Kaiser Permanente sees Q1 net loss of $961 million
A surge in COVID-19 cases led to a substantial increase in the demand for related care and testing, adding to expenses, Kaiser says.
Photo: Xavier Lorenzo/Getty Images
Due in large part to investment losses, Kaiser Permanente posted a net loss of $961 million during the first quarter of this year, a stark contrast to the net income of $2 billion that was posted in 2021, according to financial data the organization released.
In the category of other income and expense, the quarterly loss totaled $889 million, compared to $1 billion in income in the same period of the prior year.
For the quarter ending March 31, Kaiser reported total operating revenues of $24.2 billion and total operating expenses of $24.3 billion, compared to $23.2 billion and $22.2 billion, respectively, in Q1 2021. There was an operating loss of $0.07 billion, or 0.3% of total operating revenues, for the first quarter of the year compared to operating income of $1.0 billion, or 4.4%, in Q1 2021.
WHAT'S THE IMPACT?
During the first quarter of 2022, a surge in COVID-19 cases – the steepest since the start of the pandemic – led to a substantial increase in the demand for related care and testing, according to the integrated health system based in California. COVID-19 expenses drove an additional $1.4 billion in expenses.
Those expenses, along with the costs of providing care that was deferred earlier in the pandemic, were the primary drivers of additional expenses, the organization said.
In Q1, Kaiser cared for more than 688,000 patients with COVID-19 (including more than 26,000 hospitalized patients), performed 2.5 million COVID-19 diagnostic tests, supplied 1.3 million COVID-19 home tests, and administered 1.4 million vaccine doses. In addition, like the rest of the industry, Kaiser experienced significant increases in labor costs during the first quarter of 2022, compared to the same period last year, and when compared to year-end 2021.
Capital spending in the quarter totaled $872 million, compared to $906 million in Q1 2021. During the first three months of 2022, Kaiser Permanente opened a new, 220,000-square-foot medical facility in Timonium, Maryland, that features 24-hour advanced urgent care and a 24-hour pharmacy, along with an ambulatory surgery center.
Membership as of March 31, 2022, was 12.6 million, reflecting a growth of more than 88,000 members since December 31, Kaiser's internal data showed. Medicaid enrollees accounted for almost 33,000 of Kaiser Permanente's new members.
THE LARGER TREND
Kaiser's net loss comes after a 2021 that saw mixed financial results, with an increase in net income for the year but steep declines in operating income and operating margin. Total operating revenues topped $93 billion in 2021, up from $88 billion in 2020, but total operating expenses also increased from $86.5 billion in 2020 to $92.5 billion in 2021. That led to an operating margin of just $611 million last year, as compared to more than $2 billion the year prior.
Kaiser's operating margin was just 0.7% last year, compared to 2.5% in 2020. The bright spot was net income, which was about $8 million for the year – almost a $2 million increase from 2020. And there were other positive signs: The organization benefited from strong investment performance due to robust financial markets during the year, resulting in total other income and expense of $7.5 billion, compared to $4.1 billion in 2020.
In April of this year, Kaiser pledged $400 million toward economic development and housing. This doubles the nonprofit organization's financial commitment to its Thriving Communities social impact investment fund. The Thriving Communities Fund, which was launched in 2018 with $200 million, is on track to create and preserve 15,000 units of affordable housing by 2025. Doubling the fund, the system said, will allow it to increase that total to preserve 30,000 units by 2030.
Also this year, Kaiser entered into a five-year collaboration for health benefit access and specialty pharmacy services with Evernorth, Cigna Corporation's health services business. The agreement will initially focus on access to Cigna's PPO provider network for Kaiser members who need urgent or emergency care, and are traveling outside of the health system's service areas; and on specialty pharmacy services, with Evernorth president and CEO Eric Palmer calling it "an opportunity to unlock meaningful savings."
Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com
