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Kaiser Permanente hit by pandemic but remains in the black in 2020

Year-end financials are being watched closely as the healthcare system gets a handle on the full impact of COVID-19.

Jeff Lagasse, Associate Editor

It's been a difficult year for providers, payers and the entire healthcare ecosystem. That is reflected in Kaiser Permanente's 2020 financials, which were announced late last week. Operating income fell about 19% compared to 2019, and net income fell around 15%, though the nonprofit insurer and hospital operator was able to remain in the black for the year.

Total operating revenue increased for the year, rising from $84.5 billion in 2019 to $88.7 billion in 2020. But total expenses rose to $86.5 billion, almost a $5 billion increase from the year prior, while operating income dipped from $2.7 billion to $2.2 billion, representing 2.5% of operating revenues.

Kaiser's health plan data showed 12.4 million members, a gain of about 110,000 members for the year. The organization attributed these relatively stable numbers to efforts it made, along with the federal government and employers, to help people maintain benefits. 

WHAT'S THE IMPACT?

Year-end financials are being watched closely among those in the industry as the healthcare system gets a handle on the full impact of the COVID-19 coronavirus.

That impact was felt by Kaiser Permanente in various ways. Investment performance during the year resulted in total other income and expense of $4.1 billion in 2020, compared to $4.7 billion in 2019. This total, combined with operating income, resulted in net income for 2020 of $6.4 billion, compared to $7.4 billion in 2019. 

Capital spending totaled $4 billion, compared to $3.5 billion spent the year prior. As of December 31, the Kaiser Permanente network included 723 medical offices, 39 owned and operated hospitals, and 56 retail and employee clinics.

Kaiser used its relatively stable position to make investments on the COVID-19 front, pouring money and attention into equipment, supplies, facilities and virtual technologies. In 2020, the organization treated close to 600,000 patients with the coronavirus, delivering inpatient care to nearly 33,000 of them, and administered about 4.8 million COVID-19 diagnostic tests. It also distributed more than 43,000 household prevention kits containing masks, sanitizer, disposable gloves, and other items to lower the risk of in-home transmission.

As many other organizations, Kaiser Permanente ramped up telehealth and remote care services during the pandemic, providing roughly 31 million virtual visits through video and phone in 2020, and completed about 4.6 million e-visits. Members visited the member portal and mobile app more than 423 million times for activities such as sending secure messages to clinicians, viewing lab results and filling 42 million prescriptions.

THE LARGER TREND

The path wasn't always smooth for Kaiser Permanente in 2020. In March, the healthcare giant canceled plans for a $900 million headquarters, which was to be located in Oakland, California, though the organization said at the time that this was due to delays and cost increases more than the pandemic itself.

The now-canceled building was expected to reduce operational costs by more than $60 million annually, addressing facilities maintenance, inefficient utility expenses and rising commercial real estate leases.

In the midst of all that, though, Kaiser launched a "virtual-first" healthcare plan in Washington state in September 2020, which was made available on January 1. The new plan frames telehealth as a foundational modality of care for patients with nonurgent issues.

Also in 2020, Kaiser, in a collaboration with the National Health Care for the Homeless Council, provided $1 million to increase capacity for preventing and treating cases of COVID-19 within the nation's homeless population.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com