January 1, 1998

Kaiser announces increase in premiums

Kaiser Permanente is planning to increase premiums about 4 percent increase this year, says Mike Ferm, sales director for the Rocky Mountain Division of Kaiser Permanente.

“Rates have been artificially held down for the past three years because of the competition. Other HMOs are raising premiums next year, too, from about 4 to 8 percent on average. Some more, some less.”

“Kaiser lost about $4.4 million in the first half of 1997,” says Ferm, “due to higher expenses and increased utilization.”

Colorado was No. 2 in the country for flu epidemics, adds Mike Alexander, Kaiser Permanente vice president and executive director for the Denver/Boulder market. All managed care had a tough winter with three waves of flu. Many of the state’s managed-care companies lost money.

“We’re not going to make our forecast for 1997,” says Ferm.

Alexander adds, “But we will still make about $8 million to $10 million for the year.” The corporation plans to achieve the turnaround with increased cost containment, redesigned efficiencies and added automation.

Kaiser Permanente is a non-profit corporation. Alexander says its revenues are used to pay off building debt, buy new equipment, and add benefits without increasing premiums.

Many other HMOs have moved to for-profit status.

“The pressure from Wall Street is enormous for them,” adds Ferm.

Alexander adds, “Because there are 19 competitors in Boulder County, we’re not growing as quickly as we used to. But new HMOs give consumers the chance to make choices.”

Still, Kaiser reports the Denver/Boulder marketplace will grow by about 13,000 subscribers to total 337,000 at year end.

Turnover of subscribers is a concern.

“It’s a fickle market,” says Alexander. “The No. 1 reason for voluntary turnover is cost. And HMO Colorado has had rates that were below the marketplace. Although Kaiser is still the largest HMO in Boulder County, HMO Colorado has grown significantly in 1997 and is now the largest HMO in Colorado. They’re our biggest competitor.”

Kaiser Permanente is planning to increase premiums about 4 percent increase this year, says Mike Ferm, sales director for the Rocky Mountain Division of Kaiser Permanente.

“Rates have been artificially held down for the past three years because of the competition. Other HMOs are raising premiums next year, too, from about 4 to 8 percent on average. Some more, some less.”

“Kaiser lost about $4.4 million in the first half of 1997,” says Ferm, “due to higher expenses and increased utilization.”

Colorado was No. 2 in…

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