UPMC took in $20B in revenue in 2019, claims dominance in Western Pa. insurance market

Nearly 1 in 3 Western Pennsylvanians now has a health insurance plan with UPMC — making the nonprofit behemoth not only the state’s largest private employer and hospital system but also the region’s largest insurer.

That’s according to UPMC executives and their newly released 2019 year-end financial statements. They cited healthy growth across insurance, provider and enterprise arms as contributing to an increasingly strong fiscal position.

The nonprofit health system took in $20.6 billion in revenue in 2019 — $1.8 billion more than the previous year, records show.

Revenue has climbed by nearly $5 billion since 2017, for a 30% increase.

“We have solid resources to commit to this community,” UPMC interim CFO Ed Karlovich said Thursday during a news briefing. “We’ve demonstrated significant growth in our provider, insurance and other business lines, and we’re looking forward to serving this community well into the future.”

UPMC’s insurance arm now claims a 32% share of the 29-county region’s insurance market, up from 21% in 2014, according to data provided by UPMC.

Rival nonprofit health system Highmark, by comparison, lost market share over the same period — from 36% six years ago down to just 20%, UPMC’s records show.

Other insurers make up 31%, and Medicare and uninsured patients account for the remaining 17%.

UPMC claims as much as a 65% market share in places such as the North Hills.

It’s branding itself as Western Pennsylvania’s “most preferred provider and most preferred insurer — with recent and further expansions planned into central and northern Pennsylvania, neighboring states such as Maryland and internationally.

UPMC executives cited a 10-year contract inked last summer with Highmark as contributing to influxes in patient volume spanning several areas, including cancer care, surgeries, doctor visits, outpatient services and births.

“There’s been a significant increase in patients coming to us,” Karlovich said. “It’s important for people to recognize that we have our doors open for the Highmark community.”

Highmark questions UPMC’s figures

Highmark officials seemed skeptical of UPMC’s figures. Highmark has not yet released its 2019 year-end financial information.

“We believe that any market share numbers are highly speculative at this point in the year, because that information is internally generated and not substantiated by a third party,” Highmark spokesman Aaron Billger said by email. “Our current spend at UPMC is far below historic levels. Any uptick in our members’ usage of UPMC is likely from members in our broad access health plans and from customers who left UPMC to have Highmark Blue Cross Blue Shield insurance.”

The UPMC-Highmark contract was reached amid intensifying pressure from state Attorney General Josh Shapiro and after months of bitter legal battles and fears of UPMC enacting a prepay rule that would have effectively excluded Highmark members — including Medicare and cancer patients — from most UPMC facilities.

About 300,000 or more Highmark members on narrow network plans such as Community Blue remain excluded — many of whom have no choice because they have employer-sponsored coverage.

At least a few such patients have had to be transferred away from UPMC facilities.

“There have been a significant number of Community Blue patients that want to come and we say you can’t, you’ve got to get approval from your payor (Highmark),” said Dr. Stanley Marks of Hillman Cancer Center.

Net income for UPMC last year amounted to $420 million in the black, up from $290 million in the red in 2018.

Much of the increase can be attributed to 13% calendar year-end gains in its $6.6 billion investment portfolio, executives said.

With more than 90,000 employees and a headquarters in Downtown Pittsburgh’s U.S. Steel Tower, UPMC is the largest employer in Pennsylvania outside of the government.

UPMC’s provider network spans more than 4,000 physicians, 40 hospitals and 700 doctors’ and outpatient offices.

Its insurance membership has grown to 3.7 million people.

The nonprofit system — which must pump profits back into operations, investments and community benefits — says it doled out about $1.2 billion in free and discounted care, charitable contribution and other benefits last year.