. Its Permanente Medical Groups are for-profit partnerships.