Kaiser income rebounds despite IT problems

Kaiser Permanente, Oakland, Calif., said its net income rebounded 30% in 2006 as it worked to rein in fast-rising operating costs. The nation’s second-largest not-for-profit HMO earned $1.3 billion last year, up from $1 billion in 2005, when its net income sunk 38% due to higher operating costs and larger investments in ongoing capital improvement projects. Revenue rose 11% to $24.4 billion as enrollment climbed 2.5% to 8.7 million members. The company’s operating margin rose slightly to 2.8% from 2.6%. Its capital spending increased 12% to $2.8 billion. In the fourth quarter alone, Kaiser posted net income of $215 million on revenue of $8.7 billion, swinging from a loss of $211 million on revenue of $7.9 billion in 2005. The financial improvements came despite the highly publicized closure of Kaiser’s Northern California kidney-transplant program and problems with its $4 billion information technology system.