Kaiser's operating income falls 83% in Q2 as members head back for care

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Oakland, Calif.-based Kaiser Permanente, an integrated healthcare provider with 39 hospitals and a health plan, saw its operating income fall more than 83 percent in the second quarter of 2021 as its members came back for care, according to its financial report released Aug. 6.

For the quarter ending June 30, Kaiser saw its operating revenue increase to $23.7 billion, up 7.2 percent over the same period last year. The integrated healthcare provider also saw its expenses rise to $23.3 billion in the second quarter, up from $20 billion recorded in the same quarter in 2020.

Kaiser ended the second quarter with an operating income of $349 million, a sharp decline compared to the $2.1 billion recorded in the second quarter of 2020.

Kaiser said that the decline reflects that members are resuming the care they deferred because of the pandemic. 

"A year ago we were at the infancy stage of the shelter in place. People were not coming into our facilities. We had shut down a lot of our facilities. A lot of individuals that had care that they could defer, chose to defer," Tom Meier, corporate treasurer of Kaiser Permanente, told Becker's Hospital Review. "With our model, you pay a monthly premium that covers your services whether you use them or not. There was a lot of collection of revenue but a lower incurrence of cost last year. That has reversed itself in the second quarter of 2021, where folks are coming back into the system, we are continuing to do vaccinations, we are continuing to do tests and a lot of that deferred care is coming back into the system."

After factoring in investment gains and interest paid on debt, Kaiser ended the quarter with a net income of $3 billion. In the same quarter last year, Kaiser posted a net income of $4.5 billion.

Mr. Meier told Becker's that its equities performed well in both the first and second quarter of this year. 

Kaiser also saw its health plan membership remain steady in the second quarter. The health system said it has nearly 12.5 million members as of June 30, reflecting a growth of 141,000 since Dec. 31, 2020.

"The stability of Kaiser Permanente's integrated model, which provides both care and coverage, continues to help us navigate through the pandemic as we manage ongoing COVID-19 expenses and resumption of care. It enables us to support our almost 12.5 million members and provide resources to our communities during this challenging time," said Kathy Lancaster, Kaiser Permanente's executive vice president and CFO. 

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