Oakland, Calif.-based Kaiser Permanente reported a net loss of $4.5 billion in 2022, down from a net income of $8.1 billion in 2021, according to its financial results released Feb. 10. Its operating margin dipped from 0.7 percent in 2021 to -1.3 percent in 2022.
The swing from net income in 2021 to net loss in 2022 reflects an increase in healthcare costs driven by inflation, high COVID-19 costs, ongoing labor shortages and a rise in care volume, according to Kaiser, an integrated healthcare provider with 39 hospitals.
For the 12 months ended Dec. 31, Kaiser recorded an operating revenue of $95.4 billion, up 2.4 percent from $93.1 billion in 2021. However, Kaiser saw its operating expenses rise 4.5 percent from $92.5 billion to $96.7 billion in 2022.
In 2022, Kaiser posted an operating loss of $1.3 billion compared to an operating income of $611 million the prior year.
The increase in operating expenses were driven by increased care volume, rising costs of goods and services, additional outside care costs in contracted hospitals, rising labor costs and increased COVID-19 care and testing. Capital spending totaled $3.5 billion, consistent with the $3.5 billion spent the prior year.
Kaiser said strong economic headwinds in the financial markets drove a loss in total other income and expenses of $3.2 billion in 2022 compared to a gain of $7.5 billion in 2021.
"Rather than pull back amid financial pressures, we made the decision to continue our long-term and strategic investments in care and service improvements while carefully managing resources," Kaiser CEO Greg Adams said in the release. "Our staff and physicians worked hard to meet our members' needs and I am grateful for their outstanding contributions."
In 2022, Kaiser invested $2.8 billion in community health programs, up from $2.6 billion in 2021, according to the financial report. Its financial assistance program provided nearly 320,000 low-income and uninsured patients more than $433 million to cover part or all of their medical expenses.
Kaiser's health plan membership also grew by 36,000 members in 2022. It now has more than 12.6 million members.
"Kaiser Permanente continues to responsibly manage costs and is focused on continuing to deliver high-quality care to 12.6 million members," Tom Meier, senior vice president and corporate treasurer, told Becker's Hospital Review. "Despite economic and pandemic-related challenges facing the industry, we've continued our firm commitment to investing in our long-term strategic objectives, including the improvement of patient care, community health, capital programs and our investment in technology."