Kaiser Permanente's net income grew 32% in the third quarter of 2019, even as the massive health system faces the looming threat of strikes from thousands of unionized workers.
The Oakland, Calif.-based not-for-profit's net income totaled $1.2 billion in the quarter, compared with $884 million in the third quarter of 2018, according to results posted Friday. Meanwhile, Kaiser's operating margin was 2.9% in the third quarter of 2019, which ended Sept. 30, compared with 3.2% in the prior-year period.
Kaiser Treasurer Tom Meier said the health system's margin in the recently ended quarter was still in line with expectations. He said Kaiser opened five new facilities in the quarter and has more than 95 capital projects in the works.
"The operating margins we're achieving now are allowing us to continue to do that," he said.
Kaiser posted operating income of $615 million on $20.9 billion in operating revenue in the third quarter of 2019, compared with operating income of $636 million on $19.9 billion in operating revenue in the prior-year period.
Kaiser continues to negotiate with about 4,000 mental health employees represented by the National Union of Healthcare Workers who plan to strike next week. Meier said they represent a small portion of the health system's roughly 220,000 employees and 23,000 physicians.
Kaiser is no stranger to labor disputes. Back in July, more than 85,000 workers from multiple unions prepared to strike over staffing levels, wages, benefits and other issues. The strike was ultimately called off. Meier said the most recent dispute is among the last open contracts the health system is working to resolve.
While revenue increased 5% in the quarter year-over-year, expenses increased at a faster clip: 5.7%. Kaiser's expenses were $20.3 billion in the recently ended quarter, compared with $19.2 billion in the third quarter of 2018.
Membership in Kaiser's health plan totaled 12.2 million as of Sept. 30, an increase of more than 75,000 compared with Sept. 30, 2018.
Meier said there wasn't one particular area of expense growth that outpaced others. Rather, growth was spread across all parts of Kaiser's expense structure, he said.
California lawmakers in August passed a bill that will force Kaiser to disclose financial information for each of its 35 hospitals in the state, rather than group them together and reporting only by Northern and Southern California. The state's governor signed the bill into law in September.
Meier said Kaiser is working to implement the law, and doesn't foresee it being much of a burden.
"We're OK with the transparency," he said. "We think it makes sense."