Kaiser Permanente Hawaii continued its losing streak in the second quarter, attributing an $820,000 loss to reinvestments in its facilities as well as expenses associated with implementing the federal health reform law known as Obamacare.
The state’s largest health maintenance organization posted a loss of $200,000 in the year-earlier quarter.
In the first quarter of this year, Kaiser lost about $600,000, bringing year-to-date losses to about $1.4 million.
"As a nonprofit health plan we continue to reinvest premiums to care for our members and the communities we serve," Kaiser spokeswoman Laura Lott said in an email.
A rehabilitation specialty center will open on Maui in September, and new clinics at Pearlridge Center and in Kaneohe will start seeing patients in October. Kaiser’s 40,000-square-foot Kona campus is scheduled to be completed by mid-2014, and the HMO completed a $140 million expansion of the Moanalua Medical Center’s mauka tower earlier this year.
Kaiser generated $285.6 million in revenue and spent $287.6 million in the quarter ended June 30. Administrative expenses totaled $13.5 million. A nearly $2 million operating loss was offset by investment income of $1.2 million, bringing the bottom-line loss to $820,681. Kaiser listed capital and surplus at the end of the quarter at $103 million.
"Nationally health care cost trends are averaging about 4 percent (increase per year). Our most recent financial filing shows we are tracking at less than half that," Lott said. "We are listening to our customers and responding with disciplined resource management and creative solutions and ideas to deliver the best comprehensive care in the most effective way. As we maintain our focus on leading the industry in quality, we are also taking up the challenge of providing that high-quality care more affordably."
By comparison, the company collected $281.8 million in revenue in the second quarter of 2012 and spent $283 million on medical expenses, resulting in an operating loss of $1.2 million. Net investment income of $1 million reduced the bottom-line loss to $200,000, or 0.1 percent of revenue.
Kaiser’s membership of roughly 222,000 has fallen by about 4,000 from a year ago, which has hurt the company’s financial performance, said Gary Lee, a Honolulu-based principal with Mercer, a human resources and benefit plan consultant.
"In order to balance out the aging Kaiser membership, they need to attract and enroll younger, healthier Kaiser members," he said.
"And to do that, the goal should be increasing membership 5 percent per year, year-over-year. They’ve never achieved that goal in the last 10 or 15 years. That’s the underlying problem to which you add reinvestment in facilities and Obamacare. It’s their lack of enrollment."
