Kaiser Permanente reports $4.1B profit, exceeds $100B operating revenues in 2023

Kaiser Permanente wrapped up its fiscal year with $329 million of operating income (0.3% operating income), net income of $4.1 billion and more than $100 billion in both operating revenues and expenses, the Oakland, California-based nonprofit announced Feb. 9.

The rebound performance follows sizable losses during 2022, when the system logged a $1.3 billion operating loss (-1.3% operating income) off of $95.4 billion in operating revenues and $96.7 billion in operating expenses. It had also weathered a net loss of $4.5 billion due to a $3.2 billion loss across “other income,” which largely reflected down investments.

“I want to thank the people of Kaiser Permanente for their hard work in 2023 to provide members and patients with a positive experience at all touch points while also embracing new ways to drive efficiencies, improve access, and advance health outcomes,” said Chair and CEO Greg A. Adams said in a press release sharing the year’s top-line financial results. “Together, we navigated another challenging year and are on a path to deliver on our mission and bring our distinct brand of value-based care to more people.”

For the fiscal year ended Dec. 31, 2023, the integrated provider-payer landed $100.8 billion in operating revenues and $100.5 billion in operating expenses. In regard to the latter, Kaiser Permanente’s release cited higher costs for goods and services, prescription drug prices, labor challenges and care costs tied to higher volumes from respiratory infections as well as pandemic deferrals.

“Kaiser Permanente met these challenges by reducing administrative costs and pursuing efficiencies while expanding access to its high-quality care,” the system wrote in the release that also touted over 22 million virtual visits and other tech-supported care delivery efficiencies.

Kaiser Permanente’s payer business, meanwhile, saw its membership shrink by almost 51,000 members to 12.5 million as of year-end. The system attributed the decline to “the slowing pace of job growth and other economic factors."

Almost $3.8 billion of other income more than offset the prior year’s loss, with Kaiser Permanente attributing the change to “a result of swings in the financial market.”

Total capital spending rose from $3.5 billion in 2022 to $3.8 billion in 2023 and included August’s opening of San Marcos Medical Center in San Diego County. The system also highlighted a year-over-year increase in community health program investments, from $2.8 billion to $3.1 billion.

“Kaiser Permanente remains committed to providing affordable care and coverage for our members as we continue to mitigate increased costs in this evolving healthcare environment,” Executive Vice President and Chief Financial Officer Kathy Lancaster said in the release. “By fulfilling our mission, eliminating inefficiencies and investing in technology, facilities and our communities, we are on a financially sustainable path.”

Kaiser Permanente spanned 40 hospitals, 618 medical officers and 43 retail and employee clinics as of the end of 2023. The system grabbed no shortage of headlines during the course of the year, whether that be from its Geisinger Health megadeal unveiled last spring, its bargaining through the “largest healthcare worker strike in U.S. history” or nine-figure settlements with government regulators.