Dive Brief:
- Nonprofit hospital and health plan operator Kaiser Permanente posted net income of $4.1 billion in 2023 — an almost mirror image of the $4.5 billion net loss it reported in 2022 — on investment gains and reduced administrative costs.
- Operating revenues grew at a quicker clip than expenses in 2023, rising 5.7% year over year to total $100.8 billion. Operating expenses also rose 4% year over year to total $100.5 billion.
- Kaiser’s strong performance was attributed in part to its $3.8 billion in other income for 2023. The company said it enjoyed investment wins that offset 2022 loses as the stock market rebounded in 2023. Last year, investment losses cost the operator $3.2 billion.
Dive Insight:
Kaiser’s financial results reflect a significant improvement from 2022, when the operator was battling labor shortages and the ongoing impacts from the COVID-19 pandemic. Fitch Ratings dubbed 2022 one of the “worst years ever” for nonprofit hospitals as inflationary conditions challenged operating margins.
Kaiser rebounded last year, as revenues increased and Kaiser’s investments improved to offset 2022 losses. The company reported an operating income of $329 million for the year compared to an operating loss of $1.3 billion in 2022.
“By fulfilling our mission, eliminating inefficiencies, and investing in technology, facilities and our communities, we are on a financially sustainable path,” said Kathy Lancaster, executive vice president and CFO of the Oakland, California-based operator, in a Feb. 9 news release.
Capital spending totaled $3.8 billion, compared to $3.5 billion the prior year. Kaiser’s recent developments include its opening of San Diego-based San Marcos Medical Center in August. Kaiser also announced plans to acquire Geisinger Health in April and form Risant Health; the deal is still pending regulatory approval.
While Kaiser’s expenses rose at a slower rate in 2023 compared with 2022 — rising at 4% year over year compared with 4.5% — the nonprofit said it continued to be pressured by high costs of supplies, labor and prescription drugs. Kaiser said it met those challenges by reducing administrative costs and “inefficiencies.” The system reduced headcount in its IT department at the close of 2023, cutting 115 non-union positions.
Health plan membership dipped slightly in 2023 due to economic factors, including slowing job growth. Membership declined by nearly 51,000 members — less than 0.5% of Kaiser’s total 12.5 million members.
Kaiser’s labor relations department had a tumultuous year. Kaiser faced two strikes this year and narrowly averted a third as labor contracts for some of its workers expired.
In October, over 75,000 Kaiser workers represented by the coalitions held a three-day strike, the largest healthcare strike in recent history. The strike culminated in a 20% wage hikes for workers.
