The country’s largest managed care organization, Oakland-based Kaiser Permanente earned more than $2 billion of net income in the second quarter, representing a more than 200 percent increase than the same time last year.
The financial details were reported as the organization’s union workers in California overwhelmingly voted to conduct a nationwide strike in October. More than 37,000 ballots were cast in support of a walkout compared to only 867 in opposition.
As a not-for-profit healthcare consortium, Kaiser is not able to make a traditional profit and the company’s net income figures represent a stand-in for its operating revenues and income, less its expenses and spending.
The organization earned $21.4 billion in operating revenue versus operating expenses of $20.3 billion, While this accounted for a bulk of the net income number, another major aspect was returns on investment which accounted for $930 million in income.
Membership increased marginally to 12.3 million from 12.2 million people last year. Among the company’s expenditures were the capital costs associated with opening three new medical office buildings, as well as the launch of Thrive Local its new social health network to link individuals to local community services.
The first half of 2019 represents a banner year for the company fiscally. Kaiser’s $3.2 billion in net income in the first quarter adds up to $5.2 billion in the first six months of 2019.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
“Strong results are essential for us to deliver on our nonprofit mission to improve affordability while advancing our high-quality care and service for our members and customers. This also allows us to make strategic investments in technology, people and care facilities,” Kaiser Chief Financial Officer Kathy Lancaster said in a statement.
“At the same time, it’s critical we remain fiscally vigilant in today’s increasingly competitive environment with growing industry and financial pressures.”
In its argument for a strike, SEIU-UHW members have pointed to Kaiser’s high profits as well as the eight-figure compensation package awarded to CEO Bernard Tyson, making him one of the top paid healthcare executives in the country.
The list of demands from the union include higher wages and benefits, increasing staffing rates and upping workforce investment. The union’s previous contract with Kaiser expired last September.
Kaiser union workers in Oregon, Washington, Colorado, Maryland, Virginia and Washington, D.C. will vote on the strike through mid-September. If the walkout is approved, the 80,000 workers represented by the union would amount to the country’s largest strike in 20 years.
Picture: rvolkan, Getty Images
