Nonprofit health giant Kaiser Permanente saw its bottom line nearly triple last year. The Oakland-based managed care organization reported a net income of $7.4 billion, a significant jump from its 2018 net income of $2.5 billion, according to its annual financial report.
Kaiser Permanente attributed most of the new funds to a strong investment market, saying two-thirds of its net income came from investment performance. It’s also in part due to an accounting change: the company began reporting changes in estimated value of its equity securities as income.
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The amount is significantly higher than Kaiser’s bottom line in recent years. It reported a net income of $3.79 billion in 2017 and $3.1 billion in 2016.
As healthcare nonprofits face growing scrutiny, Kaiser emphasized the new dollars would go to patient care.
“Our solid 2019 operating performance and strong investment returns position Kaiser Permanente to continue delivering on our deep and long-standing commitment to provide high-quality, affordable health care and coverage,” Kaiser Permanente’s new chairman and CEO Greg Adams said in a news release. “As a not-for-profit, Kaiser Permanente’s net income goes directly to our core mission of providing high-quality, affordable health care to our members and to improving the health of the communities we serve.”
Kaiser reported revenues of $84.5 billion, up 6 percent from 2018. It also saw its membership increase by 81,000 for a total of 12.2 million as of December.
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The company’s capital spending remained relatively flat, at $3.5 billion in 2019, compared to $3.4 billion the prior year. Kaiser has plans to construct a new, $900 million headquarters in Oakland by 2023. The office tower, at 1.2 million square feet, would be one of the largest in the area.
Last year, Kaiser opened 17 new medical offices, for a total 0f 719. The company also said it would continue its $700 million expansion of its mental health facilities, which included plans to add or renovate more than 220 offices.
The nonprofit has been working to expand its mental health services since 2017, when it reached a settlement with California’s Department of Managed Health Care (DMHC) after failing to give patients timely access to mental health services. DMHC fined Kaiser for $4 million in 2013.
Per the terms of that settlement, Kaiser had to hire an outside consultant for three years and was required to report when patients were not able to get an appointment in a timely manner. But despite meeting DMHC’s benchmarks, Kaiser mental health workers have said patients still struggle to access care; more than 4,000 of them went on strike at the end of the year.
Starting in 2020, Kaiser will have to disclose more detailed financial results thanks to a new California law. Senate Bill 343, which was signed into law in September, would require Kaiser to provide information on expenses and revenue for each of its hospitals, as well as revenue by the type of payor and details on rate increases, similar to other insurers.
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