Nonprofit Kaiser Permanente posted net income of $1.2 billion for the first quarter this year, as higher care volumes and a more generous financial market boosted quarterly profit. The operator reported a $961 net loss in the first quarter of last year.
Kaiser Permanente posted a $4.5 billion net loss for all of 2022.
The posted profit comes weeks after the operator announced its plans to acquire Geisinger Health and form a new nonprofit with the purpose of acquiring and operating other nonprofit systems. Kaiser plans to spend $5 billion on the newly created company, which will be named Risant Health, over the next five years. The companies expect the acquisition to close early in 2024.
The Oakland, California-based operator and health plan reported operating income of $233 million on total revenue of $25.2 billion in the first quarter this year, compared to a $72 million loss in the prior-year period. Other net income was $975 million compared to an $899 million loss in the same quarter last year, driven by favorable market conditions, according to Kaiser.
Membership in Kaiser health plans was 12.7 million at the end of the first quarter, reflecting a growth of more than 120,000 members since the end of the fourth quarter.
Care expenses, including providing deferred care, was a “primary expense driver” for Kaiser in the first quarter. The operator reported $25 billion in operating expenses, an increase from $24.3 billion in expenses posted in the prior-year period.
Increased labor costs were due to a “highly competitive labor market” and the rising costs of goods and services contributed to heightened expenses, the operator noted. However, Kaiser reported that it increased hiring of clinical roles by 15% in the first quarter compared to the prior-year period and was implementing strategies to “effectively manage discretionary spending.”
Both labor and non-labor expenses have strained financial results for hospital operators during the first quarter this year. Last week, for-profit operator CHS reported an increase in labor and non-labor expenses that drove the system to a $51 million net loss in the first quarter. A report from management consulting firm Kaufman Hall last week found that expenses continued to outpace increases in hospitals’ revenue and profitability in March.