Highmark Health's first-ever combined report reveals $126M loss
Highmark Health reported a net loss of $126.5 million in 2013, noting that negative results from its hospitals took a bite out of the integrated health system's bottom line.
Highmark Health, the parent organization of health insurer Highmark Inc. and hospital system Allegheny Health Network, said in an audited financial report released Monday that it produced a loss from operations of $186.3 million, primarily from a one-time charge of $311 million related to acquiring West Penn Allegheny Health System.
Revenue was $15.8 billion, placing the organization among the nation's largest health care systems that include a health insurer and hospital system. UPMC, which offers health insurance and medical services, had revenue last year of $10.2 billion.
The first combined financial report included results from the calendar year for Highmark Inc., the state's largest health insurer, and a partial year for the Allegheny Health Network hospitals,which previously were on fiscal years running from July to June.
It did not include prior-year comparisons because Allegheny Health Network, Pittsburgh second-largest hospital system, was formed last year.
“Highmark Health has a strong financial foundation to invest in the future,” Karen Hanlon, senior vice president of finance, said in a conference call with reporters.
Hanlon noted that the organization has $7 billion in cash and investments.
Though Highmark Health's loss was driven by negative results at Allegheny Health Network, Hanlon said, the hospitals are making progress in improving their finances, which should lead to positive operating margins.
“We feel that the turnaround is going well,” she said.
West Penn Allegheny recently secured a $700 million loan that it used to redeem more than $600 million in bonds Highmark purchased as part of its deal to acquire the hospitals.
Officials said the hospital system's ability to take on the loan showed that its finances have improved.