Kaiser Permanente reported a $1.1 billion loss in the first quarter—a drop from $3.2 billion in income in the first quarter a year earlier, blamed largely on investment losses.
Kaiser Foundation Health Plan and Hospitals saw operating revenues of $22.6 billion and total operating expenses of $21.4 billion. That was up compared to total operating revenues of $21.3 billion and total operating expenses of $19.8 billion in the same period of the prior year.
Operating income was $1.3 billion or 5.5% of total operating revenues in the first quarter of this year, compared to $1.5 billion or 7.2% in the first quarter of 2019.
Typically, the healthcare group sees its strongest operating margin in the first quarter due to the timing of open enrollment. Instead, that margin sustained a major blow with $2.4 billion in investment losses in the first quarter of 2020 compared to a first-quarter gain of $1.6 billion in 2019.
The full cost of surge planning, as well as the overall economic and membership impacts of the COVID-19 pandemic are not yet known. Kaiser Permanente established mobile hospitals and triage units, recommissioned retired units, increased inpatient capacity and acquired additional equipment to prepare for the potential surge, officials said.
"Even with all this rapidly escalating preparation and direct care delivery, only a small portion of the financial effects of the pandemic, in terms of lost revenue and increased costs, was experienced in the first quarter," said Executive Vice President and Chief Financial Officer Kathy Lancaster in a statement.
Kaiser Permanente is one of the largest nonprofit healthcare plans in the U.S., with over 12 million members. It operates 39 hospitals and more than 700 medical offices.
Kaiser Permanente is among many health systems giants that have reported major financial hits in the first quarter including publicly traded health systems Tenet Health, Community Health Systems, Universal Health Systems and HCA Healthcare. However, most major payers have indicated they were largely able to weather the financial storm caused by COVID-19 in the first quarter.