Healthcare Business News

Kaiser boosts surplus 25% by cutting spending, and other news

By Modern Healthcare
Posted: August 16, 2014 - 12:01 am ET

Kaiser Permanente, the 32-hospital California-based system that also operates its own health plan, reported a 25% increase in its net surplus during the second quarter of the year as it added new members and scaled back capital spending.

The Oakland-based group improved its operating margin slightly to 4.7% in the quarter, compared with 4.6% in the prior-year period.

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In total, Kaiser reported a $1 billion surplus on $14 billion in revenue in the quarter, compared with an $800 million surplus on $13.3 billion in revenue in the year-ago period. The group has added 386,600 members in the first half of this year on top of the 9.1 million members it reported as of Dec. 31.

Kaiser also has been making investments in its technology and its facilities. For instance, in the second quarter, it completed work on two replacement hospitals that needed to be upgraded to meet California earthquake requirements. San Leandro (Calif.) Medical Center opened on June 3 and Oakland Medical Center opened on July 1.

Yet capital spending slowed to $614 million in the second quarter, down 20.2% from $769 million in the year-ago period. Kaiser did not break out other operating metrics in its earnings release. —Beth Kutscher

Follow Beth Kutscher on Twitter: @MHbkutscher

Arizona deal combines ortho, neurology practices

Two Arizona physician groups have agreed to a business agreement creating one of the most expansive specialty organizations in the state.

Effective Oct. 1, CORE Institute, which bills itself as the largest orthopedic group in Arizona, will employ all providers and employees of the Arizona Neurological Institute, effectively creating a neurological division, said Dr. David Jacofsky, CEO of the CORE Institute. As a result, CORE will have about 80 physicians and 120 other clinicians providing musculoskeletal, neurological and rehabilitation care.

Arizona Neurological said it saw benefits to creating a more comprehensive care path for its patients. “Musculoskeletal care, rehabilitation and the neurosciences are deeply intertwined, and many conditions require the integrated approach of both specialties, making this a natural partnership,” Dr. Atul Syal, president of the Arizona Neurological Institute, said in a news release.

CORE has 12 locations throughout the state. Arizona Neurological has nine. —Bob Herman

Follow Bob Herman on Twitter: @MHbherman

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