Dive Brief:
- Kaiser Permanente reported $39.9 billion in operating revenue for the first six months of 2018, up about 10% from the first half of 2017, according to unaudited financial results.
- The Oakland-based integrated health system said the higher revenue was due in part to an increase in membership, which fueled growth in health plan member dues and Medicare reimbursements.
- Operating expenses climbed 11% to $38.5 billion during the half, up from $34.6 billion in the same period a year ago. However, slower growth in investment income knocked operating income down 12% to $1.4 billion, compared with $1.6 billion in the H1 2017.
Dive Insight:
Those and other expenses took a toll on overall performance for the period. Kaiser finished the first half with net income of $2 billion, down 21% from H1 2017's $2.6 million.
During the half, Kaiser invested $1.6 billion on capital projects, including opening new facilities and upgrading existing ones. The system launched five new medical offices in California in the second quarter, bringing its total to 689 medical offices and 39 hospitals.
Kaiser has also upped its investment in improving health in its communities. In May, it committed $200 million to reduce homelessness through a collaboration with Mayors and CEOs for U.S. Housing Investment, citing it as a root cause of medical outcomes. "To improve the health of an entire community we must step beyond the four walls our hospitals and medical offices to help those most in needs," Bechara Choucair, chief community health officer at Kaiser Permanents, said at the time.
Providers and payers alike are investing in social determinants of health to improve patient outcomes and reduce costs. The Corporation for Supportive Housing estimates healthcare systems have invested between $75 million and $100 million in projects it supports. Last year, the American Hospital Association published a guide on how housing impacts a community's health, with recommendations on how hospitals can help.
During the half, Kaiser also weathered protests by healthcare workers concerned about plans to lay off pharmacy warehouse workers and relocate call center jobs. Kaiser maintained it was not downsizing and in fact has added more than 13,000 jobs in California since 2015.