Kaiser Permanente, the giant Oakland, Calif.-based hospital system and health plan, saw its operating income decline slightly in the first quarter, despite substantial growth in revenue and managed-care enrollment.
Operating income in the quarter fell to $701 million on revenue of $16.3 billion, compared with operating income of $741 million in the prior year quarter on revenue of $15 billion, the not-for-profit system Friday.
The operating income dip resulted from Kaiser's decision to keep rate increases in check during the quarter, generating, on average, 2.2% more revenue per member per month than the prior-year quarter, said Tom Meier, senior vice president and corporate treasurer at Kaiser.
The system's medical loss ratio widened slightly, with average operating expenses per member increasing by 2.9% in the quarter, he said.
Membership grew by nearly 384,000 to 10.6 million, an increase of 3.7% over Dec. 31, 2015.
Capital spending for the quarter totaled $669 million, compared with $740 million in the prior-year quarter. Kaiser Permanente has 50 clinics and other healthcare facilities in various phases of design and construction, including an expansion of a Kaiser hospital in San Diego, and the construction of its new School of Medicine in Pasadena.
Meier said the health system intends to increase spending on information technology in the coming months as well.