Kaiser Permanente Northwest regional president resigns

From the Portland Business Journal:

by Robin J. Moody

Kaiser Permanente Northwest’s regional president, Cynthia Finter, has resigned amid dramatic income declines at the health plan. The change is effective Aug. 15.

Tricia Peters, vice president of human resources, will serve as acting regional president while a search is conducted to find a permanent replacement.

Kaiser Foundation Health Plan of the Northwest’s net income plummeted 88 percent in the first quarter of 2006, mainly due to botched billings, computer problems and rapid growth. Oregon’s second-largest health plan reported net income of $2.5 million, down $18.7 million from the first quarter of 2005. In 2005, Kaiser’s net income dropped 38 percent compared with 2004, to $37 million.

On the other hand, the health plan brought on 50,140 new members since 2004, including 12,694 members during the first three months of 2006. But the growth prompted higher expenditures in new capacity and technology, and resulted in lower earnings. Kaiser has has 479,142 members in Oregon and Southwest Washington.

Computer glitches cost the health plan several million dollars during the past year, but Oakland-based Kaiser is also troubled with high medical costs and a lack of hospital beds. The health plan’s underwriting gain, a key indictor of success in its core business, dropped 112 percent in the first quarter of 2006, to negative $2.2 million. (Underwriting income is profit from the sale of insurance, after expenses and losses are paid.)

Kaiser launched a computer system to govern billing for its high-deductible health plan and for Medicare enrollees, but halted billing for both products in June 2005 due to a technical glitch. This resulted in loss of income for the health plan, from fee-for-service payments charged to third parties. There are 22,000 members in the high-deductible health plan; Kaiser did not disclose how many Medicare members are affected.

The health plan has incurred the loss for patients unpaid bills during 2005, and will try to recoup unbilled expenses incurred by patients enrolled in the products during 2006.