Executive Summary: Health Maintenance Organizations

Last year was a volatile time for the region's largest HMOs. While perennial leader Kaiser Permanente remained in the top spot, just two of the remaining 14 companies held their positions from 2000. Some notable departures include Maxicare and Tower Health, each of which filed for bankruptcy last year after holding the No. 10 and No. 11 positions, respectively, in 2000. Other companies hurt by substantial losses in enrollment were PacifiCare of California (down 35 percent) and Blue Shield of California HMO (down 22 percent).

Meanwhile, notable enrollment increases were seen by Woodland Hills-based Health Net and Aetna U.S. Healthcare of California Inc., whose Southern California membership totals jumped by 66 percent and 75 percent, respectively.

Overall, 9.6 million Southern Californians were enrolled in the county's 10 largest HMOs in 2001, up 5 percent from the prior year.

Danny King

The Pacesetter

Kaiser Permanente

Kaiser Permanente continued atop the list of the local HMO industry by posting steady increases in both patient enrollment and physician figures last year. At over 3 million members, Kaiser has more than double the enrollment of Southern California's second largest HMO, Thousand Oaks-based Blue Cross of California.

The improvement locally is consistent with the performance of its Oakland-based parent, Kaiser Foundation Health Plan Inc., which reported net income of $198 million for the third quarter ended Oct. 31, up from $180 million in the like period a year ago. Third quarter revenues were $4.9 billion vs. $4.4 billion.

"We are a very stable organization," said Kaiser Permanente spokesman Jim Anderson. "We try to be careful in spending the money members provide us in as wise a fashion as possible."

Anderson added that the company's non-profit status helps in an industry faced with rising costs. "We don't have shareholders to pay, and we don't have dividends to come up with," said Anderson. "Those are things that help us focus on health care."

Danny King

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