In just one quarter, Kaiser Permanente has a $608 million operating loss. It will get worse. In California, thanks to the legislature and Newsom, wages are now a minimum of $25 an hour. Add that to the loss. Then you have 36,000 nurses and staff on strike—when that is settled, add hundreds of millions to the loss.
“Kaiser Permanente posted a $608 million operating loss in the third quarter as it faces high medical expenses due to higher-than-expected utilization of services, patient acuity and pharmacy costs.
Unfavorable changes in the market and its delayed true-up of Medicaid and other annual contracts dampened the nonprofit health system’s earnings, the health system said Friday in its third-quarter earnings report.
The system also cited market changes, rising consumer expectations and inflation for the downturn, which it said affected the whole industry. Despite significantly outpacing its 2023 earnings numbers in the first half of the year, the company’s year-to-date earnings are now on par with last year after the third quarter ended.
The integrated nonprofit health system posted a $156 million gain during the same period a year ago.
Since the Governor is buying up private hospitals as fast as he can—using the UC system as the proxy—could it be that Kaiser will eventually go under and California will have government/Cuban style health care. Watch this closely.
Kaiser Permanente looks to slash costs as ‘industry headwinds’ bring $608M operating loss in Q3
By Emma Beavins, Fiercehealthcare, 11/11/24 https://www.fiercehealthcare.com/finance/industry-headwinds-bring-608m-loss-kaisers-health-plan-and-hospitals-q3
Kaiser Permanente posted a $608 million operating loss in the third quarter as it faces high medical expenses due to higher-than-expected utilization of services, patient acuity and pharmacy costs.
Unfavorable changes in the market and its delayed true-up of Medicaid and other annual contracts dampened the nonprofit health system’s earnings, the health system said Friday in its third-quarter earnings report.
The system also cited market changes, rising consumer expectations and inflation for the downturn, which it said affected the whole industry. Despite significantly outpacing its 2023 earnings numbers in the first half of the year, the company’s year-to-date earnings are now on par with last year after the third quarter ended.
The integrated nonprofit health system posted a $156 million gain during the same period a year ago.
Kaiser’s net income the three months ending Sept. 30, 2024, was $845 million, and its capital spend was $922 million, which resulted in a negative 2.1% operating margin. A press release by the organization said its capital spending in the third quarter “reflect[s] an ongoing investment in facilities and technology to serve members and patients and meet seismic safety mandates.”
The third-quarter results diverge from the first half of the year when the system reported operating margins north of 3% and billions on the bottom line.
Kaiser Permanente’s operating income for the year is marginally higher than in 2023, at $1.2 billion. A press release by the organization said that investment market conditions this year have been favorable.
Because of the one-time net gain incurred by the acquisition of Geisinger, the system’s year-to-date net income was $10.3 billion, compared to last year’s $3.5 billion net income. The health system logged a $4.6 billion net asset gain from its Geisinger Health acquisition in the first quarter. Kaiser reported a $13 million net gain in the third quarter.
Kaiser Permanente spent nearly $100 million more in the third quarter of 2024 than it did last year. The health system cited higher utilization of services, higher patient acuity and higher pharmacy costs this year, which have been borne by all U.S. healthcare organizations, it said.
Additionally, Kaiser Permanente had to square annual contracts in the third quarter including Medicaid, which normally occur earlier in the year, it said.
The health system noted that its second-half margins are generally lower than the first half because revenue stays flat while expenses increase. But the company emphasized that its year-to-date spend of $2.6 billion is consistent with its spend in 2023.
The organization is shifting by controlling discretionary spending and trimming business operations.
“Kaiser Permanente is continuing to innovate and adapt to address industry headwinds including the changing marketplace, rising consumer expectations, and the inflationary effects on the total cost of care,” said Chair and CEO Greg Adams. “I have confidence in our integrated model and believe it provides us with unique opportunities to respond to the current environment. I want to thank our dedicated employees and physicians for their continued commitment to our mission as we advance our vision of patient-centered, accessible, and affordable health care.”
Kaiser Permanente membership was nearly 12.5 million at the close of the quarter, while membership for Risant Health affiliates was more than 552,000.
“Investments in our services and capabilities allow us to meet our members’ and patients’ care needs while we continue to drive efficiencies in our care delivery operations and improve our member experience,” said Executive Vice President and Chief Financial Officer Kathy Lancaster. “The entire industry is challenged to meet the demand for more care while the costs to deliver that care are rising and some reimbursements for care have decreased. At Kaiser Permanente, we are focused on carefully managing resources and delivering on our mission to provide high-quality care that is also affordable.”
