Kaiser Permanente Hawaii said payments related to the Affordable Care Act led to losses of $6.5 million in the fourth quarter and $17.4 million for the year.
The state’s largest health maintenance organization — both an insurer and medical provider — said Tuesday it had to transfer $34.9 million to other health insurers because Kaiser had lower-risk patients. Kaiser Chief Financial Officer Thomas Risse said about $30 million of that amount, which covered 2014 and 2015, went to Hawaii Medical Service Association, the state’s largest insurer. The ACA requires that revenue be redeployed depending on how sick or healthy the population is, to discourage insurers from marketing to healthier enrollees.
“We transferred revenue away from Kaiser members, but in a way it’s positive, it has a silver lining, because it does demonstrate that Kaiser is delivering total health and people are healthier with Kaiser,” Risse said.
Kaiser boosted its membership 5.9 percent in 2015 to a record 245,559 from 231,836 in 2014. The HMO said that without the risk-adjustment revenue transfer, it would have ended the year in the black. Kaiser earned $1.4 million in the fourth quarter of 2014 and lost $2.1 million for that year.
“We had a great year,” Risse said. “We had strong growth. We expanded our facilities, and we continue to build access to patient services and electronic services. It was a great year even though the numbers don’t look like it.”
Kaiser’s revenue rose 2.4 percent in the quarter to $312.9 million from $305.7 million and increased 5.6 percent for the year to $1.27 billion from $1.20 billion in 2014. Expenses increased 5.2 percent to $320.1 million from $304.3 million in the quarter and increased 7.1 percent for the year to $1.29 billion from $1.21 billion.
Investment income was $700,000 in the quarter compared with none in the year-earlier period, and $5.1 million in 2015 versus $2.1 million in 2014.
Kaiser had an operating loss of $7.2 million in the quarter compared with a $1.4 million operating gain in the year-earlier period, and a $22.5 million operating loss for the year versus an operating loss of $4.2 million in 2014.
The HMO, which recently opened a clinic on Kauai — its 23rd statewide — is preparing to take over operations on July 1 of three financially struggling Maui County hospitals in the first privatization of Hawaii public hospitals. The deal will save the state — which heavily subsidizes Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital — an estimated $260 million over 10 years.
In a move to streamline operations, Kaiser closed its clinics on Saturdays with this weekend being the first time that they won’t be open for primary-care physician appointments.
Urgent-care appointments continue to be available over the weekend at centrally located facilities on Oahu and Maui, and at contracted providers on Hawaii island.
The Moanalua emergency department is always open, and Kaiser offers 24/7 nurse advice lines.
FOURTH-QUARTER LOSS
$6.5 million
YEAR-EARLIER NET
$1.4 million
