UPMC took in $3.1B more in operating revenue last year than 2017

UPMC took in $3.1 billion more in operating revenue last year than it did in 2017, for a 20 percent year-over-year increase, its year-end financial statements show.

Revenue for UPMC totaled $18.77 billion last year, up from $15.63 billion in 2017, according to financial documents provided by UPMC and filed with state regulators.

Operating income totaled $166 million in 2018, down from $246 million in 2017 and $215 million the previous year.

UPMC, officially a nonprofit health care integrated delivery and financing system headquartered in Downtown Pittsburgh’s U.S. Steel Tower, controls both provider and insurance arms. Its network spans more than 4,000 physicians, 40 hospitals and 600 doctors’ and outpatient offices.

Its insurance membership has grown to 3.5 million people.

“I think we’ll continue to see growth,” said Diane Holden, president of UPMC Insurance Services Division.

On the insurance side, UPMC saw its revenue grow by $1.4 billion from 2017, up to $9 billion in 2018, the figures show. Revenue grew along with the addition of 140,000 new insurance members. Operating income dropped by $3 million because of risk adjustments made through the Affordable Care Act, UPMC officials said.

UPMC’s total insurance plan membership grew by 3 percent, buoyed by an uptick in people choosing Medicare Advantage plans offered by UPMC over ones by its Pittsburgh-based rival, Highmark. Its commercial offerings boast a 98.6 percent retention rate.

“It’s significant, it’s growing, it’s dominant in the state,” Chief Financial Officer Robert DeMichiei said.

On the provider side, UPMC’s health services revenue increased by $1.9 billion last year compared with 2017, primarily due to payer rate increases and hospital affiliations — namely, 2018 being the first full year in which the financial statements included UPMC’s acquisition of Pinnacle Health, now called UPMC Pinnacle.

Outpatient revenue increased by 25 percent, admissions were up by 15 percent and physician revenue grew by 13 percent, figures show.

Operating income dropped over the same period because 2017 income had included one-time settlements from third-party payers, UPMC officials said.

The nonprofit health care system — which must pump profits back into operations, investments and community benefits — says it doled out about $960 million in community benefits last year. About $400 million went toward academic research at partners such as the University of Pittsburgh, $300 million toward charity care and Medicaid shortfalls and $250 million to other community benefits such as health fairs.

UPMC’s earnings before interest, depreciation and amortization — a measure of its financial performance and ability to generate resources for reinvestment — remained roughly flat at $790 million, compared with $789 million in 2017 and $682 million the previous year.

The health system’s investment portfolio stands at about $6.9 billion.

In the past year, UPMC spent $905 million in capital investments and new facilities.

UPMC also announced last year a $2 billion investment in three new hospitals in Pittsburgh to be focused on cancer, organ transplants, heart and vision care. They’re targeted for completion in 2022. The hospitals will be built on the campuses of UPMC Presbyterian in Oakland, UPMC Mercy in Uptown and UPMC Shadyside.

UPMC employs more than 85,000, making UPMC Pennsylvania’s largest employer outside of the government.