Kaiser Permanente had its most profitable year yet in 2021, drawing $8.1 billion in net income.

Oakland, California-based Kaiser once again benefited from strong investment returns last year, beefing up its nonoperating income even as its operating income grew slimmer. The integrated health system’s net income grew 27.2% year-over-year, from an already strong $6.4 billion in 2020.

Tom Meier, Kaiser’s corporate treasurer, cautioned that investment returns are “extremely volatile,” and Kaiser does not rely on its net income to support operations. Instead, the money supports its capital programs and infrastructure investments. Last year, that included 11 new medical offices. Kaiser now has 734 medical offices, 39 owned and operated hospitals and 58 retail and worksite clinics.

Not-for-profit Kaiser’s total capital spending dropped in 2021 to $3.5 billion, from $4 billion in 2020.

Most health systems haven’t yet released their 2021 financial results, but Kaiser has grown to become one of the country’s most profitable health systems. In 2020, its $6.4 billion was the country’s highest, even beating out investor-owned HCA Healthcare, which posted $3.8 billion in net income. Modern Healthcare financial data show Mayo Clinic was the third most profitable system in 2020, drawing $2.5 billion in net income that year.

Kaiser drew $611 billion in operating income on $93.1 billion in operating revenue, a 0.7% margin. That’s a slimmer margin than the 2.5% margin the system posted in 2020, when it generated $2.2 billion in operating income on $88.7 billion in revenue.

Expenses grew 7% year-over-year, from $86.5 billion to $92.5 billion, even as revenue increased 5%. Meier explained that Kaiser weathered three separate COVID-19 surges last year, each of which increased its spending on members’ care. Being an integrated system means Kaiser covers the medical costs for its 12.5 million members.

“In many ways 2021 was more demanding than 2020,” he said.

The key drivers of higher expenses last year were hospital and medical services and outpatient pharmacy, because more drugs were dispensed from medical offices than hospitals, Meier said.

Another contributor to the margin deterioration was the fact that a little over half of Kaiser’s 185,000 new members last year are covered under government sponsored Medicaid and Medicare plans for which reimbursement isn’t as high. The number of new members was on par with a typical year.

Kaiser said it treated more than 60,000 COVID-19 patients in its hospitals in 2021. The system also administered more than 10.5 million vaccine and booster doses to both members and non-members and conducted 9.4 million COVID-19 tests.

“In 2021 we continued to provide care for an increasing number of patients with COVID-19, while expanding COVID-19 testing and establishing mass vaccination sites to vaccinate our members, employees and communities,” Chief Financial Officer Kathy Lancaster said in a statement. “Despite additional surges, our members continued to receive in-person preventive, routine and elective care.”