Highmark reports strong financial picture for 2018
Highmark Health took in $515 million more in revenue last year than the previous year, making 2018 its second-best financial performance since the integrated health care system’s inception, CEO David Holmberg said Tuesday.
“We’ve continued to grow and expand, remain financially strong and stable, and maintain our relationships in the markets in which we compete,” Holmberg said. “We remain firmly committed to getting health care right.”
Highmark reported $18.78 billion in operating revenue last year, up from $18.26 billion in 2017, financial statements filed with state regulators show. Its net assets grew to $6.7 billion, a $200 million increase from 2017.
Despite the increased total revenue, Highmark finished 2018 with about $90 million less in operating income than the previous year. Its 2018 operating gain totaled about $526 million, down from $616 million in 2017, Highmark’s self-reported statements show.
Highmark’s net revenue, after expenses but before taxes, totaled $665 million — down from a record-high of almost $1.12 billion in 2017, records show.
A large portion of that drop was because of one-time income generated by the previous year’s sale of Davis Vision. The sale brought in $330 million in 2017 and related tax changes netted another $30 million.
Highmark’s income from commercial business decreased by $114 million, for a 36 percent decline from 2017, and government business brought in $126 million less in 2018, for a 30 percent decrease, the statements show.
Net revenue also was down because of efforts to lower the costs of plans, enhance benefits and take other steps to pass savings onto consumers, Chief Operating Officer Karen Hanlon said.
“We’ve been focused on improved prices at lower costs,” Hanlon said.
Highmark Health was formed in 2013 as the parent company to insurer Highmark Inc. and the Allegheny Health Network hospital system, which it created the same year.
Allegheny Health Network saw a $10 million boost last year, up to $39 million in operating income in 2018. Its total revenue was $3.3 billion — a nearly 7 percent increase from 2017 and a nearly 50 percent increase from five years ago.
Patient observations increased by 2.4 percent compared to 2017 and physician visits climbed by nearly 4 percent. Emergency visits dropped by 2.6 percent, which executives attributed to the success of Highmark’s same-day appointment program.
Highmark’s diversified business, including dental, vision and stop loss companies, increased their earnings by $56 million, up to $159 million in 2018. Dental business United Concordia now is the fourth largest dental company in the nation, approaching $1.5 billion in revenue.
The Downtown Pittsburgh-headquartered nonprofit system employs more than 43,000 people. Its 2018 cash and investments totaled about $8 billion.
Recent investments have spanned four new neighborhood hospitals, five new cancer care centers, renovated emergency departments, expanded women’s health services and a new academic center at Allegheny General Hospital in Pittsburgh’s North Side.
Highmark anticipates that about 200 active construction projects will create 800 health care jobs and as many as 10,000 related construction and trade jobs.
Natasha Lindstrom is a Tribune-Review staff writer. You can contact Natasha at 412-380-8514, [email protected] or via Twitter .