Kaiser hits $1 billion operating gain in Q1

Kaiser Permanente Monday posted a record $1 billion operating gain in its first quarter, just days after holding its largest-ever bond offering.The Oakland, Calif.-based health plan and hospital giant eclipsed the $1 billion barrier on revenue of $18.1 billion. That compared with an operating gain of $701 million on revenue of $16.3 billion in the year-earlier quarter.The 5.5% operating margin in the first quarter beat the strong 4.3% operating margin from the year-earlier period.Not-for-profit Kaiser is the nation’s largest integrated health system with 11.7 million health plan members and 39 hospitals.

Breaking it down

Operating revenue in Q1, at $16.3 billion, was $1.3 billion more than the comparable 2015 total of $15 billion. But operating income dipped 5.4 percent, from $741 million to $701 million, and Kaiser sustained a net non-operating loss of $197 million compared to a $301 million operating profit in 2015.

That was a hefty $498 million swing from one year to the next on the investment front.

Last year, Kaiser’s net income fell 39 percent, to $1.9 billion, even though operating revenue jumped nearly 8 percent, to $60.7 billion.

But senior officials told me last month that keeping premium rates “affordable” and growing Kaiser’s footprint is more important that squeezing out the highest possible profit margin, once the organization has earned enough to cover the costs of major capital programs.

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