Cuts in spend­ing help Kaiser boost sur­plus 25%

Modern Healthcare - - REGIONAL NEWS - —Beth Kutscher

Kaiser Per­ma­nente, the 32-hos­pi­tal Cal­i­for­nia-based sys­tem that also op­er­ates its own health plan, re­ported a 25% in­crease in its net sur­plus dur­ing the sec­ond quar­ter of the year as it added new mem­bers and scaled back cap­i­tal spend­ing.

The Oak­land-based group im­proved its op­er­at­ing mar­gin slightly to 4.7% in the quar­ter, com­pared with 4.6% in the prior-year pe­riod.

In to­tal, Kaiser re­ported a $1 bil­lion sur­plus on $14 bil­lion in rev­enue in the quar­ter, com­pared with an $800 mil­lion sur­plus on $13.3 bil­lion in rev­enue in the year-ago pe­riod. The group has added 386,600 mem­bers in the first half of this year on top of the 9.1 mil­lion mem­bers it re­ported as of Dec. 31.

Kaiser also has been mak­ing in­vest­ments in its tech­nol­ogy and its fa­cil­i­ties. For in­stance, in the sec­ond quar­ter, it com­pleted work on two re­place­ment hos­pi­tals that needed to be up­graded to meet Cal­i­for­nia earthquake re­quire­ments. San Le­an­dro (Calif.) Med­i­cal Cen­ter opened on June 3 and Oak­land Med­i­cal Cen­ter opened on July 1.

Yet cap­i­tal spend­ing slowed to $614 mil­lion in the sec­ond quar­ter, down 20.2% from $769 mil­lion in the year-ago pe­riod. Kaiser did not break out other op­er­at­ing met­rics in its earn­ings re­lease.

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