California-based managed care plan Kaiser Permanente reported a $1.1 billion net loss in the first quarter of 2020. The nonprofit chalked it up to losses in its investment portfolio, as the market dropped sharply in late March.
“The full cost of surge planning, as well as the overall economic and membership impacts of the COVID-19 pandemic are not yet known,” the company stated in its most recent financial report.
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To prepare for the pandemic, Kaiser had established triage units, acquired additional equipment and set up mobile hospitals. Some of these costs took place in the first quarter, but they were relatively minuscule.
“Even with all this rapidly escalating preparation and direct care delivery, only a small portion of the financial effects of the pandemic, in terms of lost revenue and increased costs, was experienced in the first quarter,” Kaiser Permanente CFO Kathy Lancaster said in a news release.
Stock market aside, the rest of Kaiser Permanente’s operations didn’t seem to be much affected by the pandemic in the first quarter.
The Kaiser Foundation Health Plan and Hospitals, the nonprofits behind Kaiser Permanente, reported total operating revenues of $22.6 billion in the first quarter, a slight increase from last year. Its operating income was in the green, at $1.25 billion.
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The big hit was in other sources of income, which were down $2.4 billion in the first quarter of this year, largely due to investment losses. During the same period last year, Kaiser brought in $1.6 billion.
In late March, Kaiser scrapped plans to build a new, $900 million headquarters in Oakland, a decision it said was not related to the Covid-19 pandemic. The building was expected to break ground this year.
It’s not yet clear how the pandemic will affect Kaiser’s membership later this year, though most insurers are expecting to lose some members with commercial insurance to Medicaid and ACA Marketplace plans, as unemployment numbers continue to rise. The company saw its membership increase by 194,000 to 12.4 million by the end of the first quarter.
“This is a challenging time in uncharted territory for businesses, families, communities, and people everywhere,” Kaiser Permanente Chairman and CEO Greg Adams said in a news release. “The coming months pose significant risks to health care organizations of all sizes and varieties, and like others we are working hard to adjust to the immediate and potentially long-term economic disruptions that will affect our organization and our patients, customers, and communities we serve.”
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