UPMC took in $3.1B more in operating revenue last year than 2017 | TribLIVE.com

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

Natasha Lindstrom
The UPMC sign sits atop the U.S. Steel Tower in Downtown Pittsburgh.

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.

Natasha Lindstrom is a Tribune-Review staff writer. You can contact Natasha at 412-380-8514, [email protected] or via Twitter .

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.