November 5, 2021
Kaiser Foundation Health Plan and Hospitals Q3 2021 financial update
Kaiser Permanente’s integrated health care organization maintains care and coverage as the COVID-19 pandemic continues.
Kaiser Permanente’s mission is to provide high-quality, affordable health care services and to improve the health of its members and the communities it serves. Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and their respective subsidiaries (KFHP/H) advance this mission through integrated care delivery and coverage.
Financial results
For the quarter ending September 30, 2021, KFHP/H reported total operating revenues of $23.2 billion and total operating expenses of $23.1 billion, compared to total operating revenues of $22.0 billion and total operating expenses of $21.5 billion in the same period of the prior year. Operating income this quarter has declined to $38.0 million or 0.2% of total operating revenues, compared to $456 million or 2.1% of total operating revenues in the third quarter of 2020. This decline in operating income was driven by an increase in both care delivery expenses due to the delta variant COVID-19 surge and other operating expenses. Total other income and expense, driven largely by financial market performance and therefore variable, was $1.5 billion in the third quarter, which is flat compared to the same period of the prior year. Net income for the third quarter decreased by more than $400 million year over year, to $1.6 billion for the quarter compared to $2.0 billion in the third quarter of 2020.
“Our ability to meet the demands of increased COVID-19 care during a surge, while also managing an increase in non-COVID-19 care, speaks to the resilience of the dedicated employees and physicians at Kaiser Permanente,” said chair and chief executive officer Greg A. Adams. “During the quarter, we also intensified our leadership in encouraging equitable vaccine initiatives nationwide and implemented an employee vaccination mandate as part of our effort to protect our workforce, members, and communities and to help bring the pandemic to an end.”
Membership
The change in Kaiser Permanente membership this quarter was driven by an increase in Medicaid members. Kaiser Permanente’s membership totaled 12.5 million as of September 30, 2021.
“Our third quarter 2021 performance reflects changing market conditions and membership shifting from commercial to government-sponsored plans,” said executive vice president and chief financial officer Kathy Lancaster. “We continue to thoughtfully manage our expenses consistent with our commitment to provide high-quality, affordable care to more people.”
Capital spending
For the quarter ending September 30, 2021, capital spending totaled $878 million, compared to $964 million in the third quarter of the prior year. During the third quarter of 2021, Kaiser Permanente opened new medical offices in Bowie, Maryland, and in San Rafael, California. As of September 30, 2021, Kaiser Permanente has 730 medical offices nationwide, 541 pharmacies, and 39 hospitals.
Q3 2021 and Q3 2020 financial summary
| ($ in millions, except %) | Q3 2021 | Q3 2020 |
| Total operating revenues | $23,154 | $21,952 |
| Total operating expenses | $23,116 | $21,496 |
| Operating income | $38 | $456 |
| Operating margin | 0.2% | 2.1% |
| Total other income and expense | $1,518 | $1,515 |
| Net income | $1,556 | $1,971 |
| Capital spending | $878 | $964 |
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 involve 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.
