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UPMC banks on diversity

| Saturday, May 11, 2013, 12:01 a.m.

UPMC is turning to its international and commercial businesses to diversify revenue sources and ease the pressures of lower payments and a shrinking patient market.

Western Pennsylvania's largest health system said Friday it formed a consulting business that will help hospitals around the world expand their medical services, plan for facilities, develop research programs and implement technology.

“UPMC's reputation for clinical excellence and innovation continues to attract a growing number of partners who want advisers with deep health care expertise and experience in overcoming the same challenges they face,” said Charles Bogosta, president of UPMC's International and Commercial Services Division.

The division includes UPMC facilities in Ireland, Italy and other countries, as well as for-profit joint venture businesses that UPMC established with companies such as General Electric, IBM and Alcatel-Lucent.

The overseas medical centers have returned $60 million in profit to UPMC since 2008, Bogosta said. Its commercial businesses added $153 million in profit in that time frame, he said.

“Being diversified has put us in a solid position,” Bogosta said of UPMC's finances.

UPMC, which owns 19 hospitals in the region and employs more than 56,000 people, reported lower profit on Thursday because of higher costs. Net income was $170 million in the January-March quarter, down 19 percent from the previous year.

Although the hospital network continues to make money, it is affected by cuts in Medicare and Medicaid funding and fewer people seeking medical care.

Most hospitals are experiencing that, but UPMC's size and financial strength allows it expand into other areas. UPMC reported $10 billion in revenue last year, and its investment portfolio was valued at $4 billion as of March 31.

The consulting business, UPMC Advisory Services, began with two contracts, Bogosta said.

The company will help Nazarbayev University in Kazakhstan set up cancer centers around the central Asian country of more than 17 million people. It will work with a Citizens Hospital in Hyderbad, India, to create a laboratory for diagnosing diseases.

Advisory Services is focusing its consulting services on oncology, health information technology, pediatrics and health security, which involves being prepared for bioterrorism and large-scale health emergencies.

Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or anixon@tribweb.com.

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