Kaiser Permanente posted $4.47B web loss in 2022 as prices rose

Kaiser Permanente is the newest well being system displaying indicators of wrestle amid rising prices.

Kaiser, an Oakland, California-based built-in nonprofit, on Friday reported a $4.47 billion web loss in 2022, in contrast with a $8.08 billion acquire in 2021.

Working income got here to $95.41 billion, a 2.4% enhance from 2021. Bills rose 4.5% to $96.68 billion, pushed by elevated care quantity as a consequence of beforehand deferred procedures, larger prices of products and elevated spending on labor.

Kaiser misplaced $3.2 billion as a consequence of poor market efficiency on investments.

Pressures on labor prices can be an ongoing issue for the system. Greater than 70% of Kaiser’s workforce is represented by labor unions. In late 2022, Kaiser and the California Nurses Affiliation ratified a brand new contract for greater than 21,000 employees after months of tense negotiations. The contract entails a 6% pay enhance for 2 years, adopted by a 5.25% enhance within the third and fourth years, stated Tom Meier, company treasurer.

Meier stated Kaiser’s contract labor prices have practically returned to regular ranges. He attributed the downward pattern to a extra streamlined recruiting course of and aggressive compensation packages.

Care and testing for COVID-19 was nonetheless a big value think about 2022, Meier stated. 

“It hasn’t actually dropped off. The truth is, it [was] larger in 2022 than it was in 2021,” he stated. “While you take a look at the fourth quarter, it was impacted by extra flu and RSV and never as a lot by COVID, so hopefully we’re seeing an finish in sight.”

To assist lower your expenses, Kaiser re-evaluated the need of vacant positions, lower discretionary spending and labored to cut back administrative prices. However Meier stated the system nonetheless saved its 2022 capital spending regular with 2021 and elevated its group well being investments by about $200 million.

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