Kaiser Permanente pulled in $239 million in net income during the third quarter of 2023, a turnaround from the $1.5 billion net loss the integrated system had seen a year prior.
In a release outlining its top-line results, the nonprofit reported a $156 million operating income (0.6% operating margin) for the three months ended Sept. 30 on the back of $24.9 billion in operating revenues and $24.7 billion in operating expenses.
This was up from the $75 million operating loss (-0.3% operating margin) of the third quarter of 2022, at which time Chair and CEO Greg A. Adams had cited “a global economic crisis, the high cost of goods and services, supply chain issues, labor shortages and the pandemic.
This time around, the executive said that his organization, “like other health systems, … is continuing to emerge from the pandemic and we are working hard to address our challenges, including competition for fewer workers, the high costs of goods and services and an increased demand for services due to deferred care.
“Our focus in 2023 is on implementing effective strategies that improve service, access and quality to deliver the best health outcomes for our members. Thanks to the concerted and unrelenting efforts of our employees and physicians, we are seeing results in these areas and remain committed to fulfilling our mission,” he said in the release.
Oakland, California-based Kaiser Permanente—which as of Sept. 30 comprised 618 medical offices, 40 hospitals, 34 retail and employee clinics and its 12.6 million-plus member health plan—also logged $83 million in other income and expense during the most recently closed quarter. This was the clearest difference from its prior-year performance when a plummeting investment market drove a nearly $1.5 billion loss in that category.
Kaiser Permanente’s release also highlighted $825 million of capital spending during the quarter as well as the August opening of a 433,000-square-foot medical center in San Diego County. The organization typically shares a more detailed breakdown of its quarterly financials in a later regulatory filing.
“In the third quarter, we furthered the long-term health and stability of the organization by maintaining fiscal discipline while increasing access to our high-quality care and service,” Executive Vice President and Chief Financial Officer Kathy Lancaster said in the release. “At Kaiser Permanente, we are also continuing to expand our digital capabilities and in-person care services to improve the consumer experience.”
Kaiser Permanente recently came to terms with its union on a four-year, 21% across-the-board wage increase following “the largest healthcare worker strike in U.S. history.” That three-day labor demonstration, as well as the new contract, landed within the ongoing fourth fiscal quarter.
The organization also recently agreed to a $200 million settlement with the state of California to amend “deficiencies in the plan’s delivery and oversight of behavioral healthcare” to its members. Most of those funds, $150 million, are investments into behavioral health delivery that Kaiser promised to make over a five-year span.