November 8, 2024
Kaiser Foundation Health Plan and Hospitals Q3 2024 financial update
The nation’s leading value-based health care enterprise provided high-quality, affordable care and coverage in alignment with its not-for-profit mission.
Financial results for the 9 months ending September 30, 2024
Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and their respective subsidiaries and affiliates (KFHP/H) reported consolidated year-to-date operating revenues of $85.4 billion and operating expenses of $84.2 billion in the first 9 months of 2024. Year-to-date operating revenues were $75.3 billion and operating expenses were $74.1 billion for the same period last year. Operating income was $1.2 billion through September 30, 2024, compared to $1.1 billion for the same period in 2023.
In the first 9 months of 2024, favorable investment market conditions drove positive returns on KFHP/H’s investment portfolio. As a result, other nonoperating income and expense was $4.4 billion in the first 9 months of 2024 as compared to $2.4 billion for the same period in 2023. Including the one-time net gain of $4.6 billion related to the Risant Health, Inc. acquisition of Geisinger Health, reported in the first quarter, net income year-to-date was $10.3 billion compared to $3.5 billion in net income for the same period in 2023.
Financial results for the third quarter
For the quarter ending September 30, 2024, KFHP/H reported operating revenues of $29.0 billion and operating expenses of $29.6 billion compared to operating revenues of $24.9 billion and operating expenses of $24.7 billion in the same quarter of 2023. There was an operating loss of $608 million for the third quarter compared to operating income of $156 million in the third quarter of 2023.
Kaiser Permanente — like all U.S. health care organizations — continues to experience increased medical expenses due to higher-than-expected utilization of services, patient acuity, and pharmacy costs. KFHP/H third-quarter financial performance also included the impact of Medicaid and other true-ups of annual contracts that normally occur earlier in the year. Understanding that financial headwinds are part of the health care environment for the immediate future, the organization has reduced administrative costs and continued to take steps to help offset medical expenses. These steps include implementing controls on discretionary spending and streamlining business operations to accelerate performance improvements while delivering value to members.
Historically, KFHP/H has lower operating margins in the second half of the year compared to the first half of the year because revenues stay flat while expenses usually increase in part due to seasonal care.
Other nonoperating income and expense totaled $1.4 billion in the third quarter of 2024 compared to other nonoperating income and expense of $83 million in the third quarter of 2023, largely due to investment market conditions. For the third quarter of 2024, net income was $845 million. Net income was $239 million for the third quarter of 2023.
“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 chief executive officer Greg A. 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.”
Membership
Kaiser Permanente membership was nearly 12.5 million as of September 30, 2024. Membership for Risant Health affiliates was more than 552,000 as of September 30, 2024.
Capital spending
Year-to-date as of September 30, 2024, capital spending totaled $2.6 billion, consistent with year-to-date capital spending of $2.6 billion in 2023. Capital spending in the third quarter of 2024 was $922 million, compared to $825 million in the same period of 2023, reflecting an ongoing investment in facilities and technology to serve members and patients and meet seismic safety mandates.
“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.”
KFHP/H includes integrated care and coverage under the Kaiser Permanente brand. Kaiser Permanente also includes Risant Health and its subsidiaries.
KFHP/H Financial Summary
YTD and Q3 2024 includes Risant Health*
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.
