Kaiser Permanente is the latest health system showing signs of struggling amid rising costs.
Kaiser, an Oakland, California-based integrated nonprofit, on Friday reported a net loss of $4.47 billion in 2022, while forecasting a profit of $8.08 billion in 2021.
Operating revenue came in at $95.41 billion, an increase of 2.4% from 2021. Expenses increased 4.5% to $96.68 billion, driven by an increase in the volume of care due to previously postponed procedures, higher material costs and increased labor costs.
Caesars lost $3.2 billion due to poor market performance on the investment.
Pressure on labor costs will be a continuing factor for the system. More than 70% of Kaiser’s employees are represented by labor unions. At the end of 2022, Kaiser and the California Nurses Association ratify a new agreement for more than 21,000 workers after months of tense negotiations. The contract includes 6% pay increases for two years, followed by 5.25% increases in the third and fourth years, said corporate treasurer Tom Meier.
Meier said that Caesars’ contract labor costs have almost returned to normal levels. He attributed the declining trend to a more streamlined hiring process and competitive compensation packages.
Meier said care and testing for COVID-19 was still a significant cost factor in 2022.
“It’s not really dropped. In fact, it [was] In 2022 it was higher than in 2021,” he said. “When you look at the fourth quarter, it was affected more by flu and RSV and not as much by COVID, so hopefully we see Seeing the end.”
To help save money, Kaiser re-evaluated the need for vacant positions, cut discretionary spending, and worked to reduce administrative costs. But Meier said the system has still kept its 2022 capital spending steady with 2021 and increased its community health investment by about $200 million.