Kaiser Permanente recorded a $961 million net loss in the first quarter as COVID-19 cases and labor expenses surged, the Oakland, California-based integrated health system announced Friday.
A 9.5% year-over-year increase in operating expenses coupled with investment losses diluted Kaiser's balance sheet. It reported $24.2 billion in operating revenues, which didn't keep pace with its $24.3 billion in operating expenses. Kaiser had a $2 billion net income on $23.2 billion of operating revenue in the first quarter of 2021.
"Higher than anticipated COVID-19 costs, supply chain disruptions and worker shortages significantly drove up costs. That made for a challenging quarter for much of the healthcare sector, Tom Meier, Kaiser's corporate treasurer, said in an interview. "The ongoing strain of the pandemic and the emerging variants heightened demand for COVID-19 care and testing as we continued to address the backlog of deferred care."
Kaiser treated more than 688,000 COVID-19 patients during the quarter, marking the steepest increase since the start of the pandemic. The organization tallied $1.4 billion in related expenses.
Its nonoperating income fell from $1 billion in the first quarter of 2021 to a loss of $889 million in the most recent quarter. Health systems, which often rely on nonoperating income for capital expenditures and infrastructure improvement, are expected to see a significant decline in investment income this year as interest rates rise.
Kaiser's capital spending remained steady at $872 million during the quarter, down slightly from $906 million in the same prior-year period. The health system recently opened a 220,000-square-foot facility in Timonium, Maryland, that houses an ambulatory surgery center and 24-hour advanced urgent care and pharmacy services.
Kaiser added 88,000 members in the first quarter, 33,000 of which were Medicaid beneficiaries.