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Diving brief:
- Nonprofit hospital and health plan giant Kaiser Permanente reported a Net gain of $7.4 billion for the first quarter ended March 31, compared to revenue of $1.2 billion reported for the same period last year.
- The Oakland, Calif.-based operator's profits were boosted by its completion of acquisition of Geisinger Healthwhich gave Kaiser a one-time operating gain of $4.6 billion.
- Kaiser reported a quarterly operating margin of 3.4%, but noted that the first quarter tends to be the strongest due to the timing of the open enrollment cycle. Kaiser expects revenue to remain flat in subsequent quarters, but expenses will likely increase.
Dive overview:
Kaiser operates 40 hospitals, according to its website, and serves nearly 12.6 million health plan members in the first quarter.
During the quarter, the Kaiser subsidiary Health Risant — a nonprofit health network created last year to independently purchase and operate other nonprofit health systems — has completed its purchase of Geisinger Health. Kaiser received a one-time payment, increasing its revenue. Net income for the quarter excluding the Geisinger transaction was $2.7 billion.
Kaiser grew its operating profit year over year by more than 300% to total $935 million. Still, the nonprofit provider said that figure was lower than revenues recorded before the pandemic.
Continued cost pressures from high utilization, acuity of care and rising prices of goods and services caused quarterly spending to rise 6% year-over-year to total $26.5 billion.
Kaiser conducted at least three rounds of layoffs since the fall. He recently cut 76 employees at the start of this month, a spokesperson confirmed to Healthcare Dive.
The reductions were made to “reduce costs across our organization” and primarily affected positions related to information technology and marketing, the spokesperson said by email.
Kaiser is not subject to a hiring freeze, the spokesperson noted. The organization has increased its headcount by 5% since 2022 and has vacancies currently listed online.
The Wall Street Journal also reported this weekend that Kaiser was trying to sell 3.5 billion dollars from its private investments due to liquidity problems, citing close sources. Kaiser may attempt to sell other securities later in 2024, according to the report.
Kaiser did not respond to requests for comment at the time of publication on the possible sale.