- Investment losses, an increase in COVID-19 expenses and rising costs overall drove Kaiser Permanente to a net loss of $961 million in the first quarter, down from a net income of $2 billion at the same time last year.
- Growth in the Oakland, California-based integrated health system’s expenses outstripped its revenue growth, resulting in a $72 million operating loss, according to financial data released Friday. In comparison, Kaiser brought in operating income of $1 billion in the first quarter of 2021.
- Kaiser recorded $889 million in losses for nonoperating items, mostly driven by investment losses. That’s compared to nonoperating income of $1 billion from the prior-year period.
The 39-hospital system, which also operates a sizable outpatient business and insurance plans, said the COVID-19 surge in the first quarter — “the steepest since the start of the pandemic” — drove an additional $1.4 billion in expenses that, along with the costs of providing previously delayed care, were the primary drivers of additional cost in the quarter.
In the period ended March 31, Kaiser treated more than 688,000 patients with COVID-19, including more than 26,000 inpatients. The system also experienced significant increases in labor costs, both on a year-over-year and quarter-over-quarter basis, Kaiser said.
Kaiser posted operating revenue of $24.2 billion, up slightly from $23.2 billion in the first quarter of 2021 as surging COVID-19 cases increased demand for care and testing.
However, expenses swelled almost 10% year over year to $24.3 billion.
Major nonprofit systems rely heavily on investment income to pad their bottom lines. Roughly 93% of Kaiser’s net income in 2021 was due to such “other income and expense” in 2021, for example.
But the system is the latest nonprofit to report a loss on investments amid market volatility in the first quarter. The headwind was also experienced by California peer Sutter Health, which also reported a net loss in the first quarter partially due to fallen investment income, citing an “unfavorable market.”
Kaiser’s health insurance business, which is active in eight states and Washington, D.C., covered 12.6 million members in its health plans at the end of the quarter, up more than 88,000 members since the end of 2021.
Its Medicaid program continued to swell, making up 38% of the new members.