Kaiser financial growth continues

Third quarter financial results indicate that Kaiser Permanente, the giant California-based nonprofit health system, continues to gain strength.

Last Friday, Kaiser Foundation Hospitals, Kaiser Foundation Health Plan and their subsidiaries reported a combined total operating revenue of $14.3 billion for the third quarter, ending September 30, 2014, compared to $13.2 billion in the same period in 2013. Operating income was $766 million in 3Q 2014, compared to $518 million in the same quarter last year.

Even better, Kaiser's total operating revenue for the 2014 calendar year was $42.2 billion, compared to $39.6 billion for the same period in 2013. The nonprofit's year-to-date operating income was $2.2 billion, compared to $1.7 billion for the same period in 2013, while it's net non-operating income was a healthy $900 million in the first nine months of this year, compared to $604 million in the same period last year.

Our efforts to increase efficiencies and effectiveness...are gaining momentum.

Kaiser's net non-operating income in the third quarter of 2014 ($228 million) fell sligthly compared to 3Q 2013 ($241 million). The nonprofit also reported income from discontinued operations at $3 million in the third quarter, compared to a loss of $124 million in the third quarter of 2013. Income from discontinued operations was zero for the first nine months of CY 2014, compared to a loss of $131 million for the same period in 2013.

As a result, Kaiser's net income for the third quarter was $997 million, versus $635 million in the same period of 2013, while year-to-date net income was $3.1 billion, compared to $2.2 billion in 2013.

[See also: Kaiser's 'professional business athlete'.]

"Our efforts to increase efficiencies and effectiveness, while maintaining our focus on the needs of our members and customers, are gaining momentum," said Kathy Lancaster, Kaiser's chief financial officer, in a statement.

Kaiser's health plan membership grew by approximately 442,000 members since December 31, 2013, Lancaster noted, totaling approximately 9.5 million members as of September 30, 2014.

Contributing to lower health system expenses, was a drop in capital spending in the third quarter of 2014, to $627 million from $722 million in 3Q 2013. Kaiser reported year-to-date capital spending of $2.1 billion, compared to $2.3 billion in the same period last year. Lancaster said Kaiser's capital spending included the cost of upgrading hospitals to comply with California earthquake standards. Since the beginning of the year, 15 new Kaiser Permanente medical office buildings have also opened.