Dive Brief:

• Kaiser Permanente's net income jumped to $1.2 billion for the third quarter of 2019, up substantially from $884 million for the same quarter last year.
• Revenue at the Oakland, California-based integrated health system was $20.9 billion for the quarter, up from $19.9 billion for the year-earlier quarter. The revenue increase was due in part to changes in the membership mix at its health plans.
• The nonprofit organization's insurance membership grew to 12.2 million in the quarter, an increase of 75,000 members compared with the third quarter of 2018.

Dive Insight:

Release of Kaiser Permanente's third quarter financial results Friday came right before the unexpected death of its influential Chairman and CEO Bernard Tyson, 60, who died in his sleep on Sunday. Tyson spent decades at Kaiser working his way up to the top spot in 2013.

Under his leadership, Kaiser has continued to sell health plans on the Affordable Care Act exchanges, even as many competitors have bailed. Tyson pledged to stay, citing mission.

While net income at Kaiser soared, the health system's operating income dropped during the third quarter to $615 million (2.9% of operating revenues) compared with $636 million (or 3.2% of operating revenue) for the same quarter a year ago. Operating margins were down, which the system attributed to seasonality.

In a statement, Kaiser Permanente's management cited strong returns on investments for the performance of other income and expense, which totaled $556 million in the third quarter of 2019, compared with $248 million in the year-earlier quarter.

During the second quarter, Kaiser Permanente's net income was $2 billion, up from $653 million in the second quarter of 2018.

Citing the organization's billions in profit, labor unions representing its employees have accused the system of underfunding charity care and workers' pay. However, the Coalition of Kaiser Permanente Unions called off a planned strike after reaching a four-year tentative agreement in September.

Under the terms of the agreement, 85,000 unionized Kaiser employees will receive guaranteed annual wage increases through 2023, additional education, training and advancement opportunities, a defined benefit pension plan, higher travel reimbursement and incentives for using Kaiser's mail-order prescription service.

In a statement released with the financial results, CFO Kathy Lancaster appeared to push back against criticism from unions, saying, "A strong financial position allows us to make investments in technology, infrastructure, and our people. We have a responsibility to sustain and enhance the value of Kaiser Permanente for our members and communities."

Spending on those capital investments totaled $891 million in the third quarter. Kaiser opened five new outpatient offices (three in medicine and one each for dental and mental health) in the quarter, bringing its total facility count to 706 outpatient clinics and 39 hospitals.

The system has more than 95 capital projects in various stages, and its executives expect to complete all of them in the next five years.