Kaiser Permanente is the latest health system to show signs of difficulty amid rising costs.
Kaiser, an integrated nonprofit based in Oakland, California, on Friday reported a net loss of $4.47 billion in 2022, compared with a profit of $8.08 billion in 2021.
Operating revenue came in at $95.41 billion, up 2.4% from 2021. Expenses rose 4.5% to $96.68 billion, driven by increased amounts of care due to procedures previously delayed, the cost of goods is higher and labor spending increases.
Kaiser lost $3.2 billion due to underperforming investments in the market.
Pressure on labor costs will be an ongoing factor for the system. More than 70% of Kaiser’s workforce is represented by labor unions. In late 2022, Kaiser and the California Nurses Association approved a new contract for more than 21,000 workers after months of intense negotiations. The contract includes a 6% salary increase over two years, followed by a 5.25% increase in the third and fourth years, said Tom Meier, the company’s treasurer.
Meier said Kaiser’s contract labor costs were close to returning to normal. He attributed the downward trend to a more streamlined recruitment process and competitive compensation packages.
COVID-19 care and testing remains a significant cost factor in 2022, Meier said.
“It doesn’t really drop. In fact, it [was] “When you look at Q4 it was more affected by influenza and RSV than by COVID, so hopefully we’ll see the end in the future,” he said.
To help save money, Kaiser reassessed the need for vacancies, cut discretionary spending, and worked to reduce administrative costs. But Meier said the system would keep 2022 capital expenditure steady through 2021 and increase public health investment by about $200 million.
