Kaiser Permanente's Q2 revenue growth driven by higher premiums, new members

Les Masterson

Aug. 7, 2018

Dive Brief:

• Kaiser Permanente reported an 8% increase in operating revenue to $19.6 billion for the second quarter of this year.
• The Oakland-based integrated healthcare system said the revenue increase was connected in part to Kaiser Foundation Health Plan increasing its premiums by 4% this year. The plan also picked up 453,000 new members since the end of 2017 and finished the quarter with 12.2 million members.
• Meanwhile, the system said it will no longer offer Medicaid plans in parts of Colorado in an effort to support the second phase of the state's Medicaid Accountable Care Collaborative. Kaiser alerted its 2,500 Medicaid members in the northern, southern and mountain areas of the state about the decision, but it will continue to offer Medicaid in the Denver-Boulder area, the Denver Post reported.

Dive Insight:

The system's operating income was $345 million for the second quarter. That was a 47% decrease year-over-year, which the company said is connected to a new accounting standard.

Kaiser invested $735 million on capital projects in Q2, including upgrading and opening new facilities. It opened five new medical offices, all in California, in Q2, and now has 689 medical offices and 39 hospitals.

The system has also invested in medical technology and digital capabilities for both in-person and virtual care. More than half of its more than 100 million patient encounters are done virtually. Virtual care supporters say such telehealth programs can improve quality and care access while reducing costs.

Kaiser also announced that it will devote "significant resources" to improve the health of its communities. That includes a $200 million housing and homelessness program. The company said housing stability is a "root cause of health outcomes."

Health systems and payers have increasingly invested in social determinants of health programs as a way to improve patient outcomes and lower costs. A Change Healthcare survey earlier this year found that more than 80% of payers are integrating social determinants into member programs. The American Hospital Association published a guide last summer linking the impact of housing on a community’s health, as well as recommendations for hospitals on how they can help.

https://www.healthcaredive.com/news/kaiser-permanentes-q2-revenue-growth-driven-by-higher-premiums-new-member/529507/