Kaiser Foundation Health Plan and Kaiser Foundation Hospitals earned a combined $100 billion in revenue in 2021 [2]. It's the highest-grossing non-profit organization in the USA and probably the world, lol...net income margins are slim though.
1- https://projects.propublica.org/nonprofits/organizations/941.... 2- https://projects.propublica.org/nonprofits/states/CA
I was getting a test at the hospital in my town the other day and got asked by the technician about my job, which involves public opinion data, and that got into "why are people unhappy with the economy today?" which got into strikes, and she volunteered Kaiser as an example so people like her are very away this is going on.
That’s fact not feeling. There are very few positions at the top and an oversupply of skilled people willing to fill them.
It becomes a matter of getting favored by the right people…sure executives put in the work but impressing the right people at the right time is how one progresses in the upper echelons.
On what executive mishire can cause just look at recent events at Flexport. It takes 1+ year to understand that executive is failing and course correction is extremely expensive and disruptive.
Now we hire straight in from B-schools at VP or director level, and one of those ends up CEO eventually (if a CEO's not simply hired from outside, directly).
This practice seems to have dramatically increased the cost of executives. I wonder if it's increased quality.
[EDIT] OK not straight from b-school, they have to do a stint in management consulting or whatever first. Because having that be something that the totally inexperienced do makes complete sense.
Ironically, I read this as an indicator of a bad leader and one who doesn't deserve high pay. A good leader should be regularly training their underlings to make sure there are as few hiccups as possible if they get hit by a bus.
/s
I'm not sure if that small margin matters for running a major HMO, but I could imagine it does. And that small margin might just be having connections and friends. Maybe having those connections and friends is that extra value proposition that a good CEO brings.
As a layperson, it seems like the research is mixed as to whether a specific CEO really matters that much to the bottom line. Despite the inconclusive evidence, though, they sure get paid well like it's a given that they really, really matter.
https://chiefexecutive.net/higher-ceo-pay-produce-better-com...
"compensation arrangements are endogenous and correlated with many unobservables, measuring their causal effects on behavior and firm value is extremely difficult"
Frydman, C. and Jenter, D., 2010. CEO compensation. Annu. Rev. Financ. Econ., 2(1), pp.75-102.
I do agree that assessment is less skill based at those levels, but that is largely because the job is not hard skill based. That doesn't mean the person doesn't matter or that they are interchangeable. No one but Steve Jobs could've turned around Apple for example.
As far as US CEO salaries go, I agree that it doesn’t sound particularly egregious.
Compare that with, say, Nintendo’s President, who makes the equivalent of $2.4 million.
https://www.nintendo.co.jp/ir/pdf/2023/annual2303e.pdf
Executive pay in the US seems to be high compared to at least Japan. Are US executives really that much better than Japanese executives scored against objective metrics?
If you adjust for company size then you should adjust for inflation as well. I’d be interested in knowing for sure, but if I had to, I’d guess they’re 5-10x, not 1000x, bigger.
One other way to measure it is by worker productivity, which has also increased since the 1960s. Somehow those productivity gains are disproportionately hoovered up by management.
At negotiation and price discovery, clearly they are :)
Comparing the President of a Japanese video game company to the CEO of major American healthcare organization with ~6-7x the revenue isn't really an apt comparison, is it?
Why wouldn’t it be? And if it’s not, how about a comparison between Sony and KP? Sony’s revenue in 2022 was $88B (though with a much larger net of $6.7B instead of KP’s $0.9B). Sony’s CEO was paid $4.4M.
https://www.sony.com/en/SonyInfo/IR/library/FY2022_20F_PDF.p...
I also think spinning Nintendo as simply a Japanese video game company undersells their global presence as well as the fact that they build hardware in addition to software. My guess is that Nintendo or Sony have a much greater global presence than KP though I certainly could be wrong.
sounds like profit margin is very small and they can go underwater any moment.
Where 80 of revenues had to be spent on healthcare expenses for insurers.
https://www.healthcare.gov/health-care-law-protections/rate-....
Distributing profit through pay, plans and bonuses sound like blatant fraud and they likely trying to avoid it.
No healthcare CEO or hospital administrator is coming to change your bed pan or put a PICC line in, or stop you from bleeding out in the emergency department or the operating room.
If the workers get paid more through this strike, it will translates directly to higher prices.
Even after that, Kaiser will stay a low cost provider. Becasue they are non-profit.
Has Kaiser not raised prices for health insurance premiums or other fees since 2020? Because that would be notable and they absolutely should lead with that.
My suspicion is they didn't mention that because they have been raising the fees they charge their customers faster than they have been raising wages, like many employers.
Either way, it doesn't matter all that much if their wages aren't keeping pace with inflation. That would almost definitionally lead to the kind of labor shortages described in the article.
2019: 370.50 135.50
2020: 360.50 144.60
2021: 294.50 148.50
2022: 236.50 170.10
2023: 236.50 164.90
2024: 236.50 ??
Before 2019 I had a different plan. I was retired but not yet eligible for medicare. Prices for such pre-medicare plans have increased significantly over this period. edit fix formatting
Aside from the fact that those non-discounted rates are astronomically high in the USA, they also don't have to worry about anyone analyzing the list of services provided, so the medical billing errors in the provider's favor don't have a chance of being questioned.
Large medical provider accounting is right next to Hollywood accounting in the staggering games played with profit, expense, and loss.
This makes no sense. If they are the healthcare provider, then services provided to the indigent go in the expenses column, and revenue is in the revenue column.
And you cannot “deduct” anything from profit, it is literally all revenues minus all expenses. And also Kaiser is a non profit.