Health Plan :: Kaiser Foundation Health Plan revenue, profit up in 2006

Kaiser Foundation Health Plan Inc., Kaiser Foundation Hospitals and their subsidiaries (KFHP/H) reported that total revenue for 2006 increased to $34.4 billion from $31.1 billion in 2005.

Net income for 2006 was more than $1.3 billion, compared to $1.0 billion in 2005. The operating margin for the year ended December 31, 2006, was reported at 2.8 percent, compared to an operating margin of 2.6 percent in 2005. Capital spending aimed at enhancing KFHP/H’s health care systems, technology, facilities, and health programs and services also increased, growing to $2.8 billion from $2.5 billion in the prior year. KFHP/H’s total membership of 8,658,288 also grew by 213,000 members in 2006.

“We continue to make investments to enhance access, affordability and quality of care. Our new product offerings have contributed to an increase in total membership, and we have made progress in reducing the overall cost trend, which is vital to ensure that we offer long-term, sustainable value for our members,” said KFHP/H Chairman and Chief Executive Officer George C. Halvorson. “We are on our way to completing the largest civilian deployment of an electronic health record in the world, and constructing new hospitals and clinics to meet the growing demand for our services. When you put it all together, Kaiser Permanente is well positioned to meet the challenges facing health care.”

In addition to implementing KP HealthConnect(TM), an industry-leading integrated medical record system that combines comprehensive patient records with best clinical practices, appointments, registration, and business systems, KFHP/H continues making significant investments in facilities and medical equipment to better serve its members. These investments include renovations, new facilities, and seismic retrofitting to meet California state seismic regulations.

KFHP/H’s earnings also funded approximately $800 million in 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.

“This will be a challenging year for all of health care,” said Senior Vice President and Chief Financial Officer Kathy Lancaster. “Medicare reimbursement will grow at a slower rate as changes to the Medicare Advantage program take effect. However, our progress in reducing our overall cost trend now puts us in a stronger position to meet this and other challenges, while continuing to invest in our infrastructure.”

“We are able to serve our mission because of the combined talents and devotion of our physicians, nurses, caregivers, technical, administrative and clerical teams,” said Halvorson. “This work is bolstered by our successful labor management partnership.”

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.


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