Nov. 6--Kaiser Foundation Health Plan and Hospitals muscled up to produce improved income and revenue for its third quarter -- but the health care titan also said membership dwindled in a brutal economy.

Oakland-based Kaiser generated net income of $569 million, which reversed a year-ago third-quarter loss of $399 million.

Kaiser's operating revenues totaled $10.5 billion in the third quarter, which was 2.9 percent higher than the $10.2 billion in revenue a year ago.

"We are pleased with our performance," said Kathy Lancaster, Kaiser's chief financial officer. Nevertheless, Lancaster added, "We continue to focus on making our high-quality care and service as affordable as possible, which is especially important to our customers and members in this uncertain environment."

Despite these positive results, a slump in membership haunted the health care giant.

Over the first nine months of 2009, membership fell by 63,000 and now totals 8.58 million, Kaiser said. Since the end of 2008, total membership has fallen 0.7 percent.

"While we are seeing some positive activity in the financial markets, uncertainty in the economy and health care industry continues," Lancaster said.

Kaiser has also reduced capital spending by 2.9 percent so far this year. During the first nine months of 2009, the health care company spent $1.7 billion on capital projects, down from $1.8 billion during the same nine months in 2008.

"Since the

third quarter of 2007, we have opened four new hospitals and 27 new medical office buildings," said George Halvorson, Kaiser's chief executive officer. "We have also expanded, renovated or completed seismic retrofits of another nine hospitals."

The dismal economy might loom over Kaiser and its members for some time to come.

"We remain cautious about economic recovery given the continued high rates of unemployment," Lancaster said.

George Avalos can be phoned at 925-977-8477

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