UPMC monetizes tech, services through its subsidiaries
An aging American population with unhealthy lifestyles is good for UPMC for-profit subsidiary Procirca.
The Oakland medical services company has benefited from a rise in heart disease and other cardiac conditions by providing technical support to heart surgeons across the country.
The company's 110 employees work in hospitals across the country operating machines that keep a patient's heart and lungs functioning during open-heart surgeries, assist in the implantation of devices that aid weak and damaged hearts, and run equipment that monitors the brain and spinal cord during surgeries that could affect the nervous system.
Procirca's business is growing as more hospitals take on these complicated surgeries and need the company's help.
“We've taken the expertise we developed at UPMC and molded that into expertise for hospitals” outside the UPMC system, President Stephen Winowich said.
Procirca provides services to about 17,000 patients a year, including 4,000 open-heart surgeries, half of which are in non-UPMC hospitals.
Winowich expects revenue growth this year of 10 to 15 percent. The company generates more than $20 million in annual revenue, which comes back to its nonprofit parent to support hospitals in Western Pennsylvania. He declined to provide more specific financial results.
“The field is growing, and we're recognized as a leader,” he said.
Procirca is one of a string of companies formed by the region's biggest hospital network that have commercialized its medical technology and services. It is organized under UPMC's International and Commercial Services Division, which logged $215 million in annual revenue last year, just 2 percent of the system's total revenue of $11.4 billion. But the division also produced $53 million in operating profit, or 28 percent of UPMC's total operating profit of $190 million.
Some other companies with roots in UPMC's medical and technological expertise are Omnyx, a joint venture firm UPMC formed with General Electric Co. to sell advanced cancer imaging technology; Prodigo, a software firm that helps hospitals save money on the goods and services they purchase; and Evolent Health, which helps hospitals transform into integrated health care systems and start health insurance divisions.
Like those firms, Procirca became a company when UPMC executives realized other hospitals would pay for a unique technology or service they developed. Procirca has 70 customers, up 6 percent in the last year, Winowich said.
About half of the company's business comes from perfusion services, which are machines that keep blood flowing to the heart and lungs during heart transplants and other complicated cardiac procedures. While that is the biggest contributor to revenue, Winowich said, growth is coming primarily from two other business lines: neuro-monitoring and mechanical circulatory support.
Neuro-monitoring, which accounts for about 30 percent of revenue, is used during procedures in which a mistake by the surgeon could harm the patient's brain or spinal cord.
“It's going to be a major source of growth for us,” he said.
Revenue from mechanical circulatory support services, which provide about 20 percent of revenue, is expected to increase because of a rising number of patients with heart disease. Winowich said an estimated 50,000 to 100,000 patients a year would benefit from a heart transplant, but there are only about 2,200 hearts available each year. New artificial heart devices are hitting the market that will help fill that gap by assisting a weakened heart to continue pumping.
“These are new technologies, and it's very difficult to train a group in any hospital,” said Dr. Christian Bermudez, chief of UPMC's Division of Cardiothoracic Transplantation. Bermudez uses Procirca technicians to help with his surgeries at UPMC and other hospitals where he has set up programs.
“When you want to educate and implement these techniques elsewhere, you need a team,” he said. “There is a growing need in this area, and very few companies are able to support it.”
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.