For the quarter ending June 30, 2023, Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and their respective subsidiaries (KFHP/H) reported operating revenues of $25.2 billion and operating expenses of $24.4 billion compared to operating revenues of $23.5 billion and operating expenses of $23.4 billion in the same period of the prior year. Operating income was $741 million for the second quarter of the year compared to operating income of $89 million in the second quarter of 2022.
Like all health systems, Kaiser Permanente is experiencing ongoing cost headwinds and volatility driven by inflation, labor shortages, and the lingering effects of the pandemic on access to care and service.
Due to favorable financial market conditions, Kaiser Permanente benefited from strong investment income with other income (net of other expense) of $1.3 billion for the second quarter, compared to a $1.4 billion loss in the second quarter of 2022. For the second quarter, net income was $2.1 billion compared to a net loss of $1.3 billion in the same period of 2022.
“The post-pandemic financial pressures have led many in the industry to cut back on care and service. At Kaiser Permanente, we remain focused on improving access and affordability for our patients, members, and communities, which requires continued investment in care and coverage,” said chair and chief executive officer Greg A. Adams. “Navigating the current environment would not be possible without the dedication and commitment of the people of Kaiser Permanente. I want to thank all employees and physicians for turning the disruptions and challenges of the past 3 years into opportunities to make our health care system stronger and more equitable, with improved outcomes for all.”
Historically, Kaiser Permanente sees higher operating margins in the first half of the year and lower operating margins in the second half of the year as expenses tend to increase throughout the year relative to operating revenues, due in part to the annual enrollment cycle and seasonal care.
Membership as of June 30, 2023, was nearly 12.7 million, reflecting a growth of more than 81,000 members since December 31, 2022. Kaiser Permanente began an outreach campaign to its Medicaid members in the second quarter to ensure they have critical enrollment information as states go through the mandated process of eligibility redetermination.
Capital spending in the second quarter was $824 million compared to $789 million in the same period of the prior year. As of June 30, 2023, Kaiser Permanente had 622 medical offices, 39 hospitals, and 43 retail and employee clinics.
“Our second-quarter financial results reflect operational improvements that, together with our ongoing expense reduction efforts, will help us face additional financial pressures in the second half of the year,” said executive vice president and chief financial officer Kathy Lancaster. “The process of building our financial performance back to pre-pandemic levels requires that we continue to redesign our cost structure to support investments in our facilities, technology, and people while staying competitive in a dynamic health care marketplace.”
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.