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Profit for Kaiser Triples After Premium Increase

Health: Largest nonprofit HMO says leaving Northeast also helped first-quarter results.

May 02, 2000|From Bloomberg News

Kaiser Permanente said Monday that first-quarter profit from operations almost tripled as the largest not-for-profit health maintenance organization raised premiums and left the unprofitable Northeastern region.

The company said profit rose to $167 million, from $56 million in the year-earlier quarter. Operating revenue rose to $4.3 billion, from $4.2 billion a year before, Kaiser said.

"These results are evidence that our strategies for operational improvement are taking effect and generating needed financial performance," Kaiser President Dale Crandall said.

Separately, Cigna Corp. said first-quarter profit rose 16% as the third-largest U.S. health insurer signed up more people for its health plans.

Cigna said profit from continuing operations rose to $265 million, or $1.57 a share, from $229 million, or $1.10 a share, in the year-earlier period. The results beat expectations of $1.46 a share.

Revenue from continuing operations rose to $4.9 billion, from $4.5 billion a year before. The company said it raised premiums about 9% on average during the quarter.

Kaiser, based in Oakland, had a $311-million profit in 1999, after two years of losses. Kaiser HMO membership fell by 200,000 during the first quarter to 8.1 million.

The company said it boosted its revenue as it raised premiums by an average of 10% for this year. Still, pharmaceutical and other health costs "continue to increase significantly throughout the U.S.," the company said.

Kaiser lost money in the mid-Atlantic region--Maryland, Virginia and the District of Columbia. First-quarter operating losses in the region were $1.7 million.

Last year the company pulled out of upstate New York, Massachusetts, Vermont, Connecticut and North Carolina, where money-losing operations were hurting its overall financial performance.

"We've done all the divestiture we need to do," said Kaiser spokeswoman Beverly Hayon.

Kaiser's California division, which has three-quarters of its members, added 52,000 customers and posted operating income of $164 million.

Overall, the company had net income of $142 million in the first quarter, compared with $61 million in the year-earlier quarter.

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