Kaiser Says It Expects 3rd-Quarter Loss

Kaiser Permanente Group will probably report a substantial third-quarter loss because of higher-than-expected medical costs, a company official said. The HMO has already implemented steep price increases for 1999, including an 11% increase for its biggest customer, the California state government, because premiums aren’t high enough to cover the cost of caring for its members. Third-quarter results, which will be released next Friday, could show that Kaiser’s troubles are more serious than previously thought. Last year, the nonprofit company posted a loss of $270 million, its first ever, and chalked up an operating loss of $150 million in the first half of 1998. Much of its losses were caused by a need to direct patients away from Kaiser’s network in California, its largest market, and pay for them to be treated elsewhere. As of the end of June, Oakland-based Kaiser had 9.2 million members, 5.6 million of them in California. Kaiser Permanente also asked Chief Executive David Lawrence to stay in his job for four more years.