Becker's Hospital Review

14 CFO / FINANCE Kaiser's net income more than doubles to $4.5B in Q2 By Ayla Ellison A er reporting a $1.1 billion net loss in the first quarter, Kaiser Perma- nente's revenue, operating income and net income for its nonprofit hospital and health plan units increased year over year in the second quarter of this year. e Oakland, Calif.-based healthcare giant reported operating revenues of $22.1 billion in the second quarter of 2020, up 3.3 percent from the same period a year earlier. Kaiser also saw expenses decline about 1.5 percent year over year to $20 billion. "Deferred elective surgeries and procedures due to stay-at-home orders across the com- munities we serve contributed heavily to our second quarter results by temporarily reduc- ing our operating expenses," Executive Vice President and CFO Kathy Lancaster said in an earnings release. Kaiser spent $907 million on capital projects in the second quarter, up from $710 million in the same period a year earlier. e system made investments in technology and infra- structure, including reconfiguring hospitals and building new clinical capacity to care for COVID-19 patients. e 39-hospital system ended the second quarter of this year with an operating income of $2.1 billion, up from $1.1 billion in the same quarter last year. Kaiser's unique integrated model — it pro- vides healthcare and health plans — makes it difficult to compare its financial results to those of other systems that do not receive member premiums. As of June 30, Kaiser had 12.4 million health plan members, 183,000 more than in December. Most of the growth occurred during open enrollment, which oc- curred pre-COVID-19, Kaiser Senior Vice President and Treasurer Tom Meier told Becker's Hospital Review. As a result of improved financial market condi- tions in the second quarter, the system reported strong growth in investment returns, Mr. Meier told Becker's. at recovery pushed Kaiser's net income to $4.5 billion in the second quarter of this year, up from $2 billion in the same period of 2019. In the first quarter of this year, Kaiser reported a nonoperating loss of $2.4 billion, generated largely by investment losses. As the system continues to navigate the chal- lenges of the COVID-19 pandemic, ensuring patients and health plan members have access to needed care and testing is a top priority, Chair and CEO Greg Adams said in an earn- ings release. "We have now reintroduced care that was halted during the stay-at-home orders, ex- panded our services, especially virtual care, and are working with members to schedule care that may have been deferred," Mr. Ad- ams said. "Moreover, we are working to ex- pand our testing capabilities by purchasing our own testing equipment and building Kai- ser Permanente testing labs, partnering with state and local health departments to support robust contact tracing, helping to slow the spread of the virus through education and household prevention kits, and helping our customers maintain their health coverage through these difficult times." Looking at results for the first six months of this year, Kaiser reported net income of $3.4 billion on revenues of $44.7 billion. In the same period a year earlier, the system post- ed net income of $5.2 billion on revenues of $42.8 billion. n HCA records $1B profit in Q2 By Ayla Ellison H CA Healthcare, a 186-hospital system based in Nash- ville, Tenn., said its revenue declined and its profit increased in the second quarter of this year, which ended June 30. HCA posted revenue of $11.07 billion in the second quar- ter of this year, down 12 percent from the same period a year earlier when revenue totaled $12.6 billion. In the second quarter of this year, HCA recorded $822 million in stimulus income from the federal government made available under the Coronavirus Aid, Relief and Economic Security Act. It also reported losses on the sales of facili- ties of $27 million. The company said same-hospital admissions declined nearly 13 percent year over year. Same-facility inpatient surgeries were down 16 percent, while outpatient sur- geries and emergency room visits each declined nearly 33 percent. "Patient volumes across most service lines were significantly impacted in April due to state and local policies implement- ed to contain the spread of COVID-19 and preserve personal protective equipment," HCA said in an earnings release. "Pa- tient volumes gradually improved in May and June as states began to re-open and allow for non-emergent procedures." Cash flows from operations for the second quarter of this year included $4.4 billion of accelerated Medicare pay- ments, which HCA must repay. After factoring in operating expenses and nonoperating items, the company ended the second quarter of this year with net income of $1.08 billion. That's up from net income of $783 million in the same period a year earlier. Looking at the first six months of this year, HCA reported net income of $1.66 billion on revenue of $23.9 billion. The company posted net income of $1.82 billion on revenue of $25.1 billion in the first six months of 2019. n

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