News and Commentary

Kaiser seen as biggest earner as HMO profits soared in 2003














The good times rolled on for the nation's HMOs in 2003, according to Weiss Ratings. The industry nearly doubled its profits, earning $10.2 billion, an 86 percent increase from the $5.5 billion it earned in 2002.

Kaiser Foundation Health Plan was the big winner, reporting a $1.1 billion increase in earnings. That is about one-fifth of the industry's net profit improvement.

Kaiser's increase "is a result of regulatory changes that required the company to consolidate its year-end financial statements for all entities owned, including hospitals and provider groups," says Weiss.

Of course, not all players in health care can be expected to celebrate HMOs' good fortune. "The industry's soaring profits continue to irk both consumers and businesses who are shouldering skyrocketing health care costs without any perceived improvements in benefits," says Melissa Gannon, Weiss vice president. "We may soon see the next wave of consumer backlash forcing HMOs to evolve their cost structures."

Five biggest HMO earners (in millions of dollars)

SOURCE: WEISS RATINGS

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