May 5, 2023

Kaiser Foundation Health Plan and Hospitals Q1 2023 financials

The nonprofit organization delivered on its mission of high-quality, affordable care and service while emerging from the pandemic under continued adverse conditions.

For the quarter ending March 31, 2023, Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and their respective subsidiaries (KFHP/H) reported total operating revenues of $25.2 billion and total operating expenses of $25.0 billion compared to total operating revenues of $24.2 billion and total operating expenses of $24.3 billion in the same period of the prior year. Operating income was $233 million for the first quarter of the year compared to an operating loss of $72 million in the first quarter of 2022.

Driven largely by favorable financial market conditions, total other income and expense was $975 million compared to an $889 million loss in the first quarter of 2022. For the first quarter, net income totaled $1.2 billion compared to a net loss of $961 million in 2022.

Providing comprehensive care and support including preventive, routine, chronic, acute, and deferred care was a primary expense driver in the first quarter as Kaiser Permanente continued to experience higher care volumes. Increased clinical labor costs due to a highly competitive labor market and the higher cost of goods and services contributed to financial performance in the first quarter.

To address these expenses, Kaiser Permanente accelerated the recruitment and onboarding of clinical workers and reduced reliance on contract labor. As a result, hiring of clinical roles increased by 15% in the first quarter of 2023 compared to the prior year. Kaiser Permanente also implemented strategies to increase administrative efficiencies and effectively manage discretionary spending.

“Our focus in 2023 continues to be advancing our leading value-based care and coverage model, which has defined Kaiser Permanente for more than 77 years,” said chair and chief executive officer Greg A. Adams. “Despite the ongoing challenges facing the health care industry, Kaiser Permanente is not wavering on our commitment to providing preventive, evidence-based, equitable care and quality outcomes, and offering multiple access points for member care and service. I am grateful to our dedicated, talented workforce for their contributions to our mission and model.”

Capital spending

Capital spending in the first quarter was $930 million compared to $872 million in the same period of the prior year. As of March 31, 2023, Kaiser Permanente had 624 medical offices, 39 hospitals, and 43 retail and employee clinics.

Members selected telehealth offerings, adopted widely during the pandemic, as part of their total health care, which includes in-person appointments, at-home care, hospital care, and care while traveling outside geographic service areas. Kaiser Permanente provided nearly 6 million scheduled phone and video visits in the first quarter of 2023. Additionally, members increasingly chose 24/7 virtual care visits, no appointment needed, with more than 170,000 visits in the first quarter.

Membership

Membership as of March 31, 2023, was 12.7 million, reflecting a growth of more than 120,000 members since December 31, 2022.

“We are committed to expanding access to our unique model of care and coverage, maintaining our capital investments, and effectively managing our resources in a dynamic health care landscape,” said executive vice president and chief financial officer Kathy Lancaster. “Our sound financial position helps ensure that Kaiser Permanente continues to improve the health of our members and the communities we serve, and invest in our people, technology, and facilities.”

Q1 2023 and Q1 2022 financial summary

$ in millions, except %	Q1 2023	Q1 2022
Total operating revenues	$25,224	$24,197
Total operating expenses	$24,991	$24,269
Operating income (loss)	$233	($72)
Operating margin	0.9%	(0.3%)
Total other income and expense	$975	($889)
Net income (loss)	$1,208	($961)
Capital spending	$930	$872

Note: Certain statements included in this document may constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used, such as “plan,” “project,” “forecast,” “expect,” “estimate,” “budget,” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involves known and unknown risks, uncertainties, and other factors, which may cause actual results, performance, or achievements described to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Accordingly, actual results will vary and the variations may be material. None of the KFHP/H organizations plan to issue any updates or revisions to those forward-looking statements if or when expectations change, or events, conditions, or circumstances on which such statements are based occur.