Kaiser Permanente Expects Profit in ’99

Kaiser Permanente, the No. 1 U.S. health maintenance organization, expects to return to profitability this year as cost-cutting and premium increases help it end two years of losses. The HMO is looking to post an operating profit margin of about 2% this year as premiums rise an average of about 9.5% from 1998, while costs are projected to increase by 5% to 6%, Kaiser Chief Executive David Lawrence said. Nonprofit Kaiser posted its first-ever loss in 1997, losing $266 million as it failed to keep premiums in line with rising medical costs while membership soared. While the HMO is likely to report a similar loss for 1998, it should be profitable this year thanks to implementation of a turnaround plan, Lawrence said.