Kaiser to reveal detailed financials under newly-signed California bill

By | September 7, 2019

Dive Brief:

  • California Governor Gavin Newsom (D) signed a bill into law Thursday mandating greater transparency in Kaiser Permanente’s financial disclosures as income for the not-for-profit integrated health system continues to soar.
  • Starting in 2020, Kaiser must break out expenses and revenue for its hospitals on a per-facility basis, revenue by type of payer, and rate increases by type of medical service provided. Kaiser, as a private, not-for-profit operator, was previously exempt from many of the state’s reporting requirements for payers and providers despite covering more than 65% of California’s population with large group insurance.
  • Another bill that would require Kaiser and similar nonprofit health systems report more information about payments for executives and doctors at their for-profit businesses, is wending its way through the state legislature.

Dive Insight:

Gov. Newsom, a Democrat, signed Senate Bill 343 into law Sept. 5 amid rising tensions around the status and operations of nonprofit healthcare companies.

Currently, Kaiser reports data about the revenue and profits of its hospitals in one lump figure, broken out between Northern and Southern California. Of the state’s approximately 400 hospitals, all but Kaiser’s 35 report those numbers on a per-facility basis, according to SEIU California, a union representing the company’s employees.

Kaiser reported $ 5.2 billion in net income in the first half of the year alone — more than it reported in an entire year since its founding more than seven decades ago, according to data from SEIU California. The purpose of the bill is to inject transparency into the not-for-profit’s finances and give employers leverage as they negotiate rates when purchasing insurance.

Read More:  Sunscreen: How to Help Protect Your Skin from the Sun

“This law arms employers and others with the information they need to fully understand why the cost of their health insurance with Kaiser Permanente may be rising,” state senator Richard Pan, a Democrat from Sacramento and the bill’s author, said in a statement.

SEIU California supports the bill, as do a number of other worker advocates, including the California Nurses Association, the city of Los Angeles and the county of San Francisco.

Nonprofits across the country are coming under increased scrutiny from regulators and labor advocates critical of their mounting profits and whether they do enough for the community to justify their tax-exempt status.​

Kaiser is facing an impending worker strike over contract grievances. More than 80,000 employees of the massive system are poised to walk out of work in October in what could be the nation’s largest strike in the last two decades. Kaiser plans to meet with the coalition of unions representing the workers Sept. 16 to try and work toward a new contract.

California’s Assembly Health Committee passed the bill June 25. The full Assembly passed the bill Aug. 22 and the Senate Aug. 26.

A similar bill, AB 1404, requiring California nonprofit health systems disclose more detail on assets they pay to their doctors and executives is awaiting a vote by the state Senate.

Healthcare Dive – Latest News